The COVID-19 pandemic has served as a backdrop for a number of major climate actions around the country, including a raft of historic clean energy mandates in California. Additionally, companies continue to enact their own policies to curb carbon emissions and improve their environmental image with consumers. Such initiatives can have strong ripple effects, with corporate pledges to reduce plastic consumption, for instance, trickling downstream to affect a range of other suppliers.
The analysts at MarketResearch.com have been closely tracking developments in government and corporate policies aimed at making industry greener. While a challenge for some markets, sustainability represents a major growth opportunity for others.
In this blog post, we examine the effects of recent climate change legislation in three industries most targeted by these policies — roofing and building products, power equipment, and packaging — and where the best opportunities lie. We also look at two other industries — outdoor living and food — where increased interest in sustainability, heightened by climate concern, is having a growing impact on product mix.
1. Solar Roofing and Energy-Efficient Building Products
Green building codes are expected to have an expanding impact on construction methods and building product mix in the US going forward. In 2020 and 2021, for instance, lawmakers in California revised the state building code to require, beginning in 2023, virtually all new buildings (and major retrofits) to have solar-electric power systems:
- Part of broader efforts to achieve net-zero emissions in the state, the law is expected to provide a big boost to the already fast-growing solar roofing market.
- Unlike traditional solar panels, solar roofing resembles traditional roofing products like asphalt shingles — which will make it a more attractive option for home and business owners looking for an aesthetically pleasing way to comply with the updated building code.
- Environment America, the organization that helped drive the California mandates, plans to launch similar campaigns in ten additional states by 2022.
Matt Zielenski, analyst with MarketResearch.com’s Freedonia Group, says government mandates will continue to be a key driver of demand for a range of building products in addition to solar roofing.
Government mandates play a large role in shaping demand for building products — think of the role ENERGY STAR requirements have played in shaping demand for windows and doors, appliances, and HVAC equipment, or how WATERSENSE technologies have shaped demand for plumbing products; low-flow toilets and showerheads are commonplace today."
Zielenski says building codes calling for higher energy efficiency will promote demand for not only insulation, but also such product as windows with multi-panel glazing, doors with insulated cores, brick and insulated vinyl siding, and cover boards with attached insulation — all of which can improve the energy performance of a structure. In places like Chicago, Denver, and New York City — where incentives exist — vegetative roofing systems will also see increased installations to meet building code energy efficiency requirements.
2. Electric Equipment and Machinery
Home of Silicon Valley, California has also been a leader in the electrification movement to cut consumption of fossil fuels:
- In 2021, the state passed bans on a range of gas-powered power tools and power lawn and garden equipment including lawn mowers that will start to take effect in 2022 — further boosting what were already strong growth prospects for electric versions of these products.
- Also in 2021, the state passed another law that will effectively ban the sale of fossil fuel-burning vehicles within its borders by 2030.
The push for electrification reaches even further. Use of electric heavy machinery is on the rise globally — with penetration of electric equipment rapidly increasing over ICE units in industries such as mining, construction, agriculture, and forestry. Gleb Mytko, industry analyst with MarketResearch.com’s Freedonia Group, says rising demand for electric heavy equipment will not only greatly reduce the environmental impact of these industries around the world, it will also create growth opportunities for equipment suppliers.
Many electric or hybrid models feature advanced emissions control technologies, automate key functions to reduce waste, and operate advanced software to ensure peak performance — all of which adds to their value compared to traditional ICE equipment. Soon enough — ten or thirty years out — ICE models will no longer be viable. Transitioning product portfolios now will be key to future success.”
3. Value-Added Sustainable Packaging Materials
Reducing use of virgin plastics is another major focus of both corporate and government sustainability efforts in the US, with 2021 ushering in a number of new pledges and initiatives. While the pandemic led a number of state and local governments to temporarily suspend some of the restrictions on single-use plastics that have proliferated across the country in recent years, the hunt continues for alternative materials that have comparable cost and performance to virgin plastic in key applications, such as packaging and foodservice single-use products, but are compostable or easier to recycle.
A number of alternatives to virgin plastic are seeing increased use as a result of these trends. Paper, recycled plastic, degradable plastics such as PLA, and even bamboo are among the materials brands are looking to as they shift away from virgin plastics. However, Teresa Hayes of MarketResearch.com’s Freedonia Group says advances in molded fibers — notably sugarcane — are poised to change the game.
