Green and Ethical Consumerism, and Their Impact on Companies Corporate Social Responsibility - Essay Example

GREEN AND ETHICAL CONSUMERISM, AND THEIR IMPACT ON COMPANIES’ CORPORATE SOCIAL RESPONSIBILITY Introduction In contemporary consumer-oriented culture, the increased levels of consumption and consequent impact on environmental sustainability, have led to consumers questioning their individual purchasing choices. This radical increase in environmental awareness in the last few decades has led to the phenomenon of “green consumerism” (Shaw & Shiu, 2002: 286), an aspect of ethical consumerism which encompasses issues such as fair trade practices, conducive working conditions and compensation for labourers, etc. The corporate social responsibility of companies can be defined as “the broad concept that businesses are more than just profit-seeking entities and therefore also have an obligation to benefit society” (Werther & Chandler, 2006: 6-7). Thesis Statement: The purpose of this paper is to investigate consumer attitudes about green and ethical marketing translating into their purchasing behaviour. Further, the impact of green and ethical consumerism on companies adopting corporate social responsibility measures, will be determined. Discussion During the 1980s, ethics started affecting purchasing habits due to increase in environmental awareness on the part of consumers, development of green products and the availability of green consumer guides (Doonar, 2005). The concept of green consumerism is related to environmental sustainability in which environmental quality and the conservation of nature’s assets are of prime importance. From the wise use of resources for the sake of future generations, the concept of sustainability evolved to include a focus on nature preservation for intragenerational distribution of nature’s bounty. Sustainability is a continuing process that needs careful planning and implementation to confront the problems facing “modern agriculture, natural resource management and land use” (Gunning & Holm, 2005: 129). Sustainability takes into account the human factors of production, manufacture and use along with environmental and ecological concerns such as global warming, acid rain, deforestation, ozone depletion and other occurrences (Strong, 1997). Green and Ethical Consumerism Consumers may opt for one product over another because of political, religious, social, spiritual, environmental or other motives, and may differ in opinion from one another. One common factor among ethical consumers is that they are concerned about the “effects that a purchasing choice has not only on themselves, but also on the external world around them” (Harrison et al, 2005: 2). Choosing organic foods because of a concern that pesticide use may have a detrimental effect on wildlife and the environment where the produce is farmed, rather than with a primary concern for the consumer’s own health, is considered as ethical consumption. However, it is observed that consumers may be motivated by a combination of several factors at the same time. In the United Kingdom, environmentalists have always tried to urge consumers into buying environmentally friendly products, as well as people-friendly products which are those of fairtrade practices (Strong, 1997). These ensure that the workers and labourers involved in the production of goods are treated well, since fair price ensuring adequate compensation and good working conditions are taken into consideration. Ethical consumerism is a practical and essential practice to adopt in the contemporary consumer society. Consumers are able to ensure that their ethical purchasing decisions reflect their environmental or social values. It is predicted that the numbers of ethical consumers will continue to increase (NEF, 2007). Consumers are expressing their concern for the environment in several ways through their purchasing behaviour. This is indicated by the growing amount of research evidence which reveal that consumers choose particular products and avoid others based on their impact on the natural environment (May-Plumlee & Little, 2006; Wearing et al, 2002; Schlegelmilch, 1996; Rios et al, 2006). D’Souza et al (2006: 162) found that there are consumers who will buy green products even if their quality was comparatively poorer, but looked for sufficient environmental information on the labels, in order to make informed purchasing decisions. A section of consumers are willing to pay more for environmentally friendly products since they strongly believe in ecologically favourable purchasing behaviour (Laroche et al, 2001; Kalafatis et al, 1999). Approximately 70% of consumers are observed to take environmental issues into consideration when purchasing products or services. These green consumers are impacting the development of environmentally friendly products, which forms an aspect of green marketing. Further, green or eco-tourism products are now growing in popularity in the tourism industry (Weaver & Lawton, 2002). Green products have low content of raw materials, contain re-usable and recyclable material, have non-toxic content, are non-polluting during the process of manufacture, no unrequired animal testing, no impact on protected species, low energy consumption during production, use, disposal, minimal packaging, and have a long, useful life with upgrading and re-manufacturing capabilities (Crane, 2001). The increasing concern on the part of green consumers is being taken into consideration by manufacturers to help their businesses thrive in the competitive world of marketing, besides the requirement to operate according to governmental regulations and market forces (Baker, 2002). Research was conducted by Schlegelmilch et al (1996) to determine the measures of environmental knowledge, attitudes and behaviour; and whether they are significantly related to green purchasing decisions in general and the specific purchasing habit of five green product categories: recycled paper products, products not tested on animals, environmentally friendly detergents, organically grown fruit and vegetables and ozone-friendly aerosols. The findings confirm that consumer attitudes are the most consistent predictor of environment-oriented purchasing behaviour. Increasing Ethical Consumerism and Brand Loyalty The public’s purchasing is determined by brand loyalty and preference for companies that implement corporate social responsibility. It is observed that the U.K. public overwhelmingly supports the concept of ethical purchasing and socially responsible corporate actions. The number of people who considered it “very important” that the company shows a high degree of social responsibility increased from 28 % in 1998 to 44 % in 2002. Further, 53 % of United Kingdom consumers have considered changing their brands due to issues of corporate social responsibility. 19 % have actually purchased on the basis of a company’s ethical reputation. According to the 2005 Ethical Consumerism Report 58 % of U.K. consumers have avoided purchasing a product because of the company’s reputation. Additionally, 70 % of survey respondents were found to consider ethical issues in deciding where to shop. This increasingly forces companies to formulate policies and adopt appropriate strategies towards socially responsible green marketing (NEF, 2007). Fair Trade Consumerism “Fair traded products are those purchased under equitable trading agreements, involving cooperative rather than competitive trading principles, ensuring a fair price and fair working conditions for the producers and suppliers” (Shaw & Shiu, 2002: 286). Ensuring fair prices and a regular income for growers and producers is the underlying principle behind the concept of fair trade. The increasing awareness of Third World issues on a global scale, shift towards concern for its sustainable development, growing availability of information about fair trade principles, greater media coverage and expansion in the number of fairly traded products, are the main factors behind increasing spread of fair trade values. Fair trade consumerism gives rise to competitive advantage for socially and ethically aware organizations as it is a traditional aspect of green consumerism (Strong, 1997). Consumers’ Promotion of Sustainable Development There is increased awareness and caring among consumers, greater interest in understanding the commercial motives of manufacturers, and consumer interest encompasses several issues which go beyond environmental and ecological issues which directly affect them. Consumer purchase decision making is observed to have increasing concern towards the fair trade factor of trading relationships with the Third World as in Africa (Strong, 1997). Achieving sustainable development through societal and environmental concern is the main goal. The concept defines economic development in which environmental quality and the conservation of nature’s assets are of prime importance. Earlier, sustainability took into account only the wise use of resources for the sake of future generations. The concept evolved to include a focus on nature preservation, and an “intra-generational justification to the distribution of goods” (Gunning & Holm, 2005: 129). In recent times the range of issues related to sustainability has increased, thus resulting in a wider concept. To sustain the environment, the human factor of production, manufacture and use must be included along with environmental and ecological concerns such as global warming, acid rain, deforestation, ozone depletion and other occurrences. Consumers’ perspectives and practices contribute significantly to the global concerns about sustainability. The decision making power of every consumer impacts long-term sustainability; while ethical consumerism is facilitated by increasing availability of environmentally friendly products (Strong, 1997). Green Consumerism: Impact on Companies’ CSR With greater consumer awareness for ethical purchasing, corporate social responsibility (CSR) becomes vital for a company to survive and thrive. Ethical purchasing also helps consumers to assert their opinions politically. It is similar to casting votes for a particular government or politicians whose approach towards safeguarding the best interests of the community and the environment is in line with consumers’ social concerns. The development of fair trade, awareness of sweat shops and environmental concerns has led to a growth of ethical brands such as sweatshop-free clothing brands. Many companies have ethical alternatives, such as fair trade coffee, or environment friendly hybrid car such as the Prius sold by Toyota company, which runs on electricity and petrol. Charitable work and donations are becoming part of company policy in many organizations. Moreover, an