ETHICAL CONSUMERISM

Ethical Consumerism 11

ETHICALCONSUMERISM

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ExecutiveSummary

TheRana Plaza building accident in Bangladesh shed light on how westernsource companies overlook the law and safety standards in theircountries of operation. This is a classic case of how sourcecountries put their own interests at the expense of the workers. NikeInc.is used as a case study to illustrate the effects of ethicalconsumerism. In the 1990’s the company experienced a mass consumerboycott which almost brought the company to its knees. However,thanks to a corporate organization with a focus on corporate socialresponsibility, the company turned around and is now one of the mostopen and transparent companies in the world. Clothing manufacturerscan borrow a leaf from Nike Inc. and chart a new course beforeethical consumerism catches up with them. The author offersrecommendations on how these companies can alleviate bottom linelosses as a result of consumer boycotts.

Ethicalconsumerism refers to the buying of good and services that have theleast effect or harm on the society and the environment. Ethicalconsumerism avoids the purchasing of goods and services that couldhave a negative impact on the environment(IGD,2007).This means that ethical consumerism considers the impact of consumerson the environment precisely the carbon footprint when consumersselect the products and services they acquire. Ethical consumerismcan be exercised in four ways. The first one involves positivebuying. This is a situation where consumers purchase ethically-madeproducts. The second one involves negative buying where consumerschoose not to buy unethically-made goods or services. Company basedpurchasing involves the selection made by buyers to either support orabandon a certain company based on the company’s public’sperception. Finally, there is the fully-screened approach where allthe three approaches of ethical consumerism are involved. Thisapproach takes into consideration, the purchasing of ethically-madegoods, the refusal to purchase unethically-made products andselecting whether or not to boycott a company’s product due totheir previous track record on matters involving the environment andthe society. Ethical consumerism was first coined in 1989 by a UKmagazine.

TheEthical Consumer magazine popularized the use of rating tables whichawarded companies negative ratings on issues that involved theenvironment and ethics. These issues included human rights, animalrights and environmental pollution. It is from this scale that theEthical Consumer magazine rates a number of companies over a year andrates them out of a scale of 20 on ethical and environmental matters.Over the years, there has been a demand for ethical products andservices in the U.K. According to recent statistics, the expenditureon ethical made goods and services in the U.K has tripled between1999 and 2008. The ethical market in the U.K is estimated to be 36billion pounds(IGD,2007).However, this only represents less than 1% of the total householdexpenditure in the market. In addition a report by the Co-operativebank suggest that only one-third of U.K’s consumers care aboutethical consumption but only 3% of the market can meet the consumer’sexpectations(EthicalConsumerism, 2001).Companies producing ethical goods have to forego their profits sincesuch a venture ensures that the rules of utilitarianism are adheredto. On the hand, other companies seek to make profits at the expenseof the worker’s working conditions and the environment as a whole.The top three ethically perceived brands in the world are theCo-operative Bank, in the U.K, Coca-Cola a U.S based company andDanone in France. This essay will look use the case of Nike toexplain what ways a company can do to help improve ethicalconsumerism after suffering a consumer boycott in the 1990’s.

Nikewhich is world’s athletic apparel and footwear raised eyebrows inthe 1990’s after reports suggested that the firm was violatinglabor laws. The apparel giant had allegations on the treatment ofworkers in the sweat shops in terms of their working hours, theexposure to harmful chemicals as well as physical, verbal and sexualabuse experienced by workers working in Nike plants in Asia. Thesereports and claims gave birth to a global boycott on Nike’sproducts and became a classic example of how corporations can bebrought to its knees by the consumers. The global campaign led to achange in Nike’s corporate culture as the company is now involvedin numerous corporate social responsibility projects ranging fromprotecting children from obesity to fighting HIV/AIDS. In addition,Nike is open and transparent as it allows the public to view over 150reports conducted by independent parties(Birch,2012).

EthicalConsumerism

Ethicalconsumerism involves the purchase of goods and services that have theleast effect on the society and the environment. Ethical consumerismcan be effected in four ways. This could include the purchasing ofethically made products, the boycotting of purchases of unethicallymade goods, company-based purchasing which depend on the consumer’sperception of a company and fully-screened approaches which takes thethree methods into consideration. Some of the most effective strategywhich have effected change on corporate policy involves the use ofnegative purchase or boycott of a company’s product as a result ofthe company’s perceived perception to the public. Adherence toethical consumerism standard can be measured on a rating table thatrates companies on a scale of 20 on ethical and environmental issues.A non-profit organization, Ethical Consumer Research Associationpublishes the scores on various companies on an ethical rating table.The ethical and environmental scale has developed a wide range oflabel and standards for ethical consumer goods. Such standardsinclude: Free range poultry, Halal, Recyclable and EKOenergy. Freerange poultry is a standard for ethical consumers who have attentionto how poultry and product products are acquired. Free-range poultryare not confined to cages as modern poultry farms do. Halal andkosher are religious standards applied for Islamic and Jewishacquired meat and poultry products. Such products have to meetcertain requirements in order to be considered halal or kosher.

