The Challenge of Ethical Consumerism originally posted here on Smart Solutions for Sustainable Business
by Coral Rose
The world is shifting, companies
will take note and drive sustainable change or they will become part of (what
one of my former supervisors deemed) “the Left Behind Series.” In other words,
companies not communicating their environmental and social progress will lose
out to their competitors that do.
Imagine what would
happen if all consumers looked at all their disposable income and decided they
were going to only purchase products that supported a sustainable, healthy and
socially just world? Imagine what your business would look like if you weren't
prepared for that day.
According to a recent poll conducted by the
Global Strategy Group, 87% of consumers are more likely to buy products from a
retailer that is committed to environmentally sound practices.
With this increased
awareness, the question for many companies becomes, how to achieve the maximum economic benefit from
environmentally and socially responsible products and practices while at the
same time increasing shareholder value and increasing stakeholder trust?
Looking Up and Down-Stream
· In 1960 we
were generating 2.7 pounds of waste per person PER DAY.
· In 2006
that number is 4.6 pounds of waste per person PER DAY.
· By the
time that waste fills 1 garbage can, 70 garbage cans of manufacturing waste
were created upstream to make the stuff that is now junk.
Source:2006
EPA Facts and Story of Stuff
(Read that last bullet point again. From the source of the
product through the sale-use, disposal and or reuse it takes 70 times the
resources to produce that one can of garbage! That's a bad ROI - Return on
Investment or ROJ Return on Junk, any way you look at it.)
Jared Diamond in, "What's Your Consumption Factor"? expands
that “1 can” to its worldly impact, "The average rates at which people
consume resources like oil and metals, and produce wastes like plastics and
greenhouse gases, are about 32 times higher in North America,
Western Europe, Japan and Australia than they are in the developing world.”
When we talk to consumers about
greening up their life, usually it's in terms of what they can do after the
fact or "downstream" from their point of contact, i.e. bringing down
the size of their 1 personal can of trash. How do you think they'll react
when they know that 70 more cans were created prior to reaching them? Will they
get angry, or will they just give up?
Today, the majority of products' environmental and social
impacts are hidden from our view. Consumers don't ask because they really don't
know to do so, or perhaps they don’t want to know what's behind the curtain
- either way, with more awareness, Ethical Consumerism is on the rise. It's a movement based
on purchasing products that have been ethically produced - products that have
been made without harming the environment or exploiting individuals and
animals.
Defining exactly what is or isn't
ethical will be one of the most difficult issues of our economic times.
While many new labels have come to
market recently, they have not yet matched the impact of programs such as
ENERGY STAR. This is one label that has become a simplified clear choice, but
it only represents one aspect of the product's value - low energy.
The acceptance of the labels with the highest recognition in
today's market follows closely to what impacts the consumer interests the most,
i.e. Energy (personal cost), Recycling (cost and handling issues), USDA Organic,
(safe to eat), Fair Trade (safe for global workers). They follow the same path
as what makes a company tick – profit, lean-manufacturing, safety and happy
workers. [SMaRT covers all four areas]
Does it Pay for Business to Be
Ethical?
According to a recent study reported
by the Wall Street Journal, moving your company to embrace more environmentally
and socially responsible practices-that are third party certified would be a
good investment. Green consumers may be willing to purchase unethically
produced products, but at a steep discount.
The return on investment and profits
of companies in the 21st Century are clearly rooted in social responsibility as
noted in these results:
Reward and Punishment
What are consumers were willing to
pay for a pound of coffee based on what they were told about the company's
production standards?
Ethical standards . .
. . . . . . $9.71
Unethical standards . . . . . . $5.89
Control (no information) . . . $8.31
Source: “WSJ-Does Being Ethical Pay”
A recent survey by BBMG indicated
that 35% of all Americans have avoided a product because of a
company’s practices. “People may not pay more for green products, but they
may punish
products and companies perceived as not socially or environmentally
responsible.” Andrew Winston.
With the rise of social media
including blogging,
if you're lucky, your consumers will punish you by not buying the
product. If you're unlucky, they'll punish you by putting up a bad
review on the Internet that will follow your company and the product around for
decades.
What Now?
Sustainability is becoming less
"optional" and is already becoming a necessary part of every
business strategy.
So, how will we conduct business in
the 21st Century where the consumer-becomes a conservative-ethically minded
conscious-consumer and actually practices the art of buying and spending
less?
The competitive
advantage of the 21st Century has arrived, be aware, educate yourself and your
teams
formulate
eco-strategies to save energy, lean up waste, stop the pollutants and take care
of workers producing your products. Those are the top areas that will
resonate with consumers.
What
else can you do?
1.) Not only understand but, “own”
your product's life cycle. This is a mindset shift at
the design level. Lifecycle includes understanding and owning the environmental
and social impacts along the supply value chain.
2.) Choose products that can be
authenticated to the source. Independent Third Party Certification of
Accredited Standards e.g. SMaRT, Organic, Fair Trade, etc.
3.) Educate your purchasing
agents, consumers and investors. Focus on energy saved, waste reduced,
pollutants eliminated and workers rights issues. Be prepared to link to a
source that can prove all of the above statements and tell the whole story
across the supply chain. Note both the successes and the places you have to
improve. Talking up the good and leaving out the bad is ok when talking about
your family, but not your products. Truth and proof is the new marketing
mantra.
4.) Keep your eye on the future.
Plan now. Should consumers opt to buy less and they will, how will this affect
your business model? Will you be offering more services to offset the
lower product sales?
If you have a plan in place you will
have the 21st Century edge.
Write Coral at [email protected]
We welcome your
comments.
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