The Next Step in the Ethical Consumerism Revolution

By Nick Beevors

Ethical and environmental concerns are expected to attract more public and political attention and affect shareholder value more than any other societal issue in coming years, according to a global survey published in The McKinsey Quarterly. Although business leaders currently lack a clear plan for the future of sustainability and lack in depth knowledge of consumer needs, the issue of ethical consumerism will increasingly come to the forefront as people shop at businesses they feel akin to politically, ethically and aesthetically.

Organic Spending is Growing, Driven, in Part, by Ethical Considerations
Although the primary motive for purchasing organic products is health driven, the organic market has benefited significantly from being at the intersection of the health and ethical trends over the past few years. Consumers believe that such products are healthier as well as being less harmful to the environment, thereby creating a dual benefit.

The next step is to take this to a triple, or quadruple benefit by bringing in other ethical attributes ranging from eco-friendly packaging to fair trade ingredients. While companies that create organic goods are a large part of the ethical marketplace and are already benefiting from the change in consumer consciousness, they also need to be aware of the other ethical movements that are driving the continued development of this category.

Ethical and Environmental Concerns are Escalating on a Global Scale
Globally, people are placing increasing importance on ethics and preserving the environment and have strong feelings about the level of urgency required for action. According to an ACNielsen survey (January 2007), nine out of 10 people globally were aware of global warming and 57 percent considered it a “very serious problem.” The 2007 Pew Global Attitudes survey covering 47 nations found that the proportion of people who viewed environmental degradation as a major threat to the planet had increased significantly in 20 of the 35 countries for which comparable 2002 data is available.

Consumers are also concerned about wider ethical issues such as labor rights. For example a TNS Worldpanel survey in 2007 in the UK found that 70 percent of respondents asked about working conditions in retailers’ supply chains said they thought it “very important” that there should not be any underage employees, and that workers should not be forced to work in unhealthy conditions for extended periods of time.

Consumers are also increasingly conscious of animal welfare. Research by Eurobaro-meter in 2007 found that over a third of Europeans (34 percent) considered animal welfare to be of the highest possible importance while only 2 percent claimed it is not at all important. Research by the Cooperative Group (2008) found that 21 percent of UK consumers rated animal welfare as their top ethical concern and concluded that ethical trading, animal welfare and environmental impact were the key areas of concern for UK consumers. Another study conducted in 2005 by the Australian Animal Welfare Science Centre found that 60 percent of consumers felt that ‘welfare of animals is a major concern’, while only 16 percent disagreed.

Consumers Are Increasingly Acting on Their Ethical Beliefs
As ethical consciousness has grown, ethical purchasing behavior has followed suit. From its humble beginnings in the 1950s, fair trade has developed into a global movement. Such products meet both social and environmental standards set by the group, creating a fair deal for producers and minimal environmental impact. Another important driver of fair trade purchases is the perceived authenticity, detail, and overall sense of provenance associated with such products. Consumers increasingly want to become engaged with issues such as origin and production details. Fair trade labeling is something that gives them a degree of confidence over these issues.


In the past five years fair trade sales have experienced double digit growth across Europe and the United States. In Europe, the UK remains the largest market for fair trade products with a value of around $775 million in 2007, followed by France and Germany with a value of $299 million and $194 million respectively. By 2012, the UK market for fair trade is forecast to exceed $1.5 billion. The most important fair trade markets are the UK and United States based on current sales. However, growth in countries such as Australia, Spain, Sweden and Germany is likely to drive the market on further.

Fair trade coffee and tea have become hugely popular, especially in the UK and United States where such products are available in many supermarkets and coffee shops. In the UK fair trade beverages currently account for $380 million and are forecast to grow at a CAGR of 15.7 percent between 2007 and 2012. In the United States, the fair trade beverage market accounted for $437 million in 2007 and is forecast to grow at a similar CAGR of 14.9 percent between 2007 and 2012. In 2007, 6.5 percent of all new beverage product launches in the United States carried a fair trade label according to Datamonitor’s Productscan database.

The food category is only narrowly smaller than the beverage market in most countries, enjoying strong growth in products such as bananas and chocolate. The “other” fair trade product category is seeing the fastest growth due to a number of new fair trade products becoming available in the last few years including cotton, clothing and sports equipment. For instance, leading UK retailer Marks & Spencer launched a whole fashion range produced with fair trade cotton in 2007 as part of their “Plan A” initiative. Indeed, The Cooperative Bank’s 2007 ethical consumerism report entitled “The Ethical Consumerism Report” noted that boycotts of clothing brands perceived to be unethical will continue to grow until there are more accessible high street options for ethical clothing.

