Across the globe, environmental, social, and governance (ESG) issues are top of the agenda for consumers, companies, and investors alike. Central and Eastern Europe (CEE) has come later to the party than some other regions, held back by differences in development and resource focus, local cultural diversity, and factors like revenue distribution. However, the region’s countries are adopting EU regulations, and local companies are expanding into international markets and attracting the attention of investors—ramping up the need to accelerate the pace on ESG action. The region’s consumers are overwhelmingly exposed to global news and communication on environmental and social issues. And yet, our study reveals that despite a high level of awareness of ESG, very few consumers actually factor ESG considerations into their purchasing decisions. Similarly, according to our interviews with corporate leaders, CEE companies have high levels of awareness around ESG benefits but are still lagging behind their global peers—both in terms of aspiration and execution.
The consumer perspective
ESG has become an important part of CEE consumers’ vocabulary and lives. Our survey found that on average, 49 percent of CEE consumers consider ESG to be very important, with a further 40 percent seeing it as rather important. These perceptions vary somewhat for each individual component of ESG. Awareness of the environmental aspect—climate change, sustainable use of resources, reduction of pollution and waste—achieves a high ranking, with 91 percent of consumers stating they are either very concerned or concerned about the environment. Similarly, 91 percent are also concerned about social issues, focusing on safe and healthy working environment, fairness of pay, diversity and inclusion. Finally, while the governance aspect is ranked as a somewhat lesser concern, 86 percent of consumers perceive transparent corporate governance as an essential requirement for the way that companies function.
The survey also shows that the awareness and importance of ESG rises in line with personal income: 61 percent of respondents with a monthly income of more than EUR5,000 per month considered ESG very important, compared to just 48 percent of respondents with a monthly income of less than EUR1,000. In other words, a higher standard of living translates into a stronger desire to give back to society—and the financial means to do so.
High levels of awareness are not matched by willingness to pay for ESG-compliant products and services
The survey reveals that approximately half of those consumers who see ESG as very important do not consider it when buying food or doing their Christmas shopping. On average, ESG is a buying criterion for about one in five respondents (22 percent). As a result, plastic bags are still common and the conditions in which clothing is produced are not a key concern when buying the next dress or sweater.
An even smaller group of consumers is prepared to pay more for products and services with guaranteed ESG compliance. Altogether, 17 percent of survey respondents indicate their readiness to pay a price premium for ESG, yet only 6 percent are willing to pay 3 percent or more. Despite their awareness about the importance of ESG, CEE consumers are not ready to foot the bill—at least not without commitment from corporations and national governments.
The fact that CEE consumers look to corporations to lead by example in all matters of ESG is particularly evident in their choices of whether to stay with a certain provider or whether to change. 15 percent of respondents consider ESG a reason to switch to a different brand or supplier—either because their current supplier does not meet their ESG expectations or because there is a superior ESG offering in the market. While loyalty and switching varies among industries, the risk of losing almost every seventh consumer because of ESG non-compliance is daunting for many companies.
There are prominent regional difference
The importance attributed to ESG varies from country to country. ESG figures prominently as a consideration in the purchase decisions of Romanian consumers. Every third Romanian screens their consumption choices through at least one ESG criterion. Czechs are at the other end of the spectrum, with one in eight thinking of ESG when doing their weekly shopping.
The same pattern applies to the readiness to pay a premium of more than 3 percent for ESG-compliant products or services: twice as many Romanian consumers are ready to pay this premium compared to their Czech peers—despite the fact that the annual gross salary in the Czech Republic was 20 percent higher than in Romania in 2021. Polish, Russian, and Slovene respondents fall somewhere in the middle, with around one in five consumers thinking of ESG when shopping.
ESG is less frequently considered as key when selecting a banking or telecommunications provider
Expectations about ESG compliance of companies differs by industry. CEE consumers are more attentive to ESG when buying food or selecting a utility provider for gas or electricity. 26 percent consider ESG a key purchasing criterion in these industries—something that is not surprising due to high public awareness of food safety, use of pesticides and antibiotics in agriculture, the transition to green energy, and phasing out of coal plants.
By far the lowest level of satisfaction with the ESG performance of their main provider is recorded in the gasoline sector. Only 22 percent of the respondents were satisfied with the ESG bill of their petrol station, compared to an average score of 34 percent across all industries. This low level of satisfaction can likely be attributed to consumers’ better understanding of the ESG impact of this particular sector, despite them possibly hearing less frequently about commitments and actions by gasoline firms than by companies in the food industry, for example.