ANALYSIS: The importance of being ethical - A new breed of caring consumerism means companies need to consider ethical issues, writes Tania Mason

Last week was a public relations nightmare for Nike in the UK. First it was named, along with Gap, in a BBC Panorama programme exposing the use of child labour in a Cambodian sweatshop. Then, Channel 4 News screened a two-part report on the power of brands, outlining founder Phil Knight's decision to withdraw his substantial financial support of his old university because of student protests against his company's use of sweatshops.

Last week was a public relations nightmare for Nike in the UK. First it was named, along with Gap, in a BBC Panorama programme exposing the use of child labour in a Cambodian sweatshop. Then, Channel 4 News screened a two-part report on the power of brands, outlining founder Phil Knight's decision to withdraw his substantial financial support of his old university because of student protests against his company's use of sweatshops.

The company must be wondering what's gone wrong. After all, it tries to project the right image - it has a strict code of conduct and claims to carry out regular internal and external audits of its 700 factories in order to weed out child workers. It vows it had already decided to pull out of the factory named in the Panorama investigation. It has even signed up to the United Nations' Global Compact, an initiative launched last year by secretary-general Kofi Annan to encourage businesses to implement certain human rights, labour and environmental principles.

As Nike's head of corporate communications, Yvonne Iwaniuk, told Marketing last week: 'We are not being arrogant. We are learning from this.'

What Nike is learning, presumably, is that a growing percentage of shoppers take account of a company's conduct and reputation when deciding whether to buy its products. While this is good news for a few businesses, many others are finding themselves targets for and often embarrassing public criticism.

Brand backlash

The end of the last decade was a bellwether for ethical consumerism. After large-scale protests in the US and Europe against issues as broad as globalisation, GM crops, and brands' use of cheap Third World labour, the 'brand backlash' could no longer be dismissed as ineffective pockets of extremism.

In fact, a recent MORI poll commissioned by the Co-operative Bank suggests that a third of consumers are 'seriously concerned' with ethical issues.

Within the past year, over half of us have bought a product or recommended a company on the basis of its reputation.

This research, together with other market studies, is the basis of a new report by journalist Roger Cowe and The Co-operative Bank's head of corporate affairs, Simon Williams. The report, Who Are The Ethical Consumers?

says that 'caring' consumers cross most socio-political boundaries, and are not defined by party politics, social class, age or gender.

Product attributes such as quality and value for money still dominate purchasing decisions, but most of the population says other factors are important too - particularly how companies treat employees and impact on the environment.

In light of this research, the Co-operative Bank now plans to develop a permanent index to track the growth of caring consumption.

Article 13 is a marketing agency set up two years ago to help brands work within this new framework of consumption, and to assist businesses adopt a more ethical approach in their normal business processes. Founder Neela Bettridge says: 'We are aimed at businesses interested in taking forward environmental and ethical initiatives. Once a company has decided it wants to change, we help them imbue that change into their culture and communicate it both internally and externally.'

Earlier this year, Article 13 helped Barnardo's move away from its old image as an orphanage operator and reposition itself as a comprehensive care agency. The agency worked with Bartle Bogle Hegarty to develop the charity's controversial press campaign, which included images implying kids' use of drugs.

If companies need an incentive to choose an ethical path, it's this ability to attract attention by being controversial. The Co-operative Bank recognised this some time ago. Spokesman Dave Smith says the bank's ethical positioning came about because it wanted its customers to know what happens to their money while it's in the bank. But a convenient by-product is the edge it gives it in marketing terms.

Smith explains: 'Advertising from the financial services sector is taken with some cynicism by the public. Lots of smiling happy people giving great service does not often equate with reality. Our ethical stance gives us the opportunity to say some controversial things and differentiate ourselves in a very crowded marketplace.'

Bettridge says Article 13's clients are generally 'forward-thinking marketing directors who recognise that consumers are becoming savvier. Many perceive the whole ethical issue as a risky area, but organisations that use it find it gives them a competitive advantage.'

Mainstream ethics

While ethical consumption is undeniably at the thin end of the shopping wedge (many ethical products are doing well if they have captured 1% of their market), a few brands enjoy much higher levels of success. Freedom Food eggs won an estimated 16% of the UK egg market in just five years, and Cafedirect, a Fairtrade product, has around 5% of the coffee market.

Though in the past ethics has been seen as a niche issue, a few brands have sought to take it mainstream by applying it to existing product lines instead of just niche alternatives. Iceland set out its stall as GM-free; The Body Shop doesn't test on animals; and B&Q only sells wood grown in sustainably managed forests.

The Co-operative Bank's report suggests that the potential for ethical products and services in the UK could be as high as 30% of consumer markets.

It also refers to 'signs of a new move towards simplicity, a kind of 21st century anti-consumerism which could act especially against the big multinational brands'.

Can global brands like McDonald's and Nike recover from this anti-sentiment?

Mark Simmons, managing director of Anti-Corp, the viral marketing agency which pledges to donate some of its profits to charity, says: 'The anti-capitalist protests started because people decided they didn't like being treated as a mass of faceless consumers. I think people decide, for whatever reason, that they don't feel part of a brand any more and once they've decided that, they look for other reasons they don't like it.

'Nike's mistake was it outsourced absolutely everything, and ended up as nothing more than a marketing company.'

Simmons says Nike's only way back is to change its attitude. 'Companies can't just pretend to be ethical, because people will see straight through that. If your company is genuinely ethical, people will find something to believe in.'

Perhaps ethics won't become big business until big business becomes ethical.

But as the Co-operative Bank's report warns, 'it would be foolish of businesses to dismiss the potential impact of ethical consumption'.


                                             % done at         % done at

                                            least once  least four times

Recycled materials/waste                            73                59

Bought to support local shops/suppliers             61                37

Talked to friends/family about company''s

behaviour                                           58                23

Recommended company because of responsible

reputation                                          52                14

Chosen product service on company''s

responsible reputation                              51                17

Avoided product service because of company''s

behaviour                                           44                14

Bought primarily for ethical reasons                29                 9

Actively sought info on company''s

behaviour/policies                                  24                 6

Felt guilty about unethical purchase                17                 3

Actively campaigned about environmental/

social issue                                        15                 2

Source: MORI Base: 1970 UK residents aged 15-plus. Behaviour over past

12 months.


Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now


John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network
Branding guru Wally Olins dies aged 83
Duracell short film captures epic Transatlantic voyage
Ash runs Tinder experiment to show smokers are less desirable to opposite sex
British Airways teams up with Gerry Cottle Jnr for summer of rooftop film screenings
Arklu says 'girls can be superheroes too' with doll design competition
Coke enters squash market with Oasis Mighty Drops
Virgin Galactic signs up Land Rover as space flight sponsor
Motorola marketer Andrew Morley departs as Google gears up for sale to Lenovo
US Airways apologises after tweeting obscene image at a customer