Finally,there is the EKOenergy standard which is used for electricityagreements. The application of ethical consumer product can benarrowed down to five main areas. This include: the environment,people, politics, animals and sustainable products. Environmentalproducts encompass goods or products which have an impact on thesurrounding environment. This area takes into consideration thegeneration of power and energy in the environment. The secondcriterion looks into issues which involve people in the production ofgoods and services. This includes rights such as human rights, laborlaw adherence and other labor policies. Animal ethical consumerismtakes into consideration the farming methods animals are attested toand the methods of putting them down. Politics applies the use ofboycotts to effect change while sustainability product involves theuse of sustainability measure in evaluating products. For example,the use of organic foods can be used to illustrate productsustainability. Over the years, the demand for ethical products hassignificantly surged between 1999 and 2008. In the U.K, the ethicalmarket is estimated to have been 36 billion pounds, compared to 13.5billion pounds in 1999. The ethical food and beverage industry hasespecially experienced demand with the spending in this industry morethan tripling the 1.9 billion pound spent in 1999. This has come as aresult of more standards and certificates being established in thissector. However, statistics show that there is more work to done asjust a third of the U.K consumers care about ethical consumption butonly 3% of the market is committed to producing such goods.

TheRana Plaza incident in Savar, Bangladesh is one of the many caseswhere corporations have put their interest first at the expense oftheir workers. Unfortunately, over 1134 workers who worked for highend clothing manufactures lost their lives due to negligence on theadherence of labor conditions for the workers. The case of foreignbased companies exploiting Asian workers for low wages and deplorableconditions has been the order of the day. It was apparent from theRana Plaza accident that there were some fault and violation ofstandards. The western companies which produce high end products toretails should have not overlooked these four measures. First, thesource company should have ensured that the safety of the workers isguaranteed. Safety should always come first. It was apparent duringthe day of the collapse that cracks were visible on the walls of thebuilding. In fact, some workers had evacuated the building beforethey were convinced to go back by the factory workers. This showsthat due diligence was not followed as far checking the safetystandards of buildings is concerned(BBC,2013).Secondly, source companies should ensure that there are routineinspections and renovations conducted on buildings. This could haveprevented the occurrence of the accident. The source companies couldeven train or hire the local workers on how to assess and inspectsuch buildings. Third, source companies should adhered to the laborlaws in the country which allow workers to have better workingconditions. In this scope better working conditions involve everyaspects of the employees from the working environment to the lowwages earned. The high end cloth manufacturers can definitely affordto pay their low earning workers well. This would improve theworker’s productivity and also enable them to earn a decent living.Finally, the source companies should ensure that workers are free tomake an independent choice on whether to work for a clothingmanufacturer(Ayres,2014).According to an article on the accident, some of the workers wereforced into working for the manufacturers through the use of physicaland verbal abuse. A worker that works in one of the factoriesadmitted that the owners guaranteed him that nothing will happenespecially after the occurrence of the Ranar Plaza buildingaccident(Parveen,2014).Therefore, source companies should ensure that labor laws thatenacted are followed to the letter.

