Brand value and social responsibility In December 2003 the annual report of the Co-operative Bank into ethical purchasing included the results of a survey of 1,000 consumers. This survey sought to assess the extent of ethical boycotting of various products (goods and services) and its impact on the industries involved. The results suggested that over the previous 12 months the cost in the UK of consumers switching brands for ethical environmental reasons was over £2.6bn in lost business. As many as 52% of consumers surveyed claimed to have boycotted at least one product during that period, and over 66% claimed that they would never return to a product once it had been associated with unethical environmentally damaging practices. There is also extensive evidence to support those who claim that positive associations with ethical environmental initiatives are good for business. For example, the total sales of ethical environmental products rose by 44% from £4.8bn to £6.9bn between 1999 and 2002 according to the Co-op Bank annual report. Indeed the market share of such products was estimated as rising by 30% over the same period. Food, household appliances, cosmetics and tourism were among the purchases most frequently influenced by ethical environmental concerns. Around £1.8bn was spent in the UK in 2003 on Fair-trade and organic products. A further £1.5bn was spent in the UK in 2003 on ‘green’ household products, including environment-friendly cleaning products and energy-efficient appliances, with £200m on cosmetics that were not tested on animals and £110m on ‘responsible’ tourism. A Mori poll in 2002 revealed that 92% of people believed ‘multinational companies should meet the highest human health, animal welfare and environmental standards’ wherever they are operating. Apart from commercial pressures, legal pressures on business are moving in this direction. The UK government included proposals for a Companies Bill in the 2003 Queen’s Speech, which will require businesses to produce environmental and social reviews of their actions on an annual basis.
Question
1 What incentives does this study give to businesses considering becoming more ethically environmentally ‘friendly’?
2 Can you think of any considerations which might caution a business against becoming too preoccupied with such an approach?
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