As fears over climate change mount and Western consumption patterns continue to put a strain on the world's resources, environmentally-conscious citizens are attracted to companies that share their concerns about environmental degradation.
'Products no longer enough'
"Consumers are definitely looking for companies who do the right things. Products are no longer enough," said Tim Mobsby, vice-president for European marketing at Kellogg's.
Shoppers want details of who manufactured a product and what they believe in, and will choose brands that share their own values, he predicted.
Sustainable production is therefore gaining in importance as customers choose brands that reflect their lifestyles and worldview.
"It is going up the agenda in companies, primarily because consumers are getting more concerned," Mobsby said.
However, he cautioned that shoppers were only willing to make sacrifices up to a certain point and that price would continue to be the main driver of purchase decisions.
"Companies need to solve their collective problems simultaneously. You've got to keep the price down. The challenge is identifying consumers' needs and wants, and providing them in a way that's economically viable," the Kellogg's boss said.
Social commentators agreed that low prices would remain central to business success, but insisted that modern consumers demanded more than just good value from their favourite brands
Shoppers looking for honesty
"We want honesty and we won't be preached to. We don't want to buy something and discover it was a lie. We want to feel like we belong to a movement so we buy the things we believe in," said Diana Verde Nieto, a social entrepreneur, author and self-styled 'change-maker'.
"These days we're not really hungry and we don't need more clothes or another car. It's about moving from brand purpose to brand image," Nieto said.
She spoke of "a new era of branding" in which customers are faithful to the companies they believe in, almost to the point of religiosity.
The success of Apple under CEO Steve Jobs was singled out as an example of this. "Apple stores are dimly lit, like churches, and when Jobs speaks it's like listening to the messiah," said Paul Dolan, a professor at the London School of Economics
"If Jobs tells me I need an iPad, then I need an iPad!" he added.
However, the power of social media means that even the most carefully-constructed brand can come crashing down in an instant if companies are found to have been dishonest in their consumer communications.
"If you lie, then these days you'll be found out very quickly. No amount of money can stop the truth from coming out on social media," Nieto said.
Labelling schemes under fire
Labelling is one of the EU's main tools for helping consumers to make more sustainable choices. White goods sold in the EU carry energy efficiency labels, and a similar scheme was recently introduced for car tyres.
Governments have also introduced different eco-labels and energy-efficiency labels for energy-using products, giving consumers precise information on the energy consumption of the product they are purchasing.
Companies themselves are also placing a wide variety of green claims on their products.
But Mobsby believes that labelling schemes are only effective up to a certain degree, because "very few people absorb all the information available to them when stood at the supermarket fixture".
"Consumers are also driven by habit and emotion. You can't overload them with information," he said.
Academics warn that labelling schemes are only effective if the message gets through to consumers. "Education and information programmes actually widen inequalities, because they work better on educated and informed people," said Professor Dolan.
Research into the way consumers behave can help policymakers to design effective legislation. Dolan warned against rushing out to install smart meters in European homes, for example, until research had been carried out into their effect on customers.
"What we don't know yet is whether people who install smart meters are using the money saved to buy long-haul flights, leading to a net emissions gain rather than a reduction," he said.
Instead, the professor urged policymakers to launch pilot schemes in several directions rather than investing all their effort and resources into one idea before its effectiveness has been proven.
EU slow to embrace behavioural economics
Officials in Brussels, however, admit that lawmakers have been slow to embrace such thinking.
"We have a strong interest in the way that consumers behave because that's how to achieve policy goals. But there's only one behavioural economist in the European Commission, which is a bit depressing," said Jacqueline Minor, director of consumer affairs at the EU executive's health and consumers department (DG SANCO).
Minor cited offering consumers a choice of Internet browser when they switch on their new computer and banning pre-ticked boxes on airline websites as examples of how behavioural economics had influenced EU policy.
"Most policymakers probably make policy for themselves on the presumption that they are a typical consumer. But our surveys have found that many consumers can't decipher labels and are incapable of making basic calculations," the Commission director said.
She also suggested that many consumers express lifestyle preferences which they don't actually act upon in real life, like eating healthily or buying sustainable products.
The EU executive is planning to conduct a series of studies into how behavioural economics can influence its policymaking, Minor said.
