Ethical consumerism

Ethical consumerism (alternatively called ethical consumption, ethical purchasing, moral purchasing, ethical sourcing, ethical shopping or green consumerism) is a type of consumer activism that's based on the concept of dollar voting. It is practiced through 'positive buying' in that ethical products are favoured, or 'moral boycott', that is negative purchasing and company-based purchasing.

The term "ethical consumer", now used generically, was first popularised by the UK magazine the Ethical Consumer, first published in 1989. Ethical Consumer magazine's key innovation was to produce 'ratings tables,' inspired by the criteria-based approach of the then emerging ethical investment movement. Ethical Consumer's ratings tables awarded companies negative marks (and from 2005 overall scores) across a range of ethical and environmental categories such a 'animal rights', 'human rights' and 'pollution and toxics', empowering consumers to make ethically informed consumption choices and providing campaigners with reliable information on corporate behaviour. Such criteria-based ethical and environmental ratings have subsequently become a commonplace both in providing consumer information and in business-to-business corporate social responsibility and sustainability ratings such as those provided by Innovest, Calvert, Domini, IRRC, TIAA-CREF and KLD Analytics. Today, Bloomberg and Reuters even provide "environmental, social and governance" ratings direct to the financial data screens of hundreds of thousands of stock market traders. The not-for-profit Ethical Consumer Research Association continues to publish Ethical Consumer magazine and its associated website, which provides free access to ethical ratings tables.

Basis

Global morality

An electric wire reel reused like a center table in a Rio de Janeiro decoration fair. When consumers choose and reuse environmentally friendly material like this, they are practicing ethical consumerism.

In "The Global Markets As An Ethical System", John McMurtry argues that no purchasing decision exists that does not itself imply some moral choice, and that there is no purchasing that is not ultimately moral in nature. This mirrors older arguments, especially by the Anabaptists, e.g. Mennonites, Amish, that one must accept all personal moral and spiritual liability of all harms done at any distance in space or time to anyone by one's own choices. It is often suggested that Judeo-Christian scriptures further direct followers towards practising good stewardship of the Earth, under an obligation to a God who is believed to have created the planet for us to share with other creatures... It should be noted, however, that a very similar argument can be presented from an entirely secular humanist point of view, and there are many people who believe that it is simply better for human beings to acknowledge that the planet supports life only because of a delicate balance of many different factors.

Accordingly, sustainability is required and purchasing for vanity or status is abhorred and shunned. This theory is echoed in some modern eco-villages who adopt very similar stances, effectively blocking all goods that do not satisfy their moral criteria at the village gate, and relying on internally produced food and tools as much as possible.

Spending as morality

Some trust criteria, e.g. creditworthiness or implied warranty, are considered to be part of any purchasing or sourcing decision. However, these terms refer to broader systems of guidance that would, ideally, cause any purchasing decision to disqualify offered products or services based on non-price criteria that do not affect the functional, but rather moral, liabilities of the entire production process. Paul Hawken, a proponent of Natural Capitalism, refers to "comprehensive outcomes" of production services as opposed to the "culminative outcomes" of using the product of such services. Often, moral criteria are part of a much broader shift away from commodity markets towards a deeper service economy where all activities, from growing to harvesting to processing to delivery, are considered part of the value chain and for which consumers are "responsible".

Andrew Wilson, Director of the UK's Ashridge Centre for Business and Society, argues that "Shopping is more important than voting", and others that the disposition of money is the most basic role we play in any system of economics. Some theorists believe that it is the clearest way that we express our actual moral choices, i.e., if we say we care about something but continue to buy from parties that have a high probability of risk of harm or destruction of that thing, we don't really care about it, we are practicing a form of simple hypocrisy.

