While companies have huge influence in framing and shaping demand for products, consumers play a key role in raising demand for goods and services that have adopted circular economy principles, according to a European Environment Agency (EEA) briefing published this week.
Consumers can play key role in creating demand for ‘circular’ goods and services
Policies that promote ‘going circular’ decisions by consumers are most effective if they are designed by addressing factors shaping individual behaviour, according to the new EEA briefing ‘Enabling consumer choices for a circular economy’. The briefing looks at how policies can enable more circular-economy friendly consumer behaviour by understanding the factors that influence it.
Consumers and companies both influence demand for products. Producers not only respond to but also shape consumer demand through the products offered and how the products are marketed. Consumer choices shape decisions made by actors upstream, such as product designers, and downstream, such as recyclers, in product supply chains, according to the EEA briefing.
While economic factors are key, other factors shape consumers choices too
Economic factors, like the price of products, are often the most important in consumer decision-making, while the importance of the other factors is less clear. Other factors that come into play include to what extent the available products meet consumer needs, the information available to consumers, social factors, such as adherence to social norms, community values and examples from role models, and individual preferences and beliefs related to, for instance, prestige, brand loyalty or personal values. Traditionally, policies have aimed to give consumers information (like eco-labels) and to a lesser extent to make circular alternatives more economically attractive.
There are opportunities to explore a range of future policy options across different governance levels, including tax breaks and subsidies, legally binding regulations, avoiding greenwashing, making circular options more convenient, and using eco-labels and measures targeting consumers to, for instance, enhance emotional attachment to products.
The European Union has already moved to put on place measures to make circular economy-friendly choices more attractive and convenient for consumers. For example, the European Commission’s sustainable products initiative, which focuses on providing information through labelling and product passports, and placing product requirements focusing on durability and recyclability, among others. This initiative recognises the key role of consumers in establishing a circular economy and is expected to enable an acceleration of circularity in the EU economy.