Ethical consumerism refers to purchasing products made ethically with minimal harm to the environment, animals, or human labor. Studies show millennials and younger generations are more likely to consider a company's social and environmental practices when deciding where to shop or work. While some consumers say they would punish irresponsible companies, others question if consumers will truly take action. There are increasing demands for transparency around companies' social impacts and growing interest in positively buying from ethical brands.
2. DEFINITION OF ETHICAL CONSUMERISM
The buying of products that are made
ethically
Define “ethically”
Ethically made products are those made with
the least harm to the environment and
animals and no exploitation of humans or
human labor
3. DEFINITION OF ETHICAL CONSUMERISM
Ethical consumerism also requires
consumers to think about their carbon
footprint when choosing which
goods/services to buy from which companies
4. DEFINITION OF ETHICAL CONSUMERISM
Four types of consuming
Positive buying
Buying ethically-made products
Negative buying
Not buying unethically-made products
Company-based purchasing
Choosing whether or not to support a company
based on the goods it produces
Fully-screened approach
Combination of the three methods above
5. 2004 CONE CORPORATE STUDY
Objective: To study American attitudes
toward corporate support of social issues.
Social issues include issues focused on human
rights, the environment, politics, etc.
Findings: “Companies must get involved with
social issues in order to protect and enhance
their reputations.”
6. HIGHLIGHTED FINDINGS
In the event I found out about 2004
company’s negative practices
Consider selling company’s stock 80%
Refuse to invest in company’s stock 80%
Refuse to work at that company 75%
Boycott company’s products and 73%
services
18-25 year olds more likely to consider company’s citizenship when
making purchases, employment, and investment decisions.
Question: Are these statistics surprising? Truly, would 75% refuse to
work at a company, given their negative practices? All talk, no action?
7. 2006 CONE MILLENNIAL CAUSE STUDY
Findings:
“Millennials [people born 1979-2001] say they
are prepared to reward or punish a company
based on its commitment to social causes.”
Socially and Environmentally ResponsibleBiz’s reap Rewards
83% will trust a company more if it is socially/environmentally responsible.
69% consider a company’s social/environmental commitment when deciding
where to shop.
89% very likely to switch from one brand to another that is about the same in
price and quality, if the other brand is associated with a cause
79% want to work for a company that cares about how it impacts and
contributes to society
8. WHAT IS DRIVING CR TODAY?
BSR/Cone 08 CR in a New World Survey
CR professionals attitudes and expectations
Reputational benefits are increasingly 84%
important
More demands on businesses to solve 72%
societal problems
Stakeholder demands are increasing 80%
CR is increasing seen as a driver of 57%
innovation
10. We - the mass of common men and women in all countries -
also compose the world's market. To sell to us is the ultimate
aim of the world's business. Hence it is ourselves as
consumers who stand in a central relation to all the economies
of the world, like the king in his kingdom. As producers we go
unto a particular factory, farm or mine, but as consumers we
are set by nature thus to give leadership, aim and purpose to
the whole economic world. That we are not kings, but serfs in
the mass, is due to our failure to think and act together as
consumers and so to realize our true position and power.
-Percy Redfern, The Consumers' Place in Society, 1920
11. Not There Yet
Company Ethiscore (Out of
20 )
Apple Inc 8
Ebay Inc (12.5)
McDonald’s 3.5
Starbucks 4
Exxon Mobile 2
Amazon.com Inc 6
12. CONSUMERS PUSH FOR
POSITIVE BUYING
•Positive buying- Favoring ethical products, be they
fair trade, cruelty free, organic, recycled, or re-used.
•Companies must rise to the challenge and clearly
define and articulate their corporate social
responsibility (CSR) values.
•Consumer interest in CSR is unlikely to diminish
over the coming years and ignoring consumers'
interest simply gives your competition time to
establish leadership.
13. SOCIAL ACCOUNTING
Seven out of 10 consumers are unsure which
companies are telling the truth
More than two-thirds do not think companies
are being genuine.
Social accounting supersedes the traditional
audit audience, including suppliers of inputs,
employees and trade unions, and
governments.
14. AUDITS BY FIRMS
Because there is a wider more influential
audience it is a good idea to have reports
audited by a third party.
By 2005 52% of the Fortune Global 250
largest firms produced corporate
responsibility reports separate from their
annual financials, of which 30% were
independently verified, usually by accounting
firms
15. NIKE’S AUDIT OF LABOR RIGHTS
A confidential Ernst &
Young audit of labor and
environmental conditions
inside a Nike factory in
Vietnam was leaked to
the Transnational
Resource & Action Center
(TRAC).
This is the first time that
an accounting firm's labor
and environmental audit
of any apparel company
has ever been made
public.
16. ERNST & YOUNG FINDINGS
•The audit notes continuing violations of labor laws on maximum
working hours, unprotected chemical exposures, poor treatment of
workers, and management control of the labor union.
•E&Y received criticism and so other firms because they feel that
information comes straight from managements. Complaints about the
audit:
•The audit is missing information regarding occupational health
and safety, environment, and general working conditions.
•The methodology employed by Ernst & Young ignores most
accepted standards of labor and environmental auditing. For
example, the audit involved no monitoring or sampling of air
quality in the factory.
The audit overlooks many of the key issues of concern in Nike plants
around Asia, including: physical and verbal abuse of workers, sexual
harassment, repercussions for attempts to organize, and contract
violations.
17. PWC AND WAL-MART
PricewaterhouseCoopers audit of a factory in
China producing goods for Wal-Mart missed
serious problems, including the use of
dangerous chemicals, management denial of
collective bargaining and violations of
overtime laws.
18. GLOBAL REPORTING INITIATIVE
The Global Reporting Initiative (GRI) produces
the world’s standard in sustainability
reporting guidelines. Sustainability reporting
is the action where an organization publicly
communicates their economic,
environmental, and social performance. The
GRI’s mission is to make sustainability
reporting by all organizations as routine and
comparable as financial reporting.
19. FIRMS JOINING FOR THE EFFORT
BPM | MacKenzie, is a new joint venture between San
Francisco-based accounting firm Burr Pilger&Mayer
LLP (BPM) and MacKenzie Communications, Inc.
The firm offers a diagnostic quot;health checkquot; for
clients, designed to assess current practices and
provide recommendations to align corporate
responsibility practices with strategic business goals.
BPM | MacKenzie addresses a real market need for
companies who are increasingly focused on initiating
and promoting corporate responsibility and
sustainability programs across their organizations.
Perhaps most surprising: I am very/somewhat likely to switch from one brand to another that is about the same in price and quality, if the other brand is associated with a cause….89%
Perhaps most surprising: I am very/somewhat likely to switch from one brand to another that is about the same in price and quality, if the other brand is associated with a cause….89%
One Hope Wine 2008 Financial information$1 million in salesGave away 150,000 in cashDonated 3,400 volunteer hours at 200 charity events
Explain the ethiscore. A method of assessing a company’s appeal to a typical ethical consumer. Supposed to be an objective measurement, though you can customize theethiscore to better reflect what you are most concerned about. The score is made up by combining:A Company Rating out of 15 on corporate social responsibility issues.A Product Rating out of 5 on product sustainability issues. (fair trade, organic produce, etc) Subtract numbers ascribed to criticism categories from a baseline of 14. 15th point is for “Company Sustainability” (organic produce only).
