Customer perception: Mapping sustainable impact across industries
This article is an excerpt from our research publication SJ3: The pathway to regenerative business. A Japanese version is available on Note.
Summary
- There is a discrepancy between expectations and reality when it comes to industry sustainability, and genuine efforts may remain unrecognised.
- The fashion industry is perceived as less responsible, while automotive, beverage, and international technology brands are seen to have a relatively positive impact.
- Mainstays of the Japanese economy gain recognition for social and environmental efforts, with Toyota leading the pack.
- Familiarity and frequency of usage also influence perceived sustainability, favouring global technology giants, major beverage companies, and high use retail outlets.
Sustainability issues are complex by nature, and need to be addressed by all participants in the economy and society. Japanese and global companies have a critical role to play, with 75.3% of the population holding large companies responsible for addressing social and environmental challenges, second only to government at 81.2%.
Many companies are making progress on their sustainability journey — but are they recognised by their customers and employees for their efforts, and if so, what drives these perceptions?
We asked Japanese participants what they thought about the social environmental impact of over 90 companies from seven different industries, and discovered that in many cases, it was familiarity that had the biggest influence.
Introduction
Sustainability perception score: Top 20 brands
Highlights by industry
Automotive
Along with the energy industry, Japanese people perceive the automotive industry to be most responsible for addressing social and environmental challenges, with 74.5% of participants answering ‘definitely’ or ‘somewhat’ responsible. This corresponds to their ranking in greenhouse gas emissions, both globally and in Japan.¹ ²
In recent years, there has been a noticeable shift towards hybrid and electric vehicles, encouraged by government incentives and subsidies. Major domestic players, Toyota (#1), Honda (#10) and Nissan (#15), which have been promoting more sustainable options, feature in the Top 20. Toyota’s dominance here owes much to its considerable brand power, having ranked at #1 in Interbrand’s Best Japan Brands for 15 consecutive years.
By contrast, foreign car brands all feature in the second half of the list, with Tesla highest at #57. Despite Tesla’s groundbreaking role in the development of the EV market, it seems that loyalty to one’s country provides the greatest advantage in shaping perceptions of sustainability within this category.
Food & Beverage
A high frequency category, Food & Beverage companies are perceived as among the most responsible for social and environmental challenges by people in Japan, with 69.9% of participants answering ‘definitely’ or ‘somewhat’ responsible.
The four major beverage manufacturers: Suntory (#2), Coca-Cola (#8), Kirin (#9) and Asahi (#11) score highest for perceived social and environmental actions, despite their obvious contribution to the more than 22 billion PET bottles that are shipped in Japan yearly.³
In the beverage giant’s favour, they have been innovating in terms of the content and weight of material used, and Japan does also have one of the highest recycling rates for PET bottles.⁴ ⁵ ⁶
However, it is most likely the distribution and advertising-based awareness of these brands that secures their places in the top 20. Starbucks follows at #18, again benefiting from familiarity as well as promotion of environmental and social initiatives, such as tumbler and food loss discounts and Fair Trade beans.
Fashion & Lifestyle
55.2% of participants in Japan believe that the fashion and lifestyle industry is ‘definitely’ or ‘somewhat’ responsible for social and environmental challenges.
MUJI (#3) makes it into the overall Top 3, supported by its minimal branding and anti-consumerist philosophy of “good enough”.⁷ UNIQLO (#6) and GU (#17) have both succeeded in creating a relatively positive impression, mitigating the sustainability stigma of fast fashion with technological innovation and familiarity.
Conversely, sustainability perceptions are noticeably lower for foreign fast fashion brands, such as H&M (#70) and Zara (#80).
Sports brands, both domestic and global, have middling perceptions, with outdoor brands lagging behind. Despite their sustainability initiatives, Patagonia (#64) and Snow Peak (#76) remain relatively unrecognised for their efforts to make a positive impact, perhaps reflecting their relatively niche appeal.
Technology
60.9% of people in Japan believe the technology industry is ‘definitely’ or ‘somewhat’ responsible for addressing social and environmental challenges.
The brand power of international giants such as Google / Alphabet (#4), Apple (#5), Amazon (#12) and Microsoft (#21) appears to give them a halo effect in positive perception of their social and environmental impact.
Meta / Facebook / Instagram feature at the bottom of the category at #77, suggesting that people may find it harder to make these positive associations for social media brands.
As for domestic tech companies, Panasonic (#13) and Sony (#16) are rated highest for their environmental and social impact, followed by Rakuten (#22) and Hitachi (#23). Telecom companies such as NTT (#30), au (#44) and SoftBank (#62) are less well recognised for their impact.
While this industry is dominated by foreign players, there is clearly room for Japanese companies to enhance their reputation.
Retail
56.7% believe that the retail industry is ‘definitely’ or ‘somewhat’ responsible for addressing social and environmental challenges.