In an effort by churches to advocate moral and ethical consumerism, many have become involved in the Fair Trade Movement:

• Ten Thousand Villages is affiliated with the Mennonite Central Committee
• SERRV is partnered with Catholic Relief Services and Lutheran World Relief
• Village Markets of Africa sells Fair Trade gifts from the Lutheran Church in Kenya
• Catholic Relief Services has their own Fair Trade mission in CRS Fair Trade

Growing diverse use of the term

As large corporations have tried to position themselves as moral, principled or ethical organisations, the definition has become wider and means different things to different groups of people. For example, McDonald's started to sell salads, (a more healthy choice) and has a corporate social responsibility blog. Ethical Consumerism can be seen as a movement in marketing, which may or may not reflect actual changes in the practices of businesses. Particular areas of interest for large businesses are environmental impact and the treatment of workers at the bottom of the organisational hierarchy. This change reflects an increasing awareness of ethical issues and corporate identity amongst mainstream consumers.

Positive buying

Positive buying means favoring ethical products, be they fair trade, cruelty free, organic, recycled, re-used, or produced locally. This option is arguably the most important since it directly supports progressive companies.

Standards and labels

A number of standards and labels have been introduced to induce positive buying, such as the following:

• B corporation
• Dolphin safe fish
• Equal Exchange
• Fairtrade
• Free-range poultry
• FSC-certified sustainably sourced wood
• Grass fed beef
• Green America Seal of Approval
• Halal (religious standard)
• Kosher (religious standard)
• Local food
• Made in USA
• MSC-certified sustainably sourced seafood
• No Pork No Lard (semi-religious standard)
• Organic food
• Organic Trade Association
• Product Red
• Rainforest Alliance certified
• Recycled/recyclable
• Shade-grown coffee
• Social Accountability 8000
• Union-made
• Vegan

Along with disclosure of ingredients, some mandatory labelling of origins of clothing or food is required in all developed nations. This practice has been extended in some developing nations, e.g., where every item carries the name, phone number and fax number of the factory where it was made so a buyer can inspect its conditions. And, more importantly, to prove that the item was not made by "prison labor", use of which to produce export goods is banned in most developed nations. Such labels have also been used for boycotts, as when the merchandise mark Made in Germany was introduced in 1887.

These labels serve as tokens of some reliable validation process, some instructional capital, much as does a brand name or a nation's flag. They also signal some social capital, or trust, in some community of auditors that must follow those instructions to validate those labels.

Verus Carbon Neutral Sign

Some companies in the United States, though currently not required to reduce their carbon footprint, are doing so voluntarily by changing their energy use practices, as well as by directly funding (through carbon offsets), businesses that are already sustainable—or are developing or improving green technologies for the future.

In 2009, Atlanta's Virginia-Highland became the first Carbon-Neutral Zone in the United States. Seventeen merchants of Atlanta's Virginia-Highland allowed their carbon footprint to be audited. Now, they are partnered with the Valley Wood Carbon Sequestration Project—thousands of acres of forest in rural Georgia—through the Chicago Climate Exchange. The businesses involved in the partnership display the Verus Carbon Neutral seal in each storefront and posted a sign prominently declaring the area's Carbon Neutral status.

Over time, some theorists suggest, the amount of social capital or trust invested in nation-states (or "flags") will continue to decrease, and that placed in corporations (or "brands") will increase. This can only be offset by retrenched national sovereignty to reinforce shared national standards in tax, trade, and tariff laws, and by placing the trust in civil society in such "moral labels". These arguments have been a major focus of the anti-globalization movement, which includes many broader arguments against the amoral nature of markets as such. However, the economic school of Public Choice Theory pioneered by James M. Buchanan has offered counter-arguments based on economic demonstration to this theory of 'amoral markets' versus 'moral governments'.

Areas of concern

Ethical Consumer, the alternative consumer organisation, collects and categorises information of more than 30.000 companies according to their performance in five main areas, composing the Ethiscore:

• Environment: Environmental Reporting, Nuclear Power, Climate Change, Pollution & Toxics, Habitats & Resources
• People: Human Rights, Workers' Rights, Supply Chain Policy, Irresponsible Marketing, Armaments
• Animals: Animal Testing, Factory Farming, Other Animal Rights
• Politics: Political Activity, Boycott Call, Genetic Engineering, Anti-Social Finance, Company Ethos
• Product Sustainability: Organic, Fairtrade, Positive Environmental Features, Other Sustainability.

