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Ethical Consumption

Outline

I. Introduction

A. Consumer values have shifted from the traditional inward materialistic outlook to a state of mind that is more socially and environmentally proactive.

B. Businesses cannot longer disregard the power of the ethical consumer.

II. Market failure/contradictions that ethical consumption intends to rectify

A. The business practice of profit maximisation versus social responsibility

1. It is an exploitation of any form of market imperfection

2. ethical consumption provides an avenue through which consumers can express their displeasure

B. Ethical consumers usually feel that they have the responsibility towards the society

1. Ethical consumption entails consumers purchasing products/services while taking into account numerous ethical issues

2. Through ethical consumerism, consumers usually believe that they can address the market imperfections

III. Key social and political agencies that promote ethical consumption

A. Ethical consumption is promoted by climate change organizations such as UNEP and Greenpeace; and organizations that support CSR such as the Ethical Consumer Research association and Fair Labour Association

B. These organizations have been successful in reducing market dependencies and imperatives

1. Increase in ethical spending and

2. Increase in the market share of ethical commodities

C. The primary challenge of these agencies is from the criticism of ethical consumption

1. Ethical consumers are “merely speaking and not spending”

2. The price of ethical products and services is more expensive

3. Existing unequal distribution of wealth impedes ethical consumption

D. Limitations of decommodification

1. consumers are considered political agents

2. consumers are capable of acting as advocators of ethical values and norm

IV. Conclusion: Businesses operating in the postmodern market cannot underestimate the power of ethical consumption

Ethical Consumption

Introduction

Ethics is defined as the critical assessment of human decisions and actions in order to ascertain whether they are right or wrong with regard to justice and truth (Freestone & McGoldrick 2008). In the present business world, ethics is gradually becoming significant, particular with the emergence of ethical consumption. According to De Pelsmacker, Driesen & Rayp (2005), in the post modern times, the notion of ethical consumer behaviour is gradually becoming into a vital aspect of social life since the introduction of new technologies and business practices has enabled consumers to make use of their preferences to raise their concerns on various issues such as social, labour and environmental issues. Currently, empirical studies affirm the increase in trends of “aware” and “ethical” consumers. This is characterised by instances of consumers issuing product boycott threats against commodities made using real animal fur, products made using child labour, products made using cheap labour outsourced unethically, commodities that involve the use of animals when performing trials on the product, or products of company with undesirable labour practices. In addition, consumers are issuing boycott threats to products that are not eco-friendly as a way of registering their displeasure (Kopf, Boje & Torres 2011). Consumers also are issuing boycott threats to corporations that blatantly infringe human rights and are not concerned about the environment.

Consumers are constantly evaluating firms’ records with regard to the recruitment and promotion of minorities and women. Vinai & Siriwan (2002) maintain that the postmodern consumer is exceptionally conscious about the core ethical issues, and that morals have a significant influence on the spending habits of the consumers. There is evidence indicating the increase in influence and number of ethical consumers as evident by the increase in market share of ethical services and commodities. Consumer values have shifted from the traditional inward materialistic outlook to a state of mind that is more socially and environmentally proactive. As a result, businesses cannot longer disregard the power of the ethical consumer. The current paper outlines the specific aspects of market failure or contractions that ethical consumption intent to rectify; the key social and political agencies promoting ethical consumption and their success in reducing market dependency and imperatives; the obstacles they face; and the limits of decommodification.

Market Failure/Contractions that Ethical Consumption Intends to Rectify

The market contradiction that ethical consumption intends to address relates to the business practice of profit maximisation versus social responsibility (Waheed 2012). This usually annoys consumers about companies and consumers perceive profit-maximisation a bad thing since it is an exploitation of any form of market imperfection. Usually, people have no problem with corporations that make profit through providing quality goods or services, low prices, and use ethical means and social responsibility. The move by corporations to maximise profits by exploiting the existing market imperfections played an integral role in the emergence of ethical consumerism. As a result, ethical consumption provides an avenue through which consumers can express their displeasure with reference to corporate ethical behaviour (Vinai & Siriwan 2002). Ethical consumers usually feel that they have the responsibility towards the society, thus, they express these feelings through their buying behaviour. In this regard, ethical consumption entails consumers purchasing products/services while taking into account numerous ethical issues, such as human rights, labour conditions, animal wellbeing, the environment and the social environment that corporations operate. Kopf, Boje & Torres (2011) point out that through ethical consumerism, consumers usually believe that they can address the market imperfections associated with human rights, labour conditions, animal wellbeing, the environment and the social environment. Overall, ethical consumers make use of the concept of ethical consumerism as a means to end to instil corporate ethical behaviour (Waheed 2012).

