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International: Consumers Changing the Ethical Business Agenda
GfK NOP study on the state of play of ethical brands London, March 2007 – A new five country study on business ethics, conducted by GfK NOP, has found that close to half of consumers feel that business ethics have declined in the past 5 years, with Germany and the US revealing the highest levels of disenchantment (64% and 55% respectively), followed by France, UK and Spain. Additionally, 63% of consumers across 5 countries believe that ‘companies are only out for themselves these days’ and 59% feel that ‘companies lack accountability for their actions’. Taking matters into own hands The study found that consumers are increasingly taking matters into their own hands and choosing to buy brands which they believe to be ethical. 39% of the 5,000 consumers surveyed say that buying ethical products ‘makes them feel good’ – and over half (56%) think that companies should be promoting their ethical credentials more strongly. Companies’ ethical credentials have become defining brand attributes in themselves, with many customers willing to pay a premium for an 'ethical guarantee' – nearly one third (31%) claim they are willing to pay a 5-10% premium for an ethical product over a conventional one and 43% stated that they thought that ethical brands made businesses more accountable for their actions. The most ethical brands In the UK , The Co-Op, The Body Shop, M&S, Traidcraft, and Cafédirect are rated as the top five ‘most ethical brands’, which could be explained by these companies’ proactive efforts to promote their corporate social responsibility (CSR) policies and green initiatives. Chris Davis, Managing Director of Brand Strategy commented: "The spate of corporate scandals in recent years has heightened consumers' sensitivity to how companies are behaving. Companies’ business practices are also much more transparent than ever before. With ethical claims posted on company websites, an intense media spotlight, and the growth of online discussion forums, companies these days really have nowhere to hide. The more astute brands have provided a business-led response to this consumer scepticism by adopting corporate social responsibility policies and promoting their ethical credentials. As brands have stolen the clothes of ideology, companies are realising that 'business ethics' sells. Ethical consumption is perhaps the biggest movement in branding today and shows no signs of letting up." Frequently covered in the press Ethical brands are frequently covered in the press but rarely defined. The definition of an ethical brand comes into question, illustrated by a majority of UK consumers stating that they have less interest in charitable donations and the rather vague concepts of ‘sustainability’ and ‘local community involvement’. Consumers rate most highly activities which (i) ensure fair treatment of employees – not just abroad but also at home, (ii) promote the environment, and (iii) ensure good working conditions and fair prices for local producers/suppliers. The report also found that consumers use a variety of sources to learn about companies’ business practices, with independent consumer watchdogs, online consumer chat forums, and blogs being amongst the most reliable sources. The study highlights that, in the end, the consumer is the arbiter of the brand’s reputation. Despite the rapid growth of ethical consumption, confusion remains a barrier to buying ethical brands. Nearly two thirds (60%) of consumers state that they would be more open to buying ethical brands if better information were available about what companies are doing – illustrating that how a company communicates its ethical credentials is as important as the initiatives themselves.
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