Ethical Corporation briefing on ethical branding


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Ethical Corporation briefing on ethical branding

  1. 1. Briefing: ethical branding12 Branding rethink14 Buying into sustainability17 Consumer clout HOWIES
  2. 2. 12 Briefing: ethical branding Ethical Corporation • April 2010 Overview Look beyond the label By Oliver Balch The classic image of an ethical brand is that of a small, mission-minded, upstart enterprise. As ethical awareness increases and responsible business practices spread, that image is in need of a rethink lbert Einstein once said: “Relativity good are an eco-brand’s employment The need to reconsider and possibly A applies to physics, not ethics.” The phrase appeals for its simplicity. Ethics deals policies? Or how transparent are an organic producer’s lobbying efforts? reinvent is constant for ethical brands. Take the Co-operative Bank. For much of the in absolutes and certainty, not relativity. 20th century, it clung to values dating back Theft is bad, charity is good, and so forth. Business is business to the Victorian era. A hugely successful Transfer Einstein’s concept to branding Behind every brand lies a business, widgets revamp in the mid-1990s saw customers and the same unequivocal notions can be and all. A truly ethical brand must ensure its flocking back in droves. found. Ethical brands, by definition, are good. back office is whiter than white, not just the “Ethical brands tend to grow slowly .The But are they? Well, maybe. In marketing objects in its shop window. world in which they operate changes. And terms, at least, the answer is a muted “yes”. In truth, ethical brands rely heavily on the issues that set pioneering brands apart Most consumers perceive niche ethical relativity. They depend on being more often no longer look so cutting-edge 20 years brands to be cleaner, greener or generally ethical than other brands. on,” says Mark Mansley, investment director more wholesome. And times are changing. Companies at Rathbone Greenbank, a subsidiary of In objective terms, however, the case is such as Marks & Spencer, with its Plan A investment management firm Rathbones. sometimes harder to make. Most ethical brands strategy, are moving aggressively into the If ethical brands cannot be defined exclu- tend to be narrowly focused. Their founders ethical space. Even historical villains are sively by their ethics, then what else can they identify a problem, and create a brand to getting in on the ethics game. Few compa- be known for? Their size. Most ethical brands solve it. That’s what ethical brands do. nies have been more cursed by campaigners are small. And, as we know, small can be beau- So organic food company Duchy Origi- than US monolith Wal-Mart. Yet the world’s tiful. nals champions non-chemical agriculture. largest retailer is demanding exacting Being small is not just about aesthetics. It Confection firm Divine Chocolates makes ethical standards of all its suppliers. allows brands to operate in, and profit from, lives better for Ghanaian cocoa farmers. The ethics of traditional ethical brands niche markets. In addition, smallness often Cleaning products company Ecover keeps can be relative too. Value positions change translates to fleetness of foot. Communica- chemical detergents out of the water system. over time. Low-energy light bulbs might tions provides the archetypal case in point. No one questions their strength on their have been a leading campaign issue a few Ethical brands are renowned for their ethical issue or issues of choice. But how years ago; now they are standard. wacky, edgy and personal messaging. How
  3. 3. Ethical Corporation • April 2010 Briefing: ethical branding 13 Ethical acquisitions and investments: what the founders say Innocent Drinks: sells 10-20% stake to Coca-Cola, 2009 The Body Shop: acquired by L’Oréal in 2006 “Basically, we’re dead excited about the investment. The funds raised allow us to do more of “I do not believe that L’Oréal will compromise the ethics of The Body Shop. That is what Innocent is here to do – get natural, healthy stuff out to as many people as possible.” after all what they are paying for and they are too intelligent to mess with our DNA.” Co-founders Richard Reed, Jon Wright and Adam Balon Co-founder Anita Roddick Abel & Cole (organic delivery service): sells share to private equity firm Phoenix, 2007 Green & Black’s (chocolate): Cadbury buys majority stake in 2005 “Up until this, the business was completely private and that’s not a great thing for a “We’re bumping up against the available supply of cocoa beans, and we need their business of this size because essentially every piece of risk is being taken by myself.” help to expand … If we really want to make a difference to the level of operation and Co-founder Keith Abel really support the farmers there, we need Cadbury.” Co-founder Craig Sams Tom’s of Maine (health products): bought by Colgate-Palmolive in 2006 Ben & Jerry’s: bought by Unilever in 2000 “We have a commitment from Colgate that our formulas will not be tampered with ... “While we and others certainly would have pursued our mission as an independent We chose Colgate as our partner because they have the global expertise to help take enterprise, we hope that, as part of Unilever, Ben & Jerry’s will continue to expand Tom’s of Maine to the next level.” Co-founder Tom Chappell its role in society.” Co-founders Jerry Greenfield and Ben Cohen Rachel’s Organic: bought by Horizon Organics in 1999 Seeds of Change (organic seed and food company): bought by Mars in 1997 “We have ensured that the demand for organic food is still out there