There Remains a “Disconnect” Between Attitudes and Behavior
Though positive attitudes towards ethical consumption are beginning to translate into actual behavior, there still a sizable difference between consumer’s ethical beliefs and their actual shopping habits. Datamonitor’s 2006 consumer survey found that 57 percent of United States and European consumers thought it was important to buy ethically, yet only a quarter reported actually making more ethical purchases in 2006. Despite becoming more environmentally conscious, people are still somewhat confused about the consequences and the solutions of sustainability and require more education.

Many people are confused by the myriad of terms, such as “green”, “sustainability” and “footprints,” found in the media. According to a study by Landor, in June 2006 in the United States, Americans don’t often make time to learn about the environmental impact of their purchases. The study found that 37 percent of the general population were unable to determine what makes a truly “green” brand. Meanwhile, according to The Waste & Resources Action Programme (WRAP) in the UK, despite the recent emphasis on going “green,” people are still confused about many of the issues. WRAP concluded that the industry requires better product labeling to help educate people on the full environmental benefits of new sustainability-led packaging initiatives. A recent Hartman Group study found that only half of US consumers are familiar with the term “sustainability” and most of them cannot define it.

It is clear, however, that people are willing and want to learn more about ethical issues and how they can play their own part. A recent survey commissioned by the Carbon Trust in the UK showed that 66 percent of people wanted to know the “carbon footprint” of their purchases and 67 percent said the information would influence their purchasing decisions. While these findings undoubtedly reflect an idealized response on the part of respondents, they still reinforce the notion that people are demanding more information on the environmental impact of products.

Consumers are also questioning the broader integrity of the ethical movement. International corporate scandals such as Enron, WorldCom and Global Crossing have led to a fundamental reassessment of the relationship between corporations and consumers in the 21st century. The loss of trust in corporations has resulted in a number of consumers becoming skeptical towards companies which claim to be ethical, yet provide little evidence for it or provide misinformation. According to a 2007 report by TerraChoice Environmental Marketing, an overwhelming majority of environmental marketing claims in North America are inaccurate, inappropriate or unsubstantiated. Using metrics from the Federal Trade Commission (FTC) and the Environmental Protection Agency (EPA), TerraChoice concluded that all but one of the claims, out of more than 1000 products reviewed, raised red flags. Ranging from cleaning and personal care products to televisions and printers, the report concluded that the claims in question are “…either demonstrably false or risk misleading intended audiences” (brandchannel.com, 2008). “Greenwashing,” a term used to describe this practice, only serves to increase skepticism and can leave a company open to criticism.

The Next Step…
We are reaching the point where transparent, ethical branding will become an automatic expectation in the same way that consumers expect their products to be nontoxic and safe to use. Faced with growing consumer awareness and buying behavior increasingly tending toward ethically positioned products, it is clear that industry players must make a concerted effort to make products and operations more compliant with modern consumers’ expectations. Failure to do so could result in negative implications for the industry and individual companies, tarnishing brands and ultimately hurting sales.


Manufacturers’ attempts to educate people and present clear and factual information relating to the benefits of specific behaviors and products will go some way to repairing the “disconnect” between ethical attitudes and actual behavior in the next few years. This can also go a long way to improving the integrity of the movement overall with regard to corporate behavior and enhance trust in a manner which ultimately impacts the bottom line.

Packaging and carbon footprints will be key environmental performance indicators as people begin to monitor their own contribution to climate change. Manufacturers and marketers need to demonstrate their commitment to sustainability by minimizing packaging and carbon emissions if they are to be seen as making credible steps towards sustainability and wish to repair the disconnect with consumers. Importantly, however, consumers are unwilling to sacrifice core product attributes such as efficacy, quality and convenience. The industry thus has to make sure that none of these factors are compromised during the pursuit of sustainability and ethics. Ethical credentials will increasingly be marketed in a more subtle way, secondary to messages of efficacy, quality and convenience, etc. as more companies switch to become more ethical. Ethical consumerism will increasingly come to the forefront as people look to businesses to support issues that concern them. People will search for ways to participate in related concerns or choose brands that are actively making a difference in a transparent and trustworthy manner. Buoyant growth rates among organics, fair trade and eco-friendly products/packaging will stimulate further market and product development.

Nick Beevors is a consumer market analyst at Datamonitor (www.datamonitor.com), the world’s leading provider of online data, analytic and forecasting platforms for key vertical sectors. He can be reached at nbeevors@datamonitor.com.