Boycott

Moral boycott is the practice of avoiding or boycotting products which a consumer believes to be associated with unethical behavior.

An individual can choose to boycott a product. Alternatively, the decision may be the application of criteria reflective of a morality (or, in the terminology of ethics, a theory of value) to any purchasing decisions.

Products

Reasons for products boycotts include

• Factory farming
• environmental harm
• Excessive packaging
• Strike action

Corporations

Examples include corporations that

• are perceived to espouse unethical behavior by one of its subsidiaries
• investing a portion of their profits in for example the arms industry

Such boycotts can cause great damage to reputations, not to mention loss of profits, and has, in part, led to the development of the concept of corporate social responsibility.

Consumers are encouraged by animal welfare organisations to only shop at supermarkets which have strict animal welfare policies regarding the products they sell. Compassion in World Farming produce a supermarket survey every 2 years assessing supermarket performance in the UK.

Countries

Examples:

• Made in Germany
• Consumer boycotts of South Africa over apartheid. These boycotts were mirrored in state policy over time, and contributed to the fall of the Apartheid regime.
• The ongoing boycott of Israeli products due to the treatment of ethnic Palestinians by the government of Israel.

Research

GfK NOP, the market research group, has made a five-country study of consumer beliefs about the ethics of large companies. The report was described in a Financial Times article published on February 20, 2007 entitled "Ethical consumption makes mark on branding", and was followed up by an online debate/discussion hosted by FT.com ([1]). The countries surveyed were Germany, the USA, Britain, France and Spain. More than half of respondents in Germany and the US believed there is a serious deterioration in standards of corporate practice. Almost half of those surveyed in Britain, France and Spain held similar beliefs.

About a third of respondents told researchers they would pay higher prices for ethical brands though perception of various companies ethical or unethical status varied considerably from country to country.

The most ethically perceived brands were The Co-op (in the UK), Coca Cola (in the US), Danone (in France), Adidas (in Germany) and Nestlé (in Spain). Coca Cola, Danone, Adidas and Nestlé did not appear anywhere in the UK's list of 15 most ethical companies. Nike appeared in the lists of the other four countries but not in the UK's list.

In the UK, the Co-operative Bank has produced an Ethical Consumerism Report (formerly the Ethical Purchasing Index) since 2001. The report measures the market size and growth of a basket of 'ethical' products and services, and valued UK ethical consumerism at GBP36.0 billion (USD54.4 billion) in 2008.

A number of organisations provide research-based evaluations of the behavior of companies around the world, assessing them along ethical dimensions such as human rights, the environment, animal welfare and politics. Green America is a not-for-profit membership organization founded in 1982 that provides the Green American Seal of Approval and produces a "Responsible Shopper" guide to "alert consumers and investors to problems with companies that they may shop with or invest in." The Ethical Consumer Research Association is a not-for-profit workers' co-operative founded in the UK in 1988 to "provide information on the companies behind the brand names and to promote the ethical use of consumer power" which provides an online seachable database under the name Corporate Critic or Ethiscore. The Ethiscore is a weightable numerical rating designed as a quick guide to the ethical status of companies, or brands in a particular area, and is linked to a more detailed ethical assessment. "alonovo" is an online shopping portal that provides similar weightable ethical ratings termed the "Corporate Social Behavior Index".

Tax choice

Tax choice is the concept that taxpayers should be given the option to choose which government organizations they give their taxes to. Having this option would give taxpayers the opportunity to shop for themselves in the public sector. Creating a market for public goods would allow them to practice ethical consumerism. If a taxpayer believed that a government organization was engaging in unethical behavior then he would be able to withhold his own taxes from that government organization and redirect his taxes to more ethical government organizations. For example, pacifists would have the opportunity to boycott the military by giving their taxes to the Environmental Protection Agency.

Related concepts

Conscious consuming

Conscious Consuming is a social movement that based around increased awareness of the impact of purchasing decisions on the environment and the consumers health and life in general. It is also concerned with the effects of media and advertising on consumers. Many aspects of Conscious Consuming have been practiced throughout the world but not in a cohesive form.