and in that time “Mars is interested in providing what consumers want. If that’s organic food, then we have persuaded other farmers to produce organic food.” Founder Rachel Rowlands Mars wants to be able to satisfy that demand.” Co-founder Howard Shapiromany corporations can sign off an earnings HOWIESstatement “Ben” and “Jerry”? Yet as the ambitions of the ethical marketgrow, so must brands’ size. An ethical enter-prise’s influence is directly proportional toits market share, argues environmentalactivist and business adviser Julia Hailes. “In order to have the benefit of anenvironmental product, the more non-envi-ronmental products it replaces the better,”she says. The same is true for ethicalproducts in general. The deep pockets and wide sales reach ofa corporation can appear enticing to nicheplayers looking to expand. And the entre-preneurial skills that it takes to create abrand from scratch are not necessarily thesame as those needed to boost growth. Little surprise that many niche compa-nies are selling out and sizing up. Hip howies: hip, ethical and now on the high streetethical clothing brand howies, for example, make a difference to the level of operation consumers begin to “look behind the label” – and really support the farmers there,” he to steal Marks & Spencer’s former tag-line – The deep pockets and wide said, “we need Cadbury.” the integrity of ethical claims will increasingly sales reach of a corporation As ethics become more mainstream – be called into question. can appear enticing to niche and arguably as the mainstream becomes The Brazilian philosopher Vademar more ethical – the lines between ethical Setzer got it right when he said ethics were players looking to expand brands and the rest are blurring. “not definable” but instead “involved our Perhaps that’s no bad thing? There is no thinking, but also our feeling”.recently signed a tie-up with US retail giant objective, all-encompassing definition for Innocent Drinks is widely heralded as anTimberland. The catalogue-only business an ethical brand; there never has been. Ulti- ethical brand. In reality, it makes no explicitnow has a presence on the high street. mately, being ethical is a marketing claim as such. Generous, natural, fresh, Craig Sams, founder of Fairtrade confec- decision. Brands say they are ethical: finito. sustainable: these are among the words ittioner Green & Black’s, didn’t mince his The onus then falls on the consumers to uses to define itself. “Ethical” is a prefixwords when a majority stake in the believe the brand or not. Media interrogation, added by the consumer, not the was sold to global confectionery third-party certification and the brand’s own Surely that’s the ultimate test of any ethicalcompany Cadbury. “If we really want to employees will help inform that decision. As brand. I
  4. 4. 14 Briefing: ethical branding Ethical Corporation • April 2010 tarnished through acquisitions holds up. The Body Shop, for example, slipped from a rating of 11 out of 20 to 4.5 after it was bought by cosmetics giant L’Oréal in 2006. Likewise, US healthcare company Tom’s of Maine saw its rating crash from 16 to 9 after it was subsumed into Colgate- Palmolive four years ago. A note of caution is required. The Ethis- core ranking is skewed towards the parent corporation’s practices and products. Only two or three points are attributed to the performance of the ethical subsidiary. Without any change in performance, a niche player would therefore see its score plummet simply by being considered as part of a larger, less ethical company. Dozens of ethical brands have lost their Buying ethical brands independence through mergers and acquisi- tions in recent years. Yet the pool remains too Can big be as beautiful? small to draw any general conclusions, says Craig Smith, a marketing professor at Insead business school. What’s required instead is a By Oliver Balch “case by case” assessment, he says. Several well-known niche ethical brands have become part of larger companies in recent years but such acquisitions need not mean a dilution of ethics. In fact, Investment motives the result is sometimes the opposite Naturally, much depends on the motives of the investing company. If the reasons are nnocent Drinks may enjoy an angelic And such deals are not new. When cynical, then the probability of an ethical I image, but its owners are anything but naïve. When the UK smoothie maker decided Rachel Rowlands sold her grandmother’s dairy company to a US organic milk giant 10 brand seeing its image tarnished is naturally that much higher. A company looking to rid to sell a 10-20% stake to Coca-Cola last year, years ago, she sparked uproar among itself of an upstart ethical competitor or they expected some flak. They weren’t ethical consumers. “buy” its ethics are two such examples. mistaken. Consumers and media alike decried Rachel’s Organic, the UK’s first organic Incidences of either are hard to find, the £30m tie-in. Both brands are icons – but dairy company, has consistently refuted any however. The reason is simple: marketers from different sides of the global ethisphere. suggestion that its ethics have been know that such tactics are likely to be inef- The move could have spelt disaster. But compromised. Its farms in the UK continue fectual, and they have a high potential to it didn’t, for two reasons. First, benefit of the to meet Soil Association standards. backfire. doubt. Innocent has built up enormous The picture at the parent company is less “A small ethical brand is unlikely to influ- brand equity and consumer confidence rosy. In 2003, Rachel’s Organic original ence the reputation of a large corporation, since