Good Honest Dollar $$

I have a confession to make – my latest pair of running shoes were made by Nike.

I despise the company’s poor labor practices in emerging economies. Why then, did I purchase the shoes?

Simple - they were a comfortable fit. I live in a foreign country and face extreme difficulty in finding shoes in my size. So, when I find a suitable pair, I buy them. End of story.

Ethics - Not really a big factor in consumer purchases

My experience above highlights what may be an unfortunate reality – ethical considerations may not play a large part in many consumer purchasing decisions.

Consumer surveys suggest strong demand for ethical products, but does this translate into actual purchasing behavior?

The evidence suggests not. In England, The Co-operative bank estimates household expenditure on ‘ethical’ goods and services at just over five per cent of total household expenditure.

(Expenditure on ‘ethical products’ at 32.3 billion pounds, represents just under 5% of total annual expenditure of 600 billion pounds)

The statistics may possibly understate the effect of ethical consumerism. Nevertheless, at least two prominent researchers do not believe the relationship between ethical considerations and purchasing behavior is strong. 

Devinney points out that Fairtrade products rarely account for more than 2% of any market (download relevant article here), and Vogel believes that cases where companies have increased market share through responsible behavior represent “a very small percentage of consumer spending.”

 
Barriers to ethical consumerism

Why doesn’t purchasing behavior match consumers’ stated desire for ethical products?

There are several barriers to ethical consumerism:

 
• Other factors are more pertinent to spending decisions

A range of factors, such as price, product quality and safety, fashion, style and convenience affect purchasing decisions to a greater extent than ethical factors.

Ethical products will perform well in the market only if they are competitive in terms of price, convenience and quality – the key determinants of purchasing decisions.

  
• Lack of awareness

Despite an increase in media attention toward Corporate Social Responsibility, lack of consumer awareness continues to be a barrier to ethical consumerism. Given the volume of purchases made by consumers, it is unrealistic to expect them to possess an in-depth understanding of a broad range of ethical factors associated with the majority of purchases they make.

Accordingly, only those factors which receive significant media attention are likely to affect purchasing decisions.

Moreover, the media can potentially distort consumer perceptions, particularly in cases where reporting fails to adopt a fair and balanced viewpoint.

  
• Feeling of disempowerment

According to a Marks & Spence survey, (refer article here) thirty-eight per cent of respondents did not believe that their own individual purchasing decisions made any significant impact on business and corporate behavior.

The resulting feeling of disempowerment provides a significant barrier to ethical consumerism. Why bother with ethical products if you think your own purchases make no difference? 

 
• Complicated trade-offs

Which is more environmentally friendly from a British standpoint - buying roses from the Netherlands or ones air-freighted from Kenya?

Many Brits would choose the former. However, the carbon footprint of Dutch roses is actually six times as large because they have to be stored in greenhouses. (refer article here)

This highlights another barrier to ethical consumerism – choosing the best products is not always a clear cut issue.

In addition, choosing the most ethical manufacturer or supplier can also be complicated, particularly where companies perform well in some areas but less well in other areas.

 
In fairness to business

Large business is often criticized for not paying sufficient attention to social responsibility. But is this fair?

Surely, companies do have a responsibility to adopt only positive ethical practices. But consumers must stick to their end of the bargain as well. Good corporate citizenship must be rewarded at the checkout, particularly where price and quality are similar.

Only then, can consumers fairly criticize large business.

 
Conclusion

Although many consumers genuinely care about social, environmental and other ethical issues, the effect of these considerations on consumer purchasing behavior is limited due to a range of barriers to socially responsible purchasing.

As a result, ethical consumerism has some impact on corporate behavior, but the effect is limited.

 
Over to you

Do ethical considerations play a large part in your personal buying habits? Should consumers place more emphasis on ethical considerations at the checkout?

Please feel free to add your opinion by clicking on the ‘comments’ section at the head of this post.