increasing number of companies are including corporate social responsibility programmes, and signing agreements such as the Ethical Trading Initiative (ETI) such as Levi’s. Nike has revealed a list of its factories worldwide, to underscore the transparency of its operations, free from any form of exploitation of poor or illiterate people (Doonar, 2005). Further, the Organization for European Cooperation and Development (OECD) governments give high priority to corporate social responsibility in their policy agenda (Nourick, 2001). Companies becoming more ethical helps them to increase their profits and also have a sense of righteousness in their position and the part they play in business. Putting people first, with concern for ecological and environmental factors as well as sustainability for future generations helps businesses to develop due to consumers’ support. The preference for ecofriendly and socially responsible consumerism is increasing; the United Kingdom, fair trade coffee now forms 15 % to 20 % of the roast coffee market (Doonar, 2005). Research conducted by Mohr et al (2001) indicates that there appears to be a group of consumers for whom corporate social responsibility matters, and this group may be growing. Hence policies need to be formulated for optimising legal CSR marketing communications. Green marketing to aid ethical consumerism forms an important part of companies’ corporate social responsibility policies; and the extent of incorporation of related strategies differs between companies. Some of the green initiatives are: repositioning exisiting products without changing product composition (Davis, 1992), modifying existing products to be environmentally less harmful (McDaniel & Rylander, 1993), developing new companies that manufacture only green products for the sole benefit of green consumers, or companies forming a strategic alliance with an environmental group for improved green marketing activities (Mendleson & Polonsky, 1995). Companies are now undertaking radical changes in their marketing processes in order to move beyond eco-efficiency to reduce environmental harm (Charter & Tishchner, 2001). Also, for green marketing to be adopted more widely, companies need to add more emotional value to green products, to strengthen the general public’s perceptions regarding the benefits of green consumerism (Hartmann & Ibanez, 2006). This is supported by Hartmann et al (2005), who found that a combination of emotional benefits with functional attributes was the green positioning strategy that had the highest perceptual effects in the formation of brand attitude. Further, Tadajewski & Wagner-Tsukamoto (2006) suggest that a form of community based social marketing programme may be a useful educational method for increasing ethical consumerism. Recent research has revealed that U.K. consumers are internationally among the most conscientious in their purchasing habits (NEF, 2007). Thus, companies are increasingly forced to formulate policies, adopt effective strategies and implement actions that are socially responsible. These are apparent in the changes in companies’ advertising, projecting themselves as socially responsible organizations, with a holistic view of carrying out business activities and ensuring adequate compensation to their hired workers in third world countries, to avoid the exploitation of labour. For marketing to make a more substantive contribution towards environmental sustainability, the market should operate within a society where sustainability is not only adopted as a public policy goal, but is “actively pursued through policy implementation in terms of taxation, education, industrial policy, and public spending and investments” (Peattie & Crane, 2005: 369). It is crucial that the growing environmental problems are addressed urgently, to ensure sustainable progress (Straughan & Roberts, 1999). Conclusion This paper has highlighted green and ethical consumerism and its impact on corporate social responsibility of companies. An analytical review of the literature indicates that consumer awareness and concern for human and environmental sustainability issues results in their selection of green and ethical products and services. Globally, green consumerism and advocacy of green marketing is a practical and positive step that is being taken by the public today. Increasingly, consumers ensure that their ethical purchasing decisions reflect their environmental or social values. Thus, companies are compelled to formulate policies and adopt appropriate strategies towards socially responsible green and ethical marketing. Therefore, consumers’ concern for fair trade practices and environmental sustainability are seen to be the driving force behind the drive for accountability among businesses; and are gathering momentum in the form of a social movement. The ecological, environmental, human, animal, and social issues raised by unchecked industry and business activities need to be corrected by taking appropriate and adequate measures. These will help to improve the quality of life of contemporary society and to preserve natural resources for future generations. Providing for the needs of deprived and disadvantaged workers in supplier communities across the globe, is essential for achieving a progressive world. References Baker, M.J. 2002. 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