its wholesome, healthy smoothies hit purchaser was itself acquired. The UK unless it is in a negative way,” says Simon the shelves a little over a decade ago. Simply brand now sits within the portfolio of Texas- Webley, research director at the Institute of put, its customers trust the company. based conglomerate Deans, described by Business Ethics. Second, no-nonsense communications. some hostile commentators as the Microsoft Chris Deri, executive vice-president at In their inimitable first-name style, co- of milk. public relations company Edelman, agrees. founders Adam (Balon), Jon (Wright) and The US Organic Consumers’ Association A company will be disappointed if it buys a Richard (Reed) directly addressed their claims Deans sells milk from cows that are niche business solely for its external brand customers’ concerns. Via a panoply of blogs, confined to indoor feedlots and fed on equity, he says. In fact, such equity is the videos, Facebook entries, Tweets and tradi- genetically engineered growth hormones. part “at greatest risk of evaporating” once tional media, they preached reassurance. Demands for a consumer boycott have an ethical brand walks inside the parent Coca-Cola’s cash would only be used to get followed. company. more “natural, healthy stuff ” out there. Not It is tempting to conclude that any “Serving as a catalyst and a change agent a nickel for shareholders. “That desert dalliance with big business inevitably inside the company’s four walls, that’s the island will just have to wait.” results in a dilution of an ethical company’s real value of these ethical brands,” Deri says. values. The evidence is, however, far from This last argument certainly reflects official Selling out and buying in watertight. rhetoric. Ethical brands are typically created The charge of selling out is all too common. Ethiscore, a rating system designed by by charismatic pioneers with a driving sense Every ethical brand that has ceded part of its Ethical Consumer magazine, provides one of mission. The prospect of ratcheting up that business to an external investor, be it a partial widely cited barometer of ethical perform- mission by integrating it into a bigger or majority share, has faced such accusations. ance. On the face of it, the image of brands company makes for an attractive proposition.
  5. 5. Ethical Corporation •April 2010 Briefing: ethical branding 15 Again, concrete proof of such Trojan Trade Association. More recently, it pledgedhorse strategies paying off is “pretty $10m towards the mapping of the cacao treelimited” according to Michael Tuffrey, genome.founding director of London-based consul- Not exactly a Damascene conversion, buttancy firm Corporate Citizenship. gradual change all the same. Why so? From an internal management A good measure of an investor’s inten-perspective, corporations tend to view tions is the degree of managementethical acquisitions as occupying a “separate autonomy it gives to its newly acquiredspace”. “The thinking is ‘that ethics is all ethical brand. Naturally, the more freedom,right for them. They are different. We are the more likelihood the subsidiary’s valuesmainstream’,” Tuffrey explains. will remain intact. That said, anecdotal evidence is not There is a compelling case for investorsentirely absent. Unilever, for example, to leave ethical acquisitions at arm’s length,issued its first ever comprehensive annual according to Giles Gibbons, chief executivesocial and environmental report immedi- of the UK consultancy Good Business. Hisately after acquiring ice-cream brand Ben & argument rests on hard-nosed businessJerry’s. Coincidence or coercion, who’s to sense and financial decision-making.say? The recent decision by Cadbury to shift Maintaining ethicsits flagship Dairy Milk brand to 100% Fair- “Bigger companies purchase these brandstrade cocoa is another convincing example. because of their ethical credentials. TheyThe move follows the UK confectioner ’s therefore recognise the need to ringfence Burying consumer plastic bag useacquisition of ethical chocolate manufac- those methods to maintain the reason whyturer Green & Black’s five years ago. they purchased them in the first place,” influence of such brands. “It does almost look like Green & Black’s Gibbons says. “The notion of ‘institutionalisinghas won its argument about taking its Cadbury’s acquisition of Green & Black’s mission’ is how the campaign communitycultural mission and moving it up within provides a paradigm of such logic. has got its head around the issue,” says “Cadbury was clear that it would be fatal if Ethical Consumer’s Rob Harrison. in any way Green & Black’s independence The same argument stands for corpora- Ethical brands are typically from Cadbury was diluted,” a consultant tions too. Over the past decade, leading created by charismatic pioneers close to the deal tells Ethical Corporation. players in the corporate sector have taken In practice, Green & Black’s founder huge strides to institutionalise ethics within with a driving sense of mission Craig Sams remains president of the their brand portfolios. company, while the niche confectioner ’s Take Unilever. Over recent years, itsthe parent company,” says Rob Harrison, original senior management all retain board Dove cosmetics range has become synony-editor of Ethical Consumer. positions. Cadbury has appointed the last mous with female empowerment. Likewise, The observation brooks no objection two managing directors for the premium its Lifebuoy soap brand enjoys a strongfrom Kellie Fernandes, director of global ethical brand, but all major decisions remain reputation for its contribution to basicmarketing at Green & Black’s. Sharper subject to board approval. Likewise, none of health in India and other south-east Asiancommunications and supply chain efficien- the brand’s sourcing agents or suppliers markets.cies are two more areas she would add to have been altered. These “marquee” ethical sub-brandsthe list (see box overleaf). The argument in favour of soft-touch operate as a “sort of halo” to other parts of a Mars offers another example. Thirteen management generally stands up, as long as corporation’s business, argues Edelman’syears ago, the US confectionary giant the ethical brand delivers on its sales Deri.acquired Seeds of Change, a small organic targets. Perhaps inevitably, a degree ofseed and food producer. Last year, Mars “mission creep” from the parent company Corporate quotesannounced it would move its entire cocoa can occur over time, Gibbons admits.bean supply onto a sustainable footing. By “It is probably fair to say that the Body “We’ve established ourselves to consumers as people,2020, global brands such as Galaxy, Mars, Shop has lost some of its campaigning soul as rather than a brand or a corporate entity. And bySnickers, Twix and M&Ms will all meet L’Oréal professionals have increasingly gone establishing ourselves as people, consumers haveexacting social and environmental stan- in to manage the organisation,” he says. come to understand what kind of company we aredards, the company says. Not that management crossover is neces- and what’s important to us.” Seeds of Change founder Howard sarily a negative occurrence. If best practice Jessica Sansom, head of sustainability,Shapiro has said the original sale was moti- is to be shared between the parent and Innocent Drinksvated by Mars’s belief in the commercial subsidiary, then a degree of overlappotential of the ethical market. That vision arguably has its benefits. “Cadbury’s recent shift to Fairtrade is a good exampletook more than a decade to realise itself, but Despite the initial media hullabaloo, not of how we’ve learned from Green & Black’s, but [howMars has not been stationary in the interim. all campaigners are against corporate tie-ins we’ve] done it in a mainstream way.”Three years ago, it received a lifetime with ethical brands. Many concede it is the Alex Cole, global corporate affairs director, Cadburyachievement award from the US Organic best means for increasing the sphere of
  6. 6. 16 Briefing: ethical branding Ethical Corporation • April 2010 INNOCENT A two-way street: the case of Cadbury and Green & Black’s Cadbury’s acquisition of a majority share in Green & Black’s in 2005 was met with significant public scepti- cism. But, oddly enough, not by Green & Black’s. For founder Craig Sams, the move was “no sell out”. Given Cadbury’s Quaker roots, Sams felt a certain synergy with the larger company’s ethical values. As important, he felt an opportunity existed to spread Green & Black’s way of working into the parent organisation. The experience of the past five years has borne both points out, according to Kellie Fernandes, director of global marketing for the premium chocolate brand. She cites communications as a case in point. Marketing budgets have never been big at Green & Black’s, especially when the brand was established 20 years ago. The company’s way around the problem was to “make a lot of noise”. Above all, it orientated its communications around the “people behind the brand”. “Big budgets don’t always mean the best forms of communication … With the mainstream brands that Cadbury has, you don’t know the people behind the brands,” Fernandes says. Under Green & Black’s influ- ence, that is beginning to change. Supply chain management is the final area where the hand of Green & Black’s can be seen. The brand’s head of supply chain Neil Lacroix sits on the board of Cadbury’s Cocoa Partnership, a £45m initiative set up in 2008 to secure the sustainability of around one Innocent’s smooth operators million cocoa farmers in Ghana, India, south-east Asia and the Caribbean. consumer use and waste disposal. think their niche markets will remain unaf- “Lacroix has been instrumental in some of the new The prime example of a holistic manage- fected. initiatives that they have been running over the last ment approach is provided by another UK As more companies follow M&S’s lead, couple of years, especially with the recent move to retailer, Marks & Spencer. In January 2007, the ethical space is set to become more Fairtrade,” Fernandes says. M&S rolled out its flagship Plan A mainstream. And mainstream means more The traffic hasn’t all been one way. Cadbury has programme. The initiative incorporated competitive. No longer can ethical brands taught its niche subsidiary much about management presume they are the first port of call for the discipline and professionalism, especially when values-conscious shopper. communicating its brand across different markets, M&S has the target of becoming Corporate brands may not be as “pure” Fernandes accepts. the “most sustainable major as the traditional ethical brands, but they Above all, the premium brand has benefited from are quickly adopting similar practices, Cadbury’s established routes to market. Green & retailer in the world” warns Edelman’s Deri. The critical differ- Black’s has gone from a niche brand operating only in ence is that these companies are doing so on the UK to a global product with major markets in the dozens of commitments affecting all its a much larger scale. US, Australia and Canada. products, from increasing fuel efficiency of “Now they [niche brands] are using their its logistics network by 20% to reducing ethical attributes as a key rationale for food