News

TÜV SÜD Asia Pacific Pte Ltd

11 January 2011

Glaring Demand and Supply Gap for Green Products and Services in India, Provides Tremendous Potential for Businesses

India – Consumer demand for Green products and services appears to be outstripping supply, according to independent research conducted in India, China and Singapore from TÜV SÜD Asia Pacific, one of the world’s leading providers of testing, inspection and certification services.

The study, the first to investigate, compare & contrast consumer and corporate attitudes to Green products, services, policies and certifications in Asia, revealed that businesses are significantly underestimating consumer interest1 and awareness in Green issues.

In India, the research demonstrated that 86% of the respondents are prepared to pay a considerable premium (around 25%) to get their hands on products and services that are clearly certified as green² and 78% are already purchasing such items. In contrast, the study showed that businesses expect just 35% of consumers to be willing to pay more for Green credentials and that those who are willing, would pay only a premium of 9%. Furthermore, the study showed only one third of Indian businesses have some form of CSR or sustainability policy or guidelines, led primarily by industry regulations and least by the CEO/senior management. A dismal 16% of businesses in India in the food and beverage sector and 18% in the clothing and footwear industry produce or trade Green products³. The home electronics segment, however, clocks a more impressive 60%. In addition, the vast majority (76%) either do not have a policy or guideline to minimize their impact on the environment in place or are failing to clearly communicate they have one⁴.

The research, named the TÜV SÜD Green Gauge 2010, was undertaken in China, India and Singapore. It included individual interviews with over 460 management-level employees in businesses that operate the home electronics, food and beverage, and clothing and footwear industries. A survey of more than 2,600 consumers, which act as their household’s key decision maker in the purchase of products and services in these sectors, was also conducted across the countries.

Opportunity set to increase

Whilst consumer (95 percent) and business (85 percent) interest in green products / services in India is already high, 96 percent and 82 percent respectively believe Green issues will become even more prominent in the next five years⁵.

Mr Niranjan Nadkarni, CEO of TÜV SÜD South Asia, said, “The TÜV SÜD Green Gauge 2010 shows that there is generally a high level of interest in Green issues by both businesses and consumers. However, businesses appear to not be aware of the intensity of interest among consumers and how this translates into demand for Green products and the willingness to pay premiums of 25 percent for them. This shows a large and potentially lucrative opportunity in the market.”

Independent Green Certifications are important to consumers

In addition to assessing awareness and interest levels in Green issues, the TÜV SÜD Green Gauge 2010 also investigated how Green benefits and credentials affect purchasing behaviour. 96 percent of consumers in India stated that independent Green Certifications are important when deciding which product to buy, followed by 94 percent in China and 90 percent in Singapore. In India and China, consumers even declared that such standards play a greater role in their purchasing decisions than price6. The primary reason for these beliefs in all countries was that Green certifications provide independent documentation, and therefore add credibility to the product. Surprisingly, the results also demonstrated that consumers are more aware of independent Green Certifications than businesses⁷. Around half (49 percent) of consumers on average recognise such standards compared to just a third (35 percent) of corporate organisations.

Mr Nadkarni added: “Consumers in India have become increasingly sophisticated when it comes to Green issues. They understand the importance of action, and therefore only look to purchase green products and services that are independently certified to green standards. Businesses, on the other hand, appear to be slow on the uptake. This is surprising; especially considering the demand is there.”

Differing opinions on who should take the lead on green issues

When asked who should take the lead on solving Green issues, businesses firmly pointed the finger at Governments, whilst consumers took responsibility themselves. 43 percent of corporate organisations in India stated that Governments should drive sustainability and CSR initiatives⁸. The vast majority also claimed that Industry and Government regulations are the main reason why they would implement CSR and sustainability policies and guidelines⁹.

Mr Nadkarni concluded: “The results of this research clearly demonstrate that we have reached an era where Green products and services not only help tackle pertinent environment issues but make genuine business sense. Over the next five years, this is only going to intensify. With a comparably limited number of Green products and services currently on the market, firms that act quickly to capitalise on this growing trend will reap significant rewards.”