Nikehas definitely come a long way. The company suffered one of the worstboycotts in ethical consumer history after the company denied thatthe rights of the workers from its subcontracted factories werereason for concern for the giant apparel manufacturer. In addition,there were concerns about the manufacturer’s violation of laborlaws such as overtime hours worked and low wages earned. Theoperation of Nike in Asia was coined as sweat shops as workers wereworking in deplorable working conditions while receiving lowwages(Brenton&amp Hacken, 2006).In addition, the workers were subjected to physical, verbal andsexual abuse from the management at the factories(CorporateGovernance Report).However, after a decade of massive boycotts for their consumerproducts, Nike learned its lesson and decided to turn over a newleaf. In its turn-around strategy to revitalize the company and itsbrand image, Nike adopted the following measures. First, the companyadopted a culture of ethics and embarked on a corporate socialresponsibility program. Nike has an elaborate program on how itsworkers can seek compensation upon allegations of misconduct by thecompany. Secondly, Nike has a consistent code of conduct that isapplied across all its factory locations and when issues ofmisconduct or abuse of workers arise the code of conduct is enactedswiftly such as what happened in Indonesia when reports of workerabuse surfaced. Nike is always setting standards in manufacturingconsumer products. For instance, Nike is planning to go toxic free by2020. This would help reduce the suppliers exposure to toxic wastematerials. Nike is actively involved in initiatives and projects thathelp make a difference in the society. For instance, Nike is involvedin the Let’s Move campaign that aims at protecting children fromobesity. The project is estimated to cost Nike $50 million(CorporateGovernance Report).In addition, Nike has become transparent and more open to the public.Nike allows the public to view over 150 reports on its factoryinspections made by independent parties. They also have websites withdetails about their governance and reporting with links andinteractive maps which lists all the company’s factories(Musing,2013).

Conclusion

Ethicalconsumerism is here to stay, the trend of ethical consumer productsseems to be on a uptrend and no change on this pattern is likely toexperienced anytime soon. The clothing manufacturing sector has a lotof improvement to make and just like Nike, it is not yet late toeffect any changes. According to a study conducted on negativeinformation on how labor information affects consumer’s opinionsabout the company, negative information can only elicit emotionalresponse however this can marginally change the consumer’sbehavior(Brenton&amp Hacken, 2006).The Rana Plaza building accident can be solved through animplementation of serious measures. On the other hand, the rate ofethical consumerism intake in the society is slowly gaining momentumbut more needs to be done by the producers in order to meet thegrowing demand. In the U.K, a third of the market is willing topurchase ethical goods but only 3% of the market is willing toproduce ethical goods. Therefore, source companies should go back tothe drawing board and fix their ills before the retail consumerschange their perception on about the clothes manufacturers.

Recommendations

Thefollowing recommendations can be made to the clothes manufacturersoperating in foreign companies. First, safety should always comefirst. Workers should always work in a safe environment that couldpose any danger to the workers or the company assets. This can beachieved by conducting due diligence of the work stations orbuildings. The source companies can recruit and train safetyinspectors in foreign countries to ensure that safety standards areadhered to. Second, the source company should ensure that there areregular inspections and renovations of work stations. This will helpdetect cases that could pose as a serious risk in the future andtherefore an accident would be averted. Finally, source companiesshould ensure that worker’s working conditions and labor laws arefollowed. This could prevent the company from suffering anylitigation claims should reports of abuses emerge.

ReferenceList

EthicalConsumerism.2001, February 22,. Retrieved March 2, 2015, from Ethical Money:http://www.theguardian.com/money/2001/feb/22/ethicalmoney1

Ayres,A 2014, April 24, AGuide To The Rana Plaza Tragedy, And Its Implications, In Bangladesh.Retrieved March 3, 2015, from Forbes:http://www.forbes.com/sites/alyssaayres/2014/04/24/a-guide-to-the-rana-plaza-tragedy-and-its-implications-in-bangladesh/

BBC2013, May 10, Bangladeshfactory collapse toll passes 1,000.Retrieved March 2, 2015, from BBC:http://www.bbc.com/news/world-asia-22476774

Birch,S 2012, July 6, Howactivism forced Nike to change its ethical game.Retrieved March 3, 2015, from The guardian:http://www.theguardian.com/environment/green-living-blog/2012/jul/06/activism-nike

Brenton,S., &amp Hacken, L 2006, Ethical Consumerism: Are Unethical LabourPractices Important to Consumers? Journalfor Research on Consumers,1-4.

CorporateGovernance Report n.d.., Nike’snew ethics paint new corporate identity.Retrieved March 2, 2015, from Corporate Governance Report:http://www.corporategovernancereport.com/corporate-social-responsibility/nikes-new-ethics/

IGD2007, October 10, EthicalConsumerism.Retrieved March 2, 2015, from IGD:http://www.igd.com/Research/Sustainability/Ethical-social-issues/3429/Ethical-Consumerism/

Musing,L 2013, August 30, HowEthical are our Trainers.Retrieved March 2, 2015, from Treading My Own Path:http://treadingmyownpath.com/2013/08/30/how-ethical-are-our-trainers/

Parveen,S 2014, April 23, RanaPlaza factory collapse survivors struggle one year on.Retrieved March 2, 2015, from BBC:http://www.bbc.com/news/world-asia-27107860