AEON (#7), the diversified retail group, leads the retail category in terms of sustainability perceptions. Apart from corporate initiatives such as its Decarbonisation Vision 2050, AEON has also built credibility through customer-facing initiatives including its long-running eco-bag campaign and the 2016 introduction of French organic supermarket Bio c’ Bon.⁸
Among the top 20, three major convenience stores hold prominent positions: 7-Eleven (#14), FamilyMart (#19), and Lawson (#20). The prevalence of these stores can be attributed to their high usage frequency, with 24% of Japanese people visiting convenience stores daily and 34% making two to three visits per week.⁹
Every company, nonetheless, is diligently working towards implementing sustainable practices. Examples include upgrading to energy-efficient lighting, utilising biomass plastics for rice balls or plastic bags, and providing discounts on food nearing expiry to combat food loss. Given their ubiquity and high frequency of use, these outlets have an opportunity for impact and awareness at scale by encouraging small, regular changes to behaviour.
Health & Pharmaceutical
61.2% view the health and pharmaceutical industries as ‘definitely’ or ‘somewhat’ responsible for addressing social and environmental challenges.
Domestic giants Otsuka (#25), Taisho (#29) and Takeda (#33), are seen to have a high impact within the Health & Pharmaceutical category. Johnson & Johnson (#37) and Pfizer (#41) are also recognised here, likely influenced by awareness of their customer-facing business and COVID-19 vaccine respectively.
The absence of Health & Pharmaceutical companies in the top 20 implies that these companies could benefit from emphasising their mission and societal impact in their communications.
Financial services
Finally, 57.6% of people in Japan believe the financial services industry is ‘definitely’ or ‘somewhat’ responsible for addressing social and environmental challenges.
As a whole, financial services companies are not rated highly for their social or environmental impact, with the highest score being VISA at #38 (competitor Mastercard, which has comparable merchant acceptance, trails behind at #58¹⁰).
Financial services provided by relative newcomers Rakuten (#53) and PayPay (#54) have stronger associations with sustainable actions than traditional Japanese banks: SMBC is ranked #66, Mitsubishi UFJ #69, and Mizuho falls towards the bottom of the list at #91, likely suffering a negative halo effect from a spate of system failures.¹¹
Japan Post Bank has the highest claimed usage of all listed financial services, but weak sustainability perceptions, coming in at #68. Insurance companies all come in the bottom quadrant, highlighting a significant opportunity to differentiate in this area.
Conclusion
While people have high expectations across industries in terms of addressing social and environmental challenges, certain companies have an unfair advantage due to their scale and familiarity with customers.
There is a notable correlation, both across and within industries, between the frequency of use and the brand’s perceived environmental and social impact, regardless of their actual actions.
This is a significant challenge to overcome, with a need for clarity of purpose, substantial investments, transparent communications, and above all accountability.
This advantage is likely to disappear as people shift along the sustainability consciousness curve, becoming more informed in the impact of their purchases and lifestyle decisions.
Companies that address sustainability challenges in a meaningful way, integrating impact into their core strategies, will be best placed to ensure future growth — acting on customer expectations and moving beyond surface level perceptions.
References
- Greenhouse gas emissions by sector (2023). https://ourworldindata.org/grapher/ghg-emissions-by-sector
- Ritchie, H., Roser, M. and Rosado, P. (2020) “CO₂ and Greenhouse Gas Emissions”, Our World in Data, p. https://ourworldindata.org/co2/country/japan
- Plastic Love: Japan’s Prodigious Usage and Recycling of PET Bottles (2019). https://www.nippon.com/en/japan-data/h00401/plastic-love-japan%E2%80%99s-prodigious-usage-and-recycling-of-pet-bottles.html
- Suntory Introduces 100% Plant-Based PET Bottle Prototypes (2023). https://www.suntory.com/news/article/14037E.html
- Coca-Cola (Japan) Company (2023) ESG Report. https://www.cocacola.co.jp/content/dam/journey/jp/ja/sustainability/esg-download/pdf/ESG-report-2021_English.pdf
- Wortley, K. (2022) Plastic love: Proliferation of PET bottles in Japan complicates a sustainable future, The Japan Times. https://www.japantimes.co.jp/life/2022/03/14/environment/japan-pet-bottles/
- What is MUJI? (2023). https://www.muji.com/jp/about/?area=footer
- AEON (2023) Aeon Report. https://www.aeon.info/en/wp-content/uploads/sustainability/images/report/2022/c-p126_sustainability_all_20230213_webguard.pdf
- Japan: convenience store shopping frequency (2021). https://www.statista.com/statistics/1227491/japan-convenience-store-shopping-frequency/
- 世界で最も多くの場所で使えるMastercard | Mastercard® (2023). https://www.mastercard.co.jp/ja-jp/personal/features-benefits/acceptance.html
- Mizuho Bank suffers ATM system failure for 11th time in a year (2022). https://www.japantimes.co.jp/news/2022/02/11/business/mizuho-banking-failure/
Fabric is a Strategic Design and Sustainability consultancy helping businesses move towards more innovative, sustainable futures. Based in Tokyo, we’ve been consulting with global and local companies since 2004. We have extensive experience bringing together design thinking, sustainability, and human insight to deliver good strategy for clients.
