Introduction

On April 19, 2022, Coresight Research CEO and Founder Deborah Weinswig hosted a webinar to discuss how Chinese consumers are embracing sustainability, featuring Chris Tung, Chief Marketing Officer at Alibaba Group, and JuE Wong, CEO of haircare brand Olaplex. In this report, we present key insights from panelists, covering the wider sustainability context in China, key environmental concerns among China’s e-commerce consumers and how sustainability can drive business growth and foster positive brand perception.

How Chinese Consumers Are Embracing Sustainability: Coresight Research Insights

Alibaba Aims To Outdo China’s National Sustainability Goals Globally, a huge shift is underway in sustainability in retail and e-commerce, with China at the center of this shift, according to Weinswig. In September 2020, President Xi Jinping pledged that China would reach carbon neutrality by 2060. In February 2021, Alibaba issued $5 billion in senior notes, which included a $1 billion sustainability tranche: The first-ever green bond by a tech firm in China. Alibaba believes that the new pivot to sustainability is consistent with its own mission, which Tung expressed as “Make it easy to do business anywhere.” In December 2021, the e-commerce platform pledged to reach carbon neutrality in its own operations by 2030 and unveiled Scope 3+, an initiative aimed at achieving 1.5 gigatons of decarbonization across its digital ecosystem by 2035. To meet these goals, the platform is building a framework that will exceed international standards, according to Tung.

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Figure 1. Breakdown of Alibaba’s $1 Billion Green Tranche [caption id="attachment_145967" align="aligncenter" width="580"] Source: Alibaba[/caption]   Sustainability Is Becoming a Mainstream Concern Armed with super apps, Chinese e-commerce consumers are the driving force behind sustainability, said Weinswig. Some 77% of Chinese consumers regard sustainability as a “critical priority,” Tung agreed, citing a recent survey by professional services company Accenture. Recognizing this, Tmall, Alibaba’s business-to-consumer (B2C) platform, now operates a channel dedicated to green consumption. In February 2022, Tmall launched eco-friendly labels, enabling shoppers to check the carbon impact of their purchases. The green labeling, currently covering 300,000 electronic goods and home appliances from around 3,000 merchants, will expand to include all categories, said Tung. Younger generations are keener on sustainability, and frequently use Idle Fish, Alibaba’s secondhand marketplace, where shoppers repurpose 1 billion preowned items annually, ranging from clothing to rare collectibles. Alibaba’s super-apps penetrate almost all aspects of daily life, from banking to navigating, and are used to promote sustainability. The Alibaba navigator, for example, enables users to choose greener ways of traveling by prioritizing public transport, according to Tung. “Sustainability is not esoteric to Chinese consumers,” said Wong. Discussing the differences between Western and Chinese consumers, she highlighted that Chinese consumers “are very sophisticated and want the numbers—they demand to know how much they actually save in terms of CO2 emissions.” Olaplex began selling haircare products on Tmall during the 2021 Singles’ Day festival, with Chinese e-commerce shoppers’ demand for sustainability in mind. According to Wong, many online shoppers in China are aware of Olaplex not just as a beauty brand but also as a sustainability brand. Olaplex created kits specifically for China’s sustainability-minded consumers, including eliminating secondary packaging. According to Wong, Olaplex saves 27 million gallons of water and prevents 17 million pounds of greenhouse emissions each year through its new sustainable processes. Alibaba strives to engage consumers in order to convey its sustainability focus, and has developed a variety of tools to communicate with online shoppers, such as livestreaming with influencers and key opinion leaders. Alibaba has also begun forming a “green alliance” with brands to remain responsive to sustainability trends among merchants as well as users. Authenticity and trust are also important—Alibaba and Olaplex have both brought in outside expertise for their sustainability programs. Tung pointed out that Alibaba formed a panel of independent experts to establish credibility in green labeling for merchants and shoppers alike, acknowledging however that “it’s a long journey to build infrastructure for standardization.” There is no government-backed energy efficiency or green label yet in China. Olaplex has hired French sustainability consultancy EcoVadis for its sustainability program. [caption id="attachment_145968" align="aligncenter" width="480"] Olaplex has eliminated secondary packaging to help reduce CO2 emissions
Source: Olaplex[/caption]   Sustainability Is an Opportunity in Itself Consumers’ enthusiasm for sustainable products and systems has transformed sustainability from a mere component of corporate social responsibility to an opportunity in itself. Wong highlighted the importance of communicating Olaplex’s sustainability achievements to consumers: “Partnering with the Alibaba Tmall platform was a megaphone that allows us to expand on the progress we made on sustainability.” Tung emphasized the opportunity that sustainability presents for brands and retailers, saying, “sustainability is not part of corporate social responsibility; it is a way to drive growth, the key driver to stimulate demand [and] an opportunity to create the brand consumers are really looking for.” Alibaba has unique strengths with respect to sustainability, said Tung. The Alibaba platform has tremendous communication powers and a wide range of marketing tools. In addition, its logistics arm, Cainiao, is working to develop global green supply chains. The e-commerce platform is building sustainability infrastructure to take the concept of green consumption to its stakeholders and create great value for them, from supply chains to end consumers, Tung concluded. [caption id="attachment_145969" align="aligncenter" width="700"] Tmall shoppers can confirm the carbon footprint of their purchases via the company’s app
Source: Alibaba[/caption]