Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

Special Report

Ethics and CSR

>> Back to Ethics and CSR special report

Ethical brands face growing scepticism

Written by Adrie van der Luijt

Monday, 02 June 2008

The latest GfK NOP survey into UK consumers and their ethical consumption has investigated how the situation has changed over the past year.

As in 2007, Co-op and Body Shop are the clear leaders in terms of being considered an ethical brand by UK consumers, but Innocent and Divine have moved up into the top ten, while Tesco, Sainsbury’s and Oxfam have all slipped down the ranking.

The UK consumer has become more negative about corporate ethical behaviour in 2008 with just 18 per cent of the 3000 consumers interviewed, compared to 21 per cent in 2007, believing that business ethics have improved in this country.

Around two thirds of UK consumers (62 per cent) still agree that ‘companies are only out for themselves’ compared to 65 per cent in 2007, highlighting a real lack of progress by businesses in changing perceptions of corporate ethics over the past 12 months.

The influence of ethical brands has increased in 2008, however, with a higher proportion of UK consumers (33 per cent), compared to 23 per cent in 2007, stating that there is ‘a lot of pressure to buy ethical brands’.

This has prompted a marked change in consumer behaviour with half of UK consumers (51 per cent) now agreeing that they are ‘supporting small local brands’ compared to 39 per cent a year ago, and 71 per cent agree that they would be more likely to shop with a particular retailer which sold products sourced from local suppliers.

Consumers appear to show stronger opinions about what they expect from an ethical organisation in 2008.

Treats employees fairly – up from 74 per cent to 79 per cent agree
Treats producers/suppliers fairly by ensuring good working conditions – up from 72 per cent to 78 per cent agree
Treats producers/suppliers fairly by paying a fair price for local products – up from 71 per cent to 79 per cent agree

There is less interest in 2008 with ‘promoting good / healthy eating habits’ which is down from 63 per cent to 54 per cent agree, and moves out of the top 5, perhaps as a result of people being more concerned about the source of food rather than the actual nutritional value.

Moving into the top 5 in 2008 are ‘uses a fair pricing policy’ (76 per cent) and ‘treats customers fairly’ (75 per cent).

Charity donations remain the least important consideration for the UK consumer when evaluating what makes a brand ethical.

On a more personal level, when asked unprompted what an ‘ethical brand’ meant to them – where they did not have a list of specific criteria to rate - the UK consumer has the following priorities:

Treating Third World suppliers and workers fairly
Good environmental practices
Ethical business practices
Treating employees fairly
Fair trade

Fifty-seven per cent of those interviewed agreed that ‘imposing a maximum on bonuses for senior executives’ should be an aspect of corporate ethics in the financial industry.

In addition to sourcing local produce, the most influential ethical considerations for UK consumers when choosing a retailer are usage of reduced and recycled packaging; abolition of carrier bags is considerably less important.

UK consumers do not see it as unreasonable to expect some sort of reward for their ethical behaviour with almost three quarters saying they would be influenced by a retailer offering some sort of reward for recycling / donating to charity.

Technology

The concern of UK consumers about the number of mobile handsets in circulation is clear with 47 per cent saying they recycled their last mobile phone and 32 per cent of those with a pay monthly mobile phone even stating that they are not likely to take a new handset when their contract expires.

A considerable three quarters of consumers say that their choice of new technology product would be influenced by the levels of power a device uses when charging or on standby.

Travel

The impact of ethical considerations on the airline industry is evident with 13 per cent of consumers agreeing that they are likely to fly less this year and 12 per cent stating that ‘where possible they will choose other forms of transport instead of flying’.

Seventy-nine per cent agree that the most effective contribution the airline industry can make to reduce the impact on the environment is by using cleaner fuels; whereas carbon off-setting schemes are viewed as much less important.

Consumers were asked the following question: “Thinking of an ethical airline in broader terms, for example the way it treats its suppliers, customers and employees as well as the environment. Which, if any, of these airlines would you describe as ethical?”

Most ethical airlines (ranked by % ethical)