carrier bag usage by 83%. significant price premiums. But it’s going to “Having a halo brand is one of the ways In March, M&S unveiled a new phase of be hard for them to sustain that proposition. that companies can create synergies and its sustainable branding scheme, taking the They have to find other attributes for their develop ethical brands in specific industries total number of social and environmental products as well,” he says. or segments of the market,” he says. targets up to 180. The high street brand has For the moment, ethical brands still retain Others are taking a root-and-branch set itself the target of becoming nothing less the edge over their corporate copycats. approach to building ethics into their than the “most sustainable major retailer in Coca-Cola may claim to be world’s most brands. UK retailer Boots, for example, has the world”. recognised trademark. But what the US developed a web-based tool to assess the M&S has been careful about its wording. megabrand boasts in popular recognition, social and environmental impacts across its It has intentionally placed its end goal within Innocent Drinks enjoys in popular affection. product range. The Green Tick model the remit of the world’s “major” retailers. But Why? Because consumers still know the real covers the product’s full lifecycle, from small ethical retailers would be unwise to Real Thing when they see it. I
  7. 7. Ethical Corporation • April 2010 Briefing: ethical branding 17 MARCUS LYON/FAIRTRADE pected source. With consumer venom directed to the world’s mainstream banks, many savers have gone in search of an ethical alternative. More than half of consumers say they are more likely to save with an ethical bank as a consequence of the financial crisis, a recent study by research firm GfK NOP found. Ecology Building Society provides clear proof. The specialist UK savings firm saw record levels of savings inflow as consumers shopped around for an alternative to the mainstream banking system. Recession ripples Advocates of ethical consumerism tend to be pathologically optimistic. It is in their blood. Through this enthusiasm, the ethicalConsumers market grew from £14bn in 1999 to £36bn 10 years later, according to the Co-operativeEthics goes bananas Bank’s Ethical Consumer Report. One big warning must be made about survey data. Most consumers understand- ably like to think their intentions are good.By OIiver Balch Choose between an unethical and ethicalMarketing guru Wally Olins once said ethics would be the last great differentiator product, and most will say they would optin marketing. That could be true – it just depends on whether consumers get it for the latter. Yet repeated studies show that such he new season’s collection at Dorothy Crowther credits two main reasons for altruism rarely feeds through to till receipts.T Perkins has a surprising addition. Amidthe latest designs on the racks at the UK Fairtrade’s surprisingly robust performance. Most importantly, consumers get the In a recent survey by GMA and Deloitte of 6,400 US shoppers, 95% said they were openhigh street clothing store, shoppers will find concept. “Fairtrade is seen as something to buying ethical products. In practice, onlya collection of Fairtrade cotton T-shirts and very simple that they can do to make a 67% looked for them, while less than half –blouses. difference,” she tells Ethical Corporation. 47% – found them. In total, only 22% parted Dorothy Perkins is one of a host of Second is consumer empathy. The reces- with their cash.retailers participating in the Fairtrade Foun- sion brought home to shoppers the And ethical consumption is not adation’s cotton campaign. Now in its fifth importance of equity, she argues. “People universal trait. European buyers will go theyear, the initiative aims to get certified cotton who themselves are struggling for their liveli- extra mile, especially in the UK, Germany,garments onto retailers’ shelves and into hood absolutely understand the importance France and the Benelux region. The scene inconsumers’ wardrobes. Each item comes of paying a fair price for a day’s work. And North America, Australia and New Zealandwith the guarantee that the cotton farmer they are prepared to buy into that concept.” is patchier. With one or two exceptions,has received a fair price for his or her crop. Her optimism finds echoes among other inroads in the developing markets of Asia, The timing could be better. The worst of ethical retailers. The Real Green Retail Africa and South America are absent.the recession may be over, but consumers Group, for example, which represents nine When US coffee brand Starbucks movedare still watching their wallets. Bar the odd UK retailers, cites some niche success all its espresso-based drinks to 100% Fair-blip, the general retail market remains flat. stories. Vintage Roots, an organic wine trade late last year, it did so first in the UKNow might not be the time for ethical price seller, posted a jump in its mail order and only latterly in wider Europe. Coffeepremiums. business as people chose to socialise at drinkers in Starbucks’ hometown of Seattle Barbara Crowther, Fairtrade Founda- home rather than go out. Others adopted still have to ask for Fairtrade if they want it.tion’s director of communications and innovative ways of beating the recessionary And neither are all ethical brands faringpolicy, disagrees. The market share for fairly bite. Ethical retailer Green Shop, for as well as each other. Sales of organictraded products has increased by 12% over instance, saw its profits rise by introducing produce were hit hard by the recent reces-the past year to nearly £800m, she