How much are we willing to pay to save the planet?

In recent years, governments, intergovernmental agencies, investors and companies have promoted various initiatives with the aim of contributing to sustainable development in environmental, social and corporate governance issues (the so-called ESG dimensions).

But what can civil society, each of us as citizens, do to help save our planet? We must all contribute to solving the challenges related to climate change, the eradication of hunger and poverty, access to education and healthcare, sustainable consumption, or the reduction of social and gender inequalities, among many others.

It's in our hands to solve these problems. Two recent studies show that people are willing to contribute to sustainable development - consumers paying extra to offset CO2 emissions when they buy airline tickets, and workers giving up wages to work for more sustainable companies.

A study by the Bundesbank and the University of Chicago assesses how much consumers are willing to pay to offset the greenhouse gas emissions generated by their consumption decisions. In particular, they surveyed consumers in Germany to find out how much they are willing to pay extra on their airfare (when they buy a ticket online) to offset the CO2 emissions from their continental flight to Palma de Mallorca or intercontinental flight to New York.

These CO2 emission compensation programs are quite common among airlines. For example, TAP uses the money paid by passengers to support reforestation projects in Brazil - the Ecomapuá project which conserves 86,000 hectares of rainforest in the Amazon, specifically on the island of Marajó, situated at the mouth of the Amazon River.

Lufthansa supports projects in Kenya and Madagascar that aim to reduce CO2 emissions by distributing efficient or solar-powered stoves to families instead of using wood fires (which also cause respiratory diseases), as well as renewable energy production projects (solar and biomass) in India, Indonesia and Brazil.

Consumers in Germany are willing to pay 35 euros per flight to offset emissions (the offset costs are 14 euros for Mallorca and 84 euros for New York). However, if they receive information about the effects and ways of mitigating CO2 emissions and climate change, their willingness to pay increases by 15 euros, i.e. to 50 euros.

An interesting aspect is that this willingness to pay is higher among women, older people with higher incomes, and especially among people with a left-wing political ideology who are willing to pay an extra 32 euros! These results also illustrate how information campaigns on how to combat climate change can induce action and change.

Other studies show that consumers are willing to pay higher prices for more sustainable goods and services (in times of inflation or crisis like the current ones, this willingness to pay more may disappear as sustainability becomes a luxury good!)

Another study by the Universities of Rotterdam, Geneva and Stockholm analyzes whether workers in Sweden are willing to give up wages to work for companies with more ESG concerns. The results indicate that workers accept 10% lower wages when they work for companies in more sustainable sectors such as health, education and recycling (rather than companies in less sustainable sectors such as fossil fuels, chemicals and air transport).

An important aspect is that the salary comparison is made between workers who are similar in terms of demographic and socio-economic characteristics, cognitive and non-cognitive skills and type of occupation. This reduction in salary is even more pronounced in the case of more qualified, younger workers(millennials and generation Z) and has been increasing over time.

The most sustainable companies are still able to attract and retain talent even with a lower salary. These results show that companies' sustainability policies can have beneficial effects in terms of salary costs and attracting talent.

These studies show that there is hope and that companies and individuals can contribute to sustainable development goals through their actions and decisions in terms of consumption and work. It is possible to "do well and do better"!

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This text is a republication of an opinion article published in the Jornal de Negócios - read the original here.