Key Social and Political Agencies that Promote Ethical Consumption

Numerous social and political agencies are involved in promoting ethical consumption. Some of the key organisations that adopt initiatives to promote ethical consumption entail organisations that support initiatives aimed at combating climate change, such as the Greenpeace, the United Nations Environmental Program (UNEP), and other numerous climate change organisations; organisations that support corporate social responsibility, such as the Ethical Consumer Research Association and Fair Labour Association.

Regarding their success in reducing market dependency and imperatives, numerous indicators signify the success of these organisations in promoting ethical consumption. The increase in ethical spending and in the market share of ethical commodities as well as services can be used to measure the effectiveness of such initiatives. For instance, in the United Kingdom, the Co-Operative Group (2013) reports that the market for ethical goods and services remains resilient regardless of the economic downturn with producers and retailers factoring sustainability into their services and products. A 2013 report by The Co-Operative Group (2013) indicates that the value of the ethical markets in the United Kingdom has increased from £ 35.5 billion to £ 47 billion during the period 2007-2012, which is an indicator that the ethical consumerism campaigns are considered to be successful.

Agencies that promote ethical consumption have a primary challenge that stems from the criticisms of ethical consumerism. The concept of ethical consumerism has been criticised on several accounts with its opponents. First, ethical consumers are “merely speaking and not spending” in the sense that they do not put what they say into action. A research by the Co-Operative Group (2013) reported that only 44 per cent of consumers are willing to pay a premium for green commodities, which affirms the existence of gaps. Essentially, the price of ethical products and services is more expensive, which makes people unwilling to purchase such products regardless of consumers being enthusiastic about ethical consumption. Ethical consumption has also been criticised on accounts that the existing unequal distribution of wealth impedes ethical consumption.

With regard to the limitations of decommodification, Fair Labour Association (2013) asserts that consumers are considered political agents. In this regard, ethical consumers appear to be proactive in considering the degree of corporations’ adoption of fair trade. It is doubtful that consumers are usually able to make distinctions between corporations making a minimum commitment to fair trade standards and those that exhibit maximum commitment to fair trade standards. As a result, consumers’ authority can be translated into consumer-based actions, which implies that consumers actively take part in global politics. To this end, consumers are capable of acting as advocators of ethical values and norms since they can determine the degree to which a company is committed to the ideals of fair trade.

Conclusion

It is evident that businesses operating in the postmodern market cannot underestimate the power of ethical consumption. The market contradiction that ethical consumption intends to address relates to the business practice of profit maximisation versus social responsibility. Some of the key organizations that adopt initiatives to promote ethical consumption entails organizations that support initiatives aimed at combating climate change, such as the Greenpeace, the United Nations Environmental Program (UNEP), and other numerous climate change organisations; organisations that support corporate social responsibility, such as the Ethical Consumer Research Association. Basing on the increase in ethical spending and the increase in the market share of ethical commodities and services, an inference can be made that initiatives to promote ethical consumption have been successful.

Reference List

  • De Pelsmacker, P, Driesen, L & Rayp, G 2005, 'Do consumers care about ethics? Willingness to pay for fair-trade coffee', The Journal of Consumer Affairs, vol. 39, no. 2, pp. 363-386.
  • Fair Labor Association 2013, Discussing the challenges and benefits of ethical consumption, viewed 5 December 2013, < http://www.fairlabor.org/blog/entry/discussing-challenges-and-benefits-ethical-consumption >.
  • Freestone, O & McGoldrick, P 2008, 'Motivations of the ethical consumer', Journal of Business Ethics, vol. 79, p. 445–467.
  • Kopf, D, Boje, D & Torres, I 2011, 'The good, the bad and the ugly: dialogical ethics and market information', Journal of Business Ethics, vol. 19, no. 7.
  • The Co-Operative Group 2013, Ethical consumer markets report 2012, London. < http://www.co-operative.coop/corporate/Investors/Publications/Ethical-Consumerism-Report/ >
  • Vinai, V & Siriwan, Y 2002, 'The impact of ethical considerations in purchase behavior: a propaedeutic to further research', ABAC Journal, vol. 22, no. 3, pp. 1-22.
  • Waheed, H 2012, 'Is ethical consumerism an impermissible form of vigilantism?', Philosophy & Public Affairs, vol. 40, no. 2, pp. 112-143.