says. refills for its cleaning products. sion, according to market research company She has more statistics up her sleeve. The “Everything we see points towards TNS Worldpanel.number of households that bought Fairtrade opportunities in this area. Good proposi- The dip in organics dates back further.products increased from seven in 10 in 2008 tions are still compelling to consumers,” Total sales in the UK grew a mere 1.7% toto almost nine in 10 in 2009, she points out, says Sarah Westwood, head of planning at £2.1bn in 2008, in stark contrast to the 22%quoting a survey by Kantar Worldpanel. UK GoodBrand, a marketing consultancy. leap the previous year. And the Soil Associ-sales of Fairtrade food and drink hit £635m A major beneficiary of the recent torrid ation, an organic certification body,last year, a 39% increase on the previous year. market conditions comes from an unex- concedes that the 2008 growth has more to
  8. 8. 18 Briefing: ethical branding Ethical Corporation • April 2010 Downward trend Among UK consumers surveyed in 2009: • 25% have bought because of an established link to a charitable organisation (cause marketing) (28% in 2008). • 19% buy products because of a company’s ethical reputation (22% in 2008). • 19% actively boycott products (17% in 2008). Source: Ipsos Mori, August 2009 do with higher food prices than increased sales volume. The same charge could be laid at the Fair- trade movement. Last year saw some celebrated coups, with leading brands such as Cadbury’s Dairy Milk, Sainsbury’s bananas and Nestlé’s KitKat going fully Fairtrade. Such moves have technically upped the space for fairly traded goods on the shelf. But that doesn’t necessarily trans- late to more ethically conscious shoppers on the street. Producers are certainly clamouring for a bigger bite of the pie. Greaves Henriksen is typical. Owner of the United Nilgiri tea Drink ethical tea, say pickers “We picked up a big decline efficiency measures or recycling, Dawkins purchasing on ethical considerations. in the importance of ethical says. Market opportunities are not restricted Consumer expectations for companies to that core group. An additional 33% of purchasing as the recession are not abating either. “Even though people “activist” consumers are less ardent, but still began to bite” don’t feel in a position to purchase ethically, regularly buy products that support their underlying concerns about corporate beliefs. A small minority of “showboaters” Jenny Dawkins, Ipsos Mori conduct have not gone away,” she says. (4%) buy ethically because they think they Market observers also point to the long- ought to. estate, he was the first Indian tea producer term trends. The recession, they argue, should Harder to sell to, but not impossible are to go Fairtrade. Sixteen years later, only 10% be seen as a temporary blip rather than a the 9% of “lapsed activists” who feel they of his sales receive the Fairtrade premium. sudden reversal in ethical buying habits. should buy ethical products but don’t. The “Consumers need to buy more [Fairtrade Rob Harrison, editor of Ethical final 34% of “laissez-faire” consumers who tea],” he says. “Only then will buyers be Consumer magazine, dismisses economists prepared to pay more.” who reject ethical purchasing as a passing The latest trend data suggests ethical fad in “middle class conscience-salving”. He Switching to Fairtrade? producers may be waiting a while. “Late last says: “The weight of this movement is so year, we picked up a big decline in the great that even a global recession doesn’t • 71% of UK consumers who don’t currently buy importance of ethical purchasing as the have the power to snuff it out.” any Fairtrade products say they are willing to swap recession began to bite. Since then, there one or more products to Fairtrade. has been no sign of green shoots or pick-up Co-opting consumers • 55% of Fairtrade and non-Fairtrade purchasers say in terms of consumer action,” says Jenny It is not just niche ethical players that expect they would consider switching one or more of the Dawkins, research director at market business to bounce back. Mainstream products they buy to Fairtrade. research company Ipsos Mori. Of the British companies are also banking on the long- • Top swaps are bananas (42%), other fruit (31%), public, 40% currently say they are prepared term growth in ethical consumerism coffee (29%), tea (28%) and chocolate (26%). to pay more for an environmentally friendly continuing into the future. • Just over seven in 10 consumers cut back on product. Independent analysis on the market their personal budgets in some way as a result The picture is not entirely bleak. suggests there are grounds for confidence. of the recession, such as eating out less. Consumers are showing a strong appetite According to the Co-operative Bank’s Based on a YouGov survey of 3,359 adults, commis- for ethical activities that present a cost benchmark Ethical Consumerism report, a sioned by the Fairtrade Foundation in February 2010. saving or are cost neutral, such as energy hardcore 15% of consumers base their
