Magazine article Marketing

The Importance of Being Ethical

Magazine article Marketing

The Importance of Being Ethical

Article excerpt

A new breed of caring consumerism means companies need to consider ethical issues.

Last week was a public relations nightmare for Nike in the UK. First it was named, along with Gap, in a BBC Panorama programme exposing the use of child labour in a Cambodian sweatshop. Then, Channel 4 News screened a two-part report on the power of brands, outlining founder Phil Knight's decision to withdraw his substantial financial support of his old university because of student protests against his company's use of sweatshops.

The company must be wondering what's gone wrong. After all, it tries to project the right image -- it has a strict code of conduct and claims to carry out regular internal and external audits of its 700 factories in order to weed out child workers. It vows it had already decided to pull out of the factory named in the Panorama investigation. It has even signed up to the United Nations' Global Compact, an initiative launched last year by secretary-general Kofi Annan to encourage businesses to implement certain human rights, labour and environmental principles.

As Nike's head of corporate communications, Yvonne Iwaniuk, told Marketing last week: "We are not being arrogant. We are learning from this."

What Nike is learning, presumably, is that a growing percentage of shoppers take account of a company's conduct and reputation when deciding whether to buy its products. While this is good news for a few businesses, many others are finding themselves targets for and often embarrassing public criticism.

Brand backlash

The end of the last decade was a bellwether for ethical consumerism. After large-scale protests in the US and Europe against issues as broad as globalisation, GM crops, and brands' use of cheap Third World labour, the 'brand backlash' could no longer be dismissed as ineffective pockets of extremism.

In fact, a recent MORI poll commissioned by the Co-operative Bank suggests that a third of consumers are 'seriously concerned' with ethical issues. Within the past year, over half of us have bought a product or recommended a company on the basis of its reputation.

This research, together with other market studies, is the basis of a new report by journalist Roger Cowe and The Co-operative Bank's head of corporate affairs, Simon Williams. The report, Who Are The Ethical Consumers? says that 'caring' consumers cross most sociopolitical boundaries, and are not defined by party politics, social class, age or gender.

Product attributes such as quality and value for money still dominate purchasing decisions, but most of the population says other factors are important too -- particularly how companies treat employees and impact on the environment.

In light of this research, the Co-operative Bank now plans to develop a permanent index to track the growth of caring consumption.

Article 13 is a marketing agency set up two years ago to help brands work within this new framework of consumption, and to assist businesses adopt a more ethical approach in their normal business processes. Founder Neela Bettridge says: "We are aimed at businesses interested in taking forward environmental and ethical initiatives. Once a company has decided it wants to change, we help them imbue that change into their culture and communicate it both internally and externally."

Earlier this year, Article 13 helped Barnardo's move away from its old image as an orphanage operator and reposition itself as a comprehensive care agency. …

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