The sustainability surcharge is dead according to new research that reveals Australian and New Zealand consumers have decisively rejected the idea they should fund corporate green transitions through higher prices.
The study of over 2,200 Australians and New Zealanders found 65 per cent of Australians and 63 per cent of New Zealanders believe businesses should absorb sustainability costs by reducing profits, not passing them to consumers, with only 22 per cent of Australians and 17 per cent of New Zealanders believing shoppers should pay.
More concerning for business is the insight that 74 per cent of Australians and 66 per cent of New Zealanders support government regulation if companies fail to act voluntarily, signalling acute regulatory risk for brands that wait to be forced into action.
The results challenge a decade of purpose-driven marketing: except for the most sustainably driven consumer segment (representing 19 per cent of the population in Australia and 17 per cent in New Zealand), sustainability ranked fifth or lower when competing with price, quality and other functional product benefits.
“This research exposes a fundamental miscalculation in how Australian businesses have approached sustainability pricing,” said Matt Thomas, founder of Stake: The Reputation Company. “CMOs have been building strategies on consumer sentiment that no longer exists.”
The study, conducted by reputation firm Stake and research consultancy Palladium Insight, used MaxDiff trade-off analysis, a quantitative trade-off technique that forces real-world choices between competing product attributes.
“We’re measuring what people actually choose when forced to trade off,” commented Steph Karayannis, Palladium Insight founding partner. “And the gap between stated values and revealed preferences is enormous. People care about sustainability until cost or product quality intervenes.”
“Even consumers willing to pay more for sustainability cap their tolerance at 4-5 per cent on average—barely enough to cover the cost of green certification, let alone meaningful operational change,” explained Karayannis.
With 47 per cent of Australians and 55 per cent of New Zealanders citing affordability as their primary barrier, cost-of-living pressure is reshaping the commercial calculus around sustainability.
“The question for CMOs is no longer ‘how do we monetise purpose?'” Thomas added. “It’s how do we embed sustainability without triggering consumer backlash or regulatory intervention?'”
The research examined brand trust across 15 industry sectors, revealing which sectors are most exposed.
These were, grocery retail with 70 per cent stating sustainability is important, but only 22 per cent trust the industry to use premiums responsibly (67 per cent importance vs 14 per cent trust in NZ) mining, with a 79 per cent importance rating, 19 per cent trust—the worst gap of any sector (77 per cent importance and 11 per cent trust in NZ), energy with an 80 per cent importance, 21 per cent trust (83 per cent importance and 19 per cent trust in NZ), and technology with a 67 per cent importance, but 22 per cent trust (67 per cent importance and 16 per cent trust in NZ).
“High expectations plus low trust equals regulatory exposure,” explained Karayannis. “These sectors face the greatest pressure to redesign their approach before government forces their hand.”
Stake and Palladium developed the study after observing businesses consistently invested heavily in sustainability credentials but struggled to convert that into commercial advantage or consumer trust.
“As start-ups, we’re building our practices around the problems clients are actually facing, not historical models,” said Karayannis. “This research provides CMOs and communications directors with the empirical foundation to redesign their approach before the market punishes them for getting it wrong.”
“The era of sustainability as brand theatre is over,” concluded Thomas. “Businesses need to shift from premium pricing strategies to operational embedding of sustainability, funded through margin absorption and efficiency gains, rather than consumer surcharges.
“The businesses that understand this early will define competitive advantage in the next five years. Those that don’t will face forced compliance at much higher cost.”
