Sustainability means ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’ (United Nations, 1987), it comprises of three dimensions: environment, social and economic. To achieve sustainability, both consumers and businesses also have to take up the responsibility. Companies have to take up social responsibility by implementing sustainable business practices which refer to ‘ a set of activities and actions that decreases negative environmental impact by implementing practices that are environmentally and ecologically friendly and safe’ (Cha, Kim and Cichy, 2018:1). At the same time, consumers express their social and environmental concerns through ethical consumption. It is defined as ‘the conscious endeavour of the consumer to make their choices on the basis of their values or ethical principles’ (Gulyas, 2008:26). Some say that ethical consumption is a useful method to promote sustainable business practices, however some argue the opposite stance. In this essay, sustainability refers to environmental aspects, it argues that ethical consumption is effective to promote sustainable business practices to a certain degree. The following examines both effectiveness and ineffectiveness of ethical consumption. Then, criticising arguments from both sides. Finally, conclusions are drawn on the determinants of ethical consumption and alternative methods to promote business consumption effectively.
Effectiveness of ethical consumption
With the rise of ethical consumers, the influence of ethical consumption is stronger. A third of UK consumers viewed themselves as ‘ethical purchasers’ (Cowe and Williams, 2001), indicating that more consumers aware of the social and environmental issues, such as global warming and carbon emissions. Through ethical consumption, consumers can express their ethical concerns into buying behaviour (De Pelsmacker, Driesen and Rayp, 2005). Hence, consumers are no longer buying products just based on price and quality, but also weigh ethical criteria more heavily than before when making consumption decisions. According to Ethical Consumer Markets Report (2016), the ethical consumption sales grew by 8.5% and it has already been the thirteenth year of consecutive growth. Furthermore, around 46% of European consumers claimed to be willing to pay considerably more for ethical products (MORI, 2000). In the tradition of economic theory, firms seek to maximise its profit, as if they use sustainable and ethical ways to produce the products, it allows them to set a higher price. Correspondingly, since more consumers aware of ethical issues and buy ethical products, more businesses are linking sustainability to their corporate strategy and bringing more ethical products, in order to reach more customers and increase revenue.
Consuming less can promote sustainable business practices and reduce the impact on the environment. Each purchase has ethical, resource, waste and community impact implications (Young et al, 2010), consumers can decide to lower the environmental consequences by decreasing material consumption. The market offers a wide variety of products, consumers tend to buy more unnecessary goods to fulfil their desire and momentary pleasure (Fromm, 1997). Nevertheless, more consumption does not always mean higher needs-satisfaction (Jackson, 2005). For example, taking more public transportation instead of private cars and using more renewable energy. These can cut down the use of fossil fuels, which enable firms in oil and gas industries to reduce drilling and exploration. Besides, it can also alert companies that the public is more aware of sustainability. Hence, reducing consumption might encourage companies to develop sustainable business practices.
A company’s behaviour and reputation is an important consideration for the ethical buying decisions (Creyer and Ross, 1997). Also, Cowe and Williams (2001) found that over half of the respondents had bought or recommended a product based on the firms’ ethical reputation. These prove that more consumers are making purchases based on a firm’s role in society (Forte and Lamont, 1998). The impact of a company’s ethical reputation is significant, more companies tend to implement sustainable business practices, including engaging more Corporate Social Responsibility (CSR) activities to contribute to sustainable development. A firm’s CSR initiatives do not only enable them to gain better ethical image, but also have a direct influence on the attractiveness of its product (Oberseder, Schlegelmilch and Gruber, 2011), it might coincide with some consumers’ ethical beliefs to increase the purchasing intentions (Sen and Bhattacharya, 2001). In short, as a company’s behaviour and image are two of the factors influencing consumers’ ethical purchasing decisions, it tends to promote sustainable business practices within the firms in order to maintain or develop a better reputation.
Boycott is a form of ethical consumption, the influence of boycott can also promote sustainable business practices. From the above argument, it indicates the importance of a company’s socially responsible behaviour and reputation. A study by Carrigan and Attalla (2001) revealed that consumers might not necessarily reward a firm’s ethical and sustainable behaviour, but expect to punish those irresponsible firms by boycotting their products. For instance: Nestle was criticised for using palm oil and BP’s oil spill led to water contamination (Ethical Consumer, 2018). Gelb (1995) argued that the power of boycotts is increasing, more consumers refuse to buy products which are not made throughout ethical or sustainable production. This is supported by the evidence that over 50% of the UK respondents have boycotted a product for ethical issues (Ethical Consumer, 2016). There are also successful boycott campaigns, like in palm oil using incident, Nestle has taken actions to reduce environmental damage (Wolf, 2014). These stress more consumers are participating in boycott campaigns, the impact of it can be powerful that it forces companies to make changes. As a consequence, since firms do not want to have poor reputations or their products being boycotted, they are more likely to engage in more sustainable business practices.
Even though there are pieces of evidence supporting ethical consumption is effective to promote sustainable business practices, but ethical purchasing also has disadvantages which it might not always be effective in all degree. Below are some reasons showing that ethical consumption is ineffective to encourage companies carrying out sustainable business practices.
