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

Abstract

Prior research has suggested that consumers believe sustainable products tend to underperform compared with those made using traditional methods, a phenomenon referred to as the “sustainability liability.” Despite early conceptual justification and evidence supporting this argument, recent research has not attempted to validate this effect and assess its practical relevance. By employing a variety of scenarios adapted from prior studies, the authors quantify the magnitude of the sustainability-liability effect and show that it is relatively small and unlikely to be meaningful. This research also estimates the boundary conditions to identify scenarios in which a significant sustainability-liability effect might occur. Using archival data, the authors demonstrate that the association between sustainability and inferior product performance has decreased over time, explaining the discrepancy between their findings and prior research. These findings have important public policy implications, providing decision makers with empirical evidence that designing and promoting eco-friendly products can benefit society without detracting from the perceived performance of the company's offerings.