  9. 9. Ethical Corporation • April 2010 Briefing: ethical branding 19 STARBUCKSbuy according to their needs, not their another means of empowering consumers.beliefs, represent the toughest category. Several leading washing powder manufac- First and foremost, retailers must make it turers, for instance, have modified theireasy for consumers to make ethical choices. brands to enable users to wash clothes atSometimes doubts over product perform- lower temperatures and thereby saveance or concerns over price dissuade energy. Ariel’s successful “Turn to 30”purchasers, but poor communication and campaign is perhaps the best-knownproduct education present the biggest example.obstacles to shoppers, the Deloitte study ofUS shoppers found. The M&S factor “Companies must do a better job of The stellar case study of a company makingcommunicating the sustainable attributes it easy for its consumers while also empow-behind the products to show the value of ering them to make a change comes frombuying green to the shopper,” says Scott Marks & Spencer, the UK retailer. M&SBearse, director of Deloitte’s enterprise announced in March that all the 2.7bnsustainability group. products its sells annually will comply with To date, product labelling has been the its 180 Plan A sustainability targets by 2020.communications instrument of choice, and “Our aim is to move sustainability from Less froth and a large sprinkle of ethicsit has done some good. The most successful being a niche product in the corner of themarks – the Soil Association logo, Fairtrade, store and broaden it across every productForest Stewardship Council, Marine Stew- that we sell,” says Mike Barry, sustainability M&S: on track to becoming director for M&S. the world’s most sustainable In some cases, M&S will develop its own retailer Ten years ago, the consumer internal certification processes where On March 1, Marks & Spencer added 80 new commit- who sought out organic existing schemes are lacking. It is in the final ments to its already extensive list of targets. The UK stages, for example, of developing a fair- cabbage was seen as an oddity wage label for all its suppliers in India, Sri retailer promises to deliver on the new phase of its Plan A strategy by 2015, and in some cases 2020. Lanka and Bangladesh. Highlights include:ardship Council and the EU Ecolabel, Where the retailer is making the biggest • Build Plan A into every one of the 2.7bnamong others – have stimulated consumer strides, however, is in consumer engage- individual M&S products by 2020 (50% ofawareness and driven sales. ment. M&S’s consumer segmentation cuts products by 2015). Yet the certification movement has been roughly four ways: the “green crusaders”a victim of its own success. Joanna Daniel, (10%), the “light greens” (35%), the “what • Help one million M&S customers develop theirmarketplace director at Business in the difference can I make?” group (35%) and own personal Plan A by 2015.Community, puts the number of ethical those who “are not interested at all” (20%). • A £100,000 prize – Your Green Idea – for themarks at more than 100. The result is a The buying patterns of the first and last best customer idea to help green M&S.minefield for consumers, she says. segments are entrenched. Where M&S is • A five-year, £50m internal innovation fund “On the one hand there needs to be focusing its energies is therefore among the to help M&S identify and implement thesimplification, but then on the other these middle two groups. Price is a key determi- breakthrough technologies of the future.issues are often very complicated,” nant for the light greens, Barry argues, and • Engage 10,000 farmers in a sustainableaccording to Daniel. The solution, she some tactful nudging also plays a part. agriculture programme.argues, is twofold: take the pain out for M&S’s recent decision to launch a £100,000 • Implement a process to ensure M&S clothingconsumers, and empower them to choose. prize for the consumer with the best green suppliers pay a fair living wage in the least One simple way of achieving the former is idea is one such nudge. developed remove the element of choice. Ben & Jerry’s The “what difference can I make?” • Source six key raw materials – soya, palm oil,has done just that. Starting this year, all new consumers are less easily won over. On the coffee, tea, cocoa and leather – from sources thatflavours of the iconic ice-cream brand will surface, they are more cynical, Barry says. do not contribute to Fairtrade (see also CRwatch). It’s ethical “They typically say, ‘what’s the point of mepurchasing by default. buying organic or fair trade if a billion M&S existing Plan A commitments, to be delivered Empowering consumers is harder. people in China are beginning to fly or by 2012, include:Finding alternative, innovative communica- drive?’,” he explains. • Become carbon-neutral.tion approaches certainly helps. Patagonia’s Yet consumer focus groups run by M&SFootprint Chronicles provides just such an show that those in this sceptical category • Send no operational waste to landfill.example. Via an interactive online map, the are willing to change behaviour as long as • Triple sales of organic food in the UK and RepublicUS outdoor clothing brand invites its others follow suit. Consumer “tribalism”, of Ireland.consumers to track the complete journey of Barry terms it. Alone, they perceive their • Extend the scope of ethical trading assessmentsits products. At each stage, the map high- actions as pointless. Act collectively, and to other parts of its supply chain.lights the “good” sustainability aspects as they see the difference. • Remove children’s sweets from till points.well as the “bad”. “If they can do one or two simple steps More information: Product development can present that everyone else can do and therefore be
