UK Ethical Spending Increases Despite Retail Brands' ‘Disappointing’ Trading Performances

Oxford Street December 2006.jpeg(3BL Media/Justmeans) – One source of optimism today comes from confirmation that the U.K. economic downturn has not dented people's desire to reduce their impact on the environment or spend on ethical products, in spite of some big U.K. retail brands recently announcing ‘disappointing’ trading performances. According to the Ethical Consumer Markets Report published by Ethical Consumer magazine and Triodos Bank, ethical spending has continued to grow despite difficult market conditions. The value of ethical sales grew by eight percent in a period when inflation barely rose above 0.5 percent. The overall value of the ethical market grew from £35bn to £38bn; the sales of electric, hybrid and other tax-band A-rated cars are booming, growing by 40 percent to nearly £7bn; and spending on solar panels rose by nearly 25 percent to £716m.

However, not all sectors were as healthy. Fairtrade food and drink sales fell four per cent, the first shrinking sales reported since the scheme was introduced. Fairtrade is an initiative to protect farmers in developing countries by promising them a minimum price and a premium to invest in community projects for their retail products. The authors suggest that this drop may have been caused by a combination of factors such as falling market share at Sainsbury’s and the Co-op, Fairtrade’s biggest UK grocery retail supporters, along with the growing sales of new supermarkets on the high street, Aldi and Lidl, which have smaller Fairtrade ranges. Overall, the ethical food sector grew with a revival in organic sales, strong growth in sustainable fish sales, and a good performance in other ethical food sectors.

Interestingly, the value of money held ethically fell by two percent, largely caused by accounts being closed or moved from the Co-operative Bank. All other elements in the sector - including savings and investments with Triodos Bank - showed year on year growth. Ethical investment grew by nine percent to £13bn. Combined ethical money and ethical spending totals rose from £78bn to £80bn.

It looks as though ethical behaviour will continue to grow, as people are willing to look for more information on ethical living and seek more sustainable alternatives. The most effective way brands can support this movement is by providing visibility, affordability, quality and clear communication around ethical products and services. This report’s findings are a very positive sign for ethical consumption, demonstrating that despite continuing economic hardship, people are making conscious choices at a growing rate.

It’s no longer a question if consumers care about social impact. Consumers do care and show they do through their actions. Making conscious choices about how we use our money is one of the most powerful ways each of us can make a difference. Now the focus should be on determining how brands can effectively create shared value by marrying the appropriate social cause and the consumer segments.

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