Is Sustainability a Liability? Green Marketing and Consumer Beliefs about Eco-Friendly Products

Abstract

Prior research has argued that consumers believe that sustainable products tend to under perform those made using traditional methods—a phenomenon referred to as “sustainability liability.” Despite the conceptual justification and early evidence in support of this argument, extant research has not attempted to quantify the magnitude of this effect and assess its practical relevance. Analyzing data from over 6,500 respondents and employing a variety of scenarios and product categories adapted from prior research, we assess the size of the sustainability-liability effect. We then use equivalence-testing approach to quantify the magnitude of the sustainability-liability effect and show that it is relatively small and unlikely to have meaningful practical consequences. We further show that the impact of sustainability is a function of the strength/gentleness of the attributes describing the products under consideration and quantify the magnitude of the gap between the perceived strength and gentleness that must exist in order for sustainability to have a significant effect on consumers’ product performance beliefs.

Keywords: sustainability, corporate social responsibility, compensatory inferences, halo effect, green marketing

JEL Classification: M31