Confronted with the grim realities of the climate crisis and broader awareness of social and environmental issues, many consumers are increasingly motivated by environmental, societal and governance (ESG) factors when making purchases.

According to a survey of 2,000 UK consumers, two thirds think about the environmental impact of the goods they buy. And four in 10 say they prefer to shop locally rather than online, helping to support local independent businesses and potentially reduce the carbon footprint of their shopping habits.

But just because people say they actively think about such things, it doesn’t necessarily mean their behavior follows suit. This “value-action gap” isn’t just a product of fickle human nature. In many cases “ethical” products are simply more expensive, less available or less convenient.

These barriers make it difficult for brands to navigate the waters between profitability and purpose, especially during periods of economic and political uncertainty.

But there are encouraging signs that businesses motivated by purpose have performed well in recent years. And as purpose-driven brands grow, they can scale their distribution, improve the convenience of their products or services and ultimately reduce price—helping to close the value-action gap.

But is there a role for advertising in promoting ethical consumer behavior? I would argue so, and the growth in UK advertising spend from purpose-driven brands is heartening. Our analysis of a sample of B Corp companies revealed a year-on-year growth in U.K. ad spend of 95% in 2021. Over the same period, total U.K. ad spend grew by just 18%.

Advertising has a demonstrable ability to drive business revenue, build brand equity and modify behavior, so it’s no surprise that purpose-driven brands are ramping up investment in advertising to fuel growth, especially considering that latent demand for these types of brands.

In an ideal world, businesses wouldn’t need to compromise between product sustainability or price. But how should businesses navigate purpose and price and how can advertising help in the real world?

Understand your customer base

Context is vital. Begin by understanding the motivations and challenges facing specific customer markets. For instance, in the U.K. 20% of the public agree with the statement “I only buy clothes from sustainable brands” (YouGov Profiles, 2023). But there’s large demographic variance with the 18-24 age group nearly 2.5 times as likely to agree compared to those over 55.

Given this, it would make sense for fashion brands catering to a younger audience to invest in sustainability. But if that results in a marked increase in production costs, the new pricing may limit the number of 18–24-year-olds who can afford the brand. This complexity can be better understood through research such as price elasticity analysis, which helps firms understand the nuanced relationship between product pricing and sales volume. In scenarios where more sustainable or ethical business decisions inflate costs, then passed-on price increases can impact sales volume (and hence, profitability).

Use AI to your advantage

One of AI’s most important uses for marketers is streamlining time-consuming and monotonous tasks. Identifying consumer wants and desires is one of those tasks. AI can identify trends, sentiments and concerns among audiences, monitor online conversations to understand brand consumer perception, evaluate other brand purpose strategies and personalize based on individual preferences.

AI can then take this data and enable businesses to tailor prices across people, places and time. AI algorithms, when trained on detailed behavioral data, can allow organizations to predict with precision what people are willing to pay. The inherent concern with such AI applications is when acceptable persuasion turns into unacceptable manipulation. Recent advances in AI (especially generative AI) have made fully automated advertising - that can identify and exploit cognitive biases in consumers at scale and for commercial gain - more possible. As advertisers, we should be on alert.

Actionable goals for consumers

Following audience segmentation and research, marketers must take that data to help communicate incremental, understandable, short-term goals that people can embrace to bridge the gap between sustainability and affordability. Businesses that communicate well, communicate with transparency and involve their customers in their sustainability journey have a greater chance of building trust ultimately leading to less pricing friction.

Lush’s ‘Bring it Back’ recycling scheme—launched with multichannel marketing and a PR campaign—was a small change that benefits customers of the handmade cosmetics marketer and addressed ESG aims. The campaign encouraged customers to bring their pots back to be refilled for a 50p discount on Lush purchases.

Producing sustainable products isn't as expensive as you might think—especially when there is demand. In 2021, a World Economic Forum study conducted with BCG concluded that decarbonizing supply chains, though challenging, added 1% to 4% to the end price for the six sectors examined. In 2022, Co-op in the U.K. decided not to set premium prices for its plant-based range compared with regular meat and dairy. This decision was well-received and aligned with its ethical retailer positioning.

In a world where ESG is incredibly important to most consumers, brands must tread carefully when weighing up price vs purpose. Agencies and brands can, and should, challenge suggestions to use advertising to promote unsubstantiated claims—consumers are aware of greenwashing and will call out brands. Agency and brand marketers have a responsibility to confront ideas that seek to manipulate the public in this way.