As a result of organizations such as Adbusters and the Center for a New American Dream, the Conscious Consuming movement began in Boston in the summer of 2003 when a group of people gathered together and planned an alternative gift fair, "Gift It Up!" In the fall of 2004, another group of Bostonians formed a group named "Conscious Consuming" and began meeting to discuss a broad range of topics, from the environmental impact of consumption to the effect of media and advertising. The memberships quickly overlapped and in 2005, the groups merged into Conscious Consuming.

Conscious consuming has its roots in voluntary simplicity, in which people re-evaluate their work-life balance in order to spend more of their time and money on the things that matter to them. As people work less, there is more time for connecting with family and friends, volunteerism, hobbies, and community service. A natural off-shoot of working less is spending less. Instead of spending time and money shopping, people engaging in voluntary simplicity buy less. They get goods using web sites like craigslist, trade with friends, make do with what they have, or hit yard sales. When they do purchase something new, the decision to buy is made consciously. A would-be shopper asks, "Is this item made in line with my values? Am I supporting the local economy? Are the people who produce this item treated and compensated fairly? Is this item built to last?" As a result of these questions, conscious consumers find themselves supporting organic agriculture, fair-trade and sweat-shop free products, and local and independent businesses.

Conscientious consumption

The consumer rationalizes unnecessary and even unwanted consumption by saying that "it's for a good cause". As a result, the consumer buys pink ribbons during National Breast Cancer Awareness Month, green products to support the environment, candy and popcorn from school children, greeting cards and gift wrap from charities, and many other, often unwanted objects. The consumer avoids considering whether the price offered is fair, whether a small cash donation would be more effective with far less work, or even whether selling the item is consistent with the ostensible mission, such as when sports teams sell candy.

Some of these efforts are based on concept brands: the consumer is buying an association with women's health or environmental concerns as much as he is buying a tangible product.

Alternative giving

Main article: Alternative giving

In response to an increasing demand for ethical consumerism surrounding gift giving occasions, charities have promoted an alternative gift market, in which charitable contributions are made on behalf of the gift "recipient". The "recipient" receives a card explaining the selected gift, while the actual gift item (frequently agricultural supplies or domestic animals) is sent to a family in a poor community.

Criticism

Critics argue that the ability to affect structural change is limited in ethical consumerism. Some cite the preponderance of niche markets as the actual effect of ethical consumerism, while others argue that information is limited regarding the outcomes of a given purchase, preventing consumers from making informed ethical choices. Critics have also argued that the uneven distribution of wealth prevents consumerism, ethical or otherwise, from fulfilling its democratic potential.

One recent study suggests that "Buying Green" serves as a license for unethical behavior. In their 2009 paper, "Do Green Products Make Us Better People?", the authors state the following:

In line with the halo associated with green consumerism, people act more altruistically after mere exposure to green than conventional products. However, people act less altruistically and are more likely to cheat and steal after purchasing green products as opposed to conventional products. Together, the studies show that consumption is more tightly connected to our social and ethical behaviors in directions and domains other than previously thought.

This may have implications for pollution licensing programs, for example. A polluter that buys a pollution license in effect has "bought green", which makes them more likely to engage in unethical behavior, leading to increased pollution. Without considering human psychology, such programs could aggravate the very problems they hope to solve. See Law of Unintended Consequences.

In a 2010 newspaper article, British environmental writer and activist George Monbiot described green consumerism as "a catastrophic mistake" on the grounds that "it strengthens extrinsic values" (those that "concern status and self-advancement"), thereby "making future campaigns less likely to succeed".

See also

• Anti-consumerism
• Carrying capacity
• Cause marketing
• Consumerism
• Ethical banking
• Fair trade
• Green brands
• Socially responsible investing

Further reading

• Speth, James Gustave (2008). The Bridge at the End of the World: Capitalism, the Environment, and Crossing from Crisis to Sustainability. Caravan Books.