Molded fiber is definitely getting a boost from customer demand for more sustainable packaging. Molded pulp, the most established product, is seeing renewed interest while newer materials such as sugarcane are seeing rapid growth especially in foodservice. These newer molded fiber products benefit from their use of waste as a raw material, allowing them to be positioned as a more sustainable alternative to not only plastic but also paper.”
In addition to its sterling environmental profile, molded sugarcane’s true promise resides in its performance relative to other sustainable materials, including better durability and leak protection than molded pulp — important considerations in the large food packaging market. The porosity of bagasse fiber is also claimed to provide enhanced moisture absorption and breathability, promoting longer shelf lives for perishable food items like fresh produce.
4. Eco-Friendly Outdoor Living Products
In addition to government actions, rising consumer concern about the environmental impact of purchasing behavior is driving major shifts in mature industries — and creating new ones.
Having no clear-cut definition, sustainability means different things to different people. In an increasing number of cases, consumers think of it as reducing waste, recycling, and reusing things. More and more, consumers also equate outdoor living with a more sustainable lifestyle. Gardening, especially organic gardening, is seen as the ultimate way to eat locally and reduce a household’s carbon footprint.
These trends combined forces with the surging hobby gardening and home renovation activity of the pandemic era to drive robust growth for a range of consumer products used outdoors in 2020 and 2021, with sustainability remaining a key consideration in purchasing decisions.
The ability for a consumer product to provide an additional benefit beyond just improving sustainability — e.g., noise reduction, better tasting produce, reduced energy costs, convenience — drives adoption even faster,” says Jenny Mapes Christ of MarketResearch.com’s Freedonia Group and Packaged Facts.
For example:
- Home gardeners tend to have greater concern about the environmental impact of their purchasing decisions than the average consumer, boosting sales of higher value organic lawn and garden consumables and live goods, which in addition to being better for the environment, can yield better tasting fruits and vegetables.
- A sharp rise in DIY lawn and garden maintenance as a result of people spending more time at home drove explosive growth for robotic and other electric power lawn and garden equipment — which, in addition to having no engine emissions, reduce noise and increase user convenience.
- More landscapers are also going electric as better-performing models become available, with the recently passed legislation in California expected to help accelerate this trend nationally.
- Consumers invested in transforming backyards into amenity-filled outdoor living spaces, with sustainability-oriented products — such as energy-efficient or solar-power outdoor lighting fixtures and hardscaping products sourced from recycled materials — especially benefiting.
5. Premium Food and Meatless Protein
Sustainability is especially important in the food industry due to growing concern about the moral and environmental impacts of food production, including deforestation, agricultural runoff, and the welfare of animals in factory farming operations. More consumers are opting for food items they perceive to be more sustainable — such as those containing organic and/or fair-trade ingredients — and major food brands are responding accordingly. For instance, as at-home grocery sales surged during the pandemic, the number of premium clean-label food options proliferated on grocery store shelves — from the produce section to the frozen aisle.
Meatless protein represents a particularly fast-growing segment of the sustainable food market, as more consumers are consciously choosing to eat less meat (if not cut it out altogether) to shrink their carbon footprint. According to a recent analysis by MarketResearch.com’s Packaged Facts, it’s not full-time vegetarians and vegans driving rapid sales growth for meatless proteins, but flexitarians — omnivores who are consciously selecting plant-forward options in lieu of meat and sometimes dairy.
“The increasing variety of meat and dairy analogues meant to taste and feel like conventional meat and dairy products are typically aimed at this demographic,” observes Jenny Mapes Christ.
While some vegans and vegetarians may be interested in plant-based alternative products, those that have chosen their diet and lifestyle for health reasons are likely to reject many of these products because they tend to be highly processed and may have ingredients with an unhealthy perception that many consumers try to avoid, such as preservatives, soy, or gluten. To those who are health-focused, foods that are more “pure” instead of “processed” are most appealing, meaning that alternatives that are engineered as a substitute for another product may be disregarded in favor of other foods. This is especially true of the clean label movement, which rejects foods with “unpronounceable” ingredients and looks for products that are unadulterated and wholesome.
About the author of this article: Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.
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- Sustainability in the Outdoor Living Industry