  10. 10. 20 Briefing: ethical branding Ethical Corporation • April 2010 replicated among millions, then they will From luxury to low-end – March. It linked palm oil used to make the chocolate take part,” he says. are there any budget ethical bars to Sinar Mas, a company operating in sensitive Take recycling. If 100,000 M&S customers brands? Indonesian forest areas. In particular Greenpeace donate their clothes for reuse rather than suggested that orang-utan habitat was being damaged. throw them away that adds up to a million Ethical equals expensive. That simple equation is fixed Nestlé subsequently cancelled contracts with Sinar Mas, or so items, Barry calculates. To encourage in the minds of many consumers, and not without good reasserting its plan to source only certified palm oil for such behaviour, M&S now offers a £5 reason. Compare a packet of organic Duchy Originals all its products by 2015. voucher (redeemable when spending more Highland All Butter Shortbread at £1.99 with Tesco Value Big changes are happening at the lower end of the than £35) to all customers who recycle Nice biscuits £0.59 in the same UK store, and the price price spectrum. As companies begin embedding social clothing through Oxfam’s charity store. differential is self-evident. and environmental practices throughout their opera- Another gentle nudge. Yet the notion that paying for ethics means parting tions, mainstream products are becoming gradually Among M&S’s most ambitious targets is with more cash is not universally true. First, the more ethical. And gradually more affordable. its goal to persuade one million customers comparison is often not like-for-like. Compare Duchy to develop “their own personal Plan A” by Originals with a premium biscuit brand and the cost will Ethical savings 2015, increasing to three million by 2020. be similar, if not lower. In some cases, this mainstreaming process has led to an Essentially, the idea works like a new year Second, retailers may choose to assume the premium actual reduction in production costs. Energy saving and resolution. The retailer hopes to convince cost themselves. This is becoming increasingly common, other early environmental management interventions consumers to make individual, specific especially when mainstream brands switch to Fairtrade. demonstrate such an outcome. In other cases, there are pledges regarding their buying practices or economies of scale to be product usage. The scheme will be rolled found. The relative cost of out through a consumer-facing website in third party certification, for the initial stages. instance, drops in line with “As a major retail brand in the 21st increased production century, it’s not just about us putting our volumes. Mergers with own house in order – our products, our larger companies also help stores, our supply chain, our lorries – but it’s niche players bring efficien- also about helping our customers to make a cies to their operations. change where they want to,” Barry says. Finally, ethical retailers are finding innovative ways Whiter than white to save on sales costs. Even if external economic conditions may E-commerce provides the have flattened ethical sales, most consumers prime example. EthicalSu- want to do the right thing. Ten years ago, perstore, a UK web-based the consumer who sought out eco-labelled retailer offering everything tuna or organic cabbage was seen as an from eco-friendly nappies oddity. Now, they are in the ascendancy. to organic groceries, Companies, both niche and large, averages “just a few have helped promote this consumer turn- percentage points” more around, and driving prices down has than high-street stores in been essential. Easily understandable terms of price. labels, consumer awareness campaigns Fairtrade marketing gloss tarnished by Greenpeace “By using the internet and innovative product designs have also and operating on a tight helped. Cadbury’s Dairy Milk, Sainsbury’s peas and bananas, margin … we can offer a much more competitive super- The ideal situation for any consumer is to and Nestlé’s KitKat are no more expensive now that market style offer over a wider range of products,” says enter a store without having to think about they carry the ethical certification. EthicalSuperstore’s co-founder Andy Redfern. ethics. The company’s processes should be Third, the premium on an ethical product doesn’t Retailers associated with the lower end of the so rigorous that all ethical question marks necessarily link directly to the product’s ethics. Take the consumer market are getting in on the act as well. are removed. example of niche chocolate brand Green & Black’s. The Budget supermarket Lidl, for example, now boasts a “It shouldn’t be necessary for consumers producer is unabashed about its product being range of own-brand Fairtrade products in its German to look at every single label on every single premium. Yet corporate responsibility is not the primary stores. UK low-price retailers Asda and Morrisons, jam jar that they buy. It should be enough to driver of price, the company maintains. meanwhile, recently introduced Fairtrade melons from see the brand and be comfortable that they “We treat people well and we don’t go against the Brazil. know what the brand does and what it environment, but that’s not necessarily what makes us Modern consumers are becoming more demanding by stands for,” says Kate Ives, senior principal premium. We’re premium because we pay care and the day. They don’t want to pay more and neither do at AccountAbility. attention to get the best ingredients,” says Kellie they want to compromise on quality or consistency. Yet Such a scenario remains a long way off. Fernandes, Green & Black’s head of global marketing. they also want basic ethical considerations covered. The Few if any brands are whiter than white. KitKat was hit by a highly successful internet companies that crack that equation in the future will be But many are getting closer, and consumers’ campaign from environmental NGO Greenpeace in onto a winning formula. willingness to reward them is only set to grow. I