Ethical markets defy recession
Since the beginning of the financial crisis it has been assumed that the environmental and responsible business agenda would be pushed backwards. In fact, recession and the threat of it, were used in a number of occasions to justify lack of ambition in policy interventions. However, it seems that households, many of which are finding it hard to pay the bills, are moving to the right direction.
While the British economy was balancing between zero and negative growth, business in ethical goods markets was increasing. The results are consistent in a wide range of products and services. According to figures reported by Co-operative, ethical consumption was worth £47.2bn in 2011, a significant growth from £35.5bn in 2008 and £18bn in 2001. Specifically the market for ethically sourced groceries was worth £7.5bn, a growth of about 350% since 2000. Sales of domestic consumer goods promoting efficient use of energy grew by nearly 450% at the same time while over £1bn was spent in 2011 on “green cars”.
The sustainable and ethical segment of groceries grew by 7.8% on the year to 2011. Ethically sourced fish and Fairtrade products championed this trend as sales were increased by 31.5% and 24.1% respectively. Apparently, when asked, 9 out of 10 consumers recognised the Fairtrade logo. In groceries, between 2010 and 2011 growth was strong in free-range poultry and eggs by more than 5%. However, the sales of organic products, while generally presenting a growth of 250% in the decade, followed a slight downwards trend between 2010-2011.
Co-operative’s research also found that between 2000-2012 there was an increasing trend among people who reported getting engaged in acts broadly aligned with the ethical agenda at least once annually. Some examples include people who bought certain products primarily for ethical reasons (42% up from 27%), actively campaigned on environmental and social issues (24% up from 15%), felt guilty about unethical purchase (31% up from 17%), actively sought information about a company’s reputation (33% up from 24%). However, the number of those who bought a product or service based on a company’s reputation was slightly decreased (50% down from 51%). Also, the number of people who recommended a company on the basis of its reputation was reduced from 52% to 41%.
While there is no doubt that ethical business is growing it is now more than ever the combined efforts of retailers, governmental policy and consumer behaviour driving that growth. Take for example micro-generation (that is mainly domestic electricity generation) which grew by a staggering 286.3% in the year to 2011. This probably includes the boost in rooftop photovoltaic panels, for which the government used to provide generous subsidies. Moreover, the growth in green cars is influenced by the road tax scheme that provides tax breaks for low emission cars. Surely, the availability of affordable green vehicles helped as well. Similarly with groceries, all major retailers take pride in promoting sustainable and ethical goods. In conclusion, with the contribution of all stakeholders the performance of ethical markets remains strong.
Employers from all market segments actively participate in these developments. It is safe to say that there is a growing interest in graduates who can promote the agenda of responsible and sustainable business in every aspect and operation. Here, at NBS, we are eager to equip our students with the necessary skills that responsible business requires. Within the family of our MSc courses we’re launching this year the MSc in Sustainable Business. This course is designed for students who have not studied for a UK business degree before and are looking to add a sustainable business angle to their existing background.
Have a happy and productive New Year everyone,
(this article was originally posted at the author’s personal blog “Energy and Sustainable Business“).