Ineffectiveness of ethical consumption
A study identified the gap between consumers’ ethical attitudes and their actual consumption behaviours (Boulstridge and Carrigan, 2000). Even though with many studies show that more consumers consider ethical and environmental concerns when they make purchasing decisions, they are struggling to translate this into purchases. The majority of them still see price, quality, convenience and brand familiarity as the most important factors affecting the buying decisions (Roberts, 1996). Evidence is illustrated by Hughner et al (2007) showed that despite consumers hold favourable attitudes towards organic food, the actual purchasing forms only 4-10% of different product ranges. Also, most of the ethical labelling products often have market shares of less than 1% (MacGillivray, 2000). These indicate that the popularity of ethical consumption is still low, not many consumers adopt the habit of ethical consumption. Hence, companies might not put efforts to care about sustainability. Because it will increase the costs to carry out the ethical and sustainable practices such as using renewable energy. Therefore, when consumers’ ethical attitude and behaviour are not consistent, it is difficult to convince firms to develop sustainable business practices.
Despite the fact that there is an increase in ethical consumption, it is still a minority. Ulrich and Sarasin (1995) concluded that the demand for change towards more ethical products is low. For instance, due to consumer requests for ethical consumption choices, there are ethical products launching into the market, like Volkswagen Golf Ecomatic diesel engine car, but it has struggled through lack of demand (Carrigan and Attalla, 2001). These kinds of incidents discourage firms to carry out sustainable business practices, as they see that those practices do not bring many advantages for the business, so that they are not willing to spend more capital for sustainable development. Besides, with the support from the above argument of attitude-behaviour gap, it strongly illustrates that consumers are still buying products from unethical firms, the influence of ethical consumption is not huge. Consequently, ethical consumption is not effective to promote sustainable business practices.
Ethical consumption might not be common in all markets. Literature highlights the growth of ethical consumption tends to focus on low value, commoditised products, such as food and cosmetics (Strong, 1996). There is little research showing ethical consumption is practised in luxury market (Davies, Lee and Ahonkhai, 2012). Consumers’ ethic decisions on luxury purchasing and commodity purchasing are different (Vigneron and Johnson, 1999). There are still many unethical and unsustainable practices carried out by luxury market, for instance: gold and diamond mining industry causes damages to the environment and contaminates drinking water (Jenkins and Yakovleva, 2006). Furthermore, a study by Davies, Lee and Ahonkhai (2012) found that the importance of ethical and sustainable condition of production is lower for luxury purchases comparing to commodity purchases. These provide evidence showing that luxury brand companies are not paying much attention to sustainability. When ethical consumption is not popular in luxury market, prestige brand firms would less likely to implement sustainable business practices.
Research emphasises the importance of information in helping consumers to make ethical consumption choices (Shaw and Clarke, 1999). Some argue that additional information might be confusing and increase consumers’ sense of uncertainty (Uusitalo and Oksanen, 2004), but it allows consumers to have more accurate information to understand the production of different firms and figure out more ethical products, in order to make purchasing decisions. With the information on the socially responsible performance of the firms, consumers can response by prioritising with ethical products and boycotting unethical one. However, although the public has information relevant to ethical consumption, those do not have enough knowledge for consumers to make ethical decisions (Bray, Johns and Kiburn, 2010). The lack of information unable consumers to distinguish responsible and irresponsible companies. This argues the lack of information means that ethical issues are not significant enough, it increases the difficulty of ethical purchases. Thus, It is harder to promote sustainable business practices to the firms and more unsustainable firms would continue with their dirty practices.
Criticism on both sides arguments
The effect of boycott campaigns fluctuates because not all campaigns are successfully promoted sustainable practices to the firms and some boycotts might only have a few consumers act onto them, which result in not affecting the irresponsible firms. Moreover, consuming less requires a large number of consumers to participate, if only a few of them doing it, it will not be effective to attract firms attention to encourage sustainable business practices. Therefore, ethical purchasing can be argued that it is not effective.
On the other hand, even though ethical consumption is still a minority, but the number of ethical consumers is rising and more consumers concern about the social and environmental issues when they make purchasing decisions. It takes time for more consumers find out the importance of social and environmental matters and match their ethical attitudes with behaviours. Hence, in the long term, the impact of ethical consumption is more significant. Additionally, further studies raise the attention to luxury brands about the environmental problems (Joy et al, 2012), they alert the luxury industries to start changing, so sustainable practices might start carrying out in the future.
To conclude, ethical consumption is effective to promote business practices to some certain extent. The increase in ethical consumption, consuming less, the influence of boycott campaigns and the impact of a company’s behaviour and reputation can help boosting the sustainable business practices. Nevertheless, ethical consumption might not be useful due to the attitude-behaviour gap, low popularity in luxury industries, lack of information and lack of demand for ethical products. The effectiveness of ethical consumption depends on various factors, including the leader of the firm, the level of consumers’ concerns towards social and environmental issues and their ethical attitude and behaviour in the future. There are alternatives to promote sustainable business practices, such as government policies and campaigns from Non-Governmental Organisation. Consequently, ethical consumption might have slightly effect on promoting sustainable business practices in the short term, but in the long term the influence of ethical purchasing grow stronger and will be more effective.