The Ethical Consumerism Report 2003 - The Co-operative

The Ethical Consumerism Report 2003

This booklet represents the authors’ personal opinions and interpretation of the subject notthe opinions, views or policies of The Co-operative Bank. The booklet may not be reproducedwithout the express permission of The Co-operative Bank, or the authors.Published by

Contents4 Foreword5 Summary7 Defining the Ethical Marketplace9 FairtradeVegetarian/Meat AlternativesFree Range Eggs10 Organic FoodsGreen Household Goods11 Personal ItemsResponsible Tourism12 Green Housing SpendRe-use and Recycling13 Ethical BoycottsLocal Shopping14 Public TransportEthical Banking and Investment15 Further InformationFeedback form3

ForewordIt is a fact that, when asked, a significant number of people tend not to label themselves asethical consumers. Yet our Report, this year, shows that for the majority of consumers ethicsdo indeed play a role in their purchasing choices. It’s just that their behaviours do not conformto traditional definitions of ethical consumption. Rather, they are engaged in what we havetermed ‘ethical invisibles’ (such as shopping locally in support of their communities).Furthermore, research carried out for this year’s Report has shown that these ‘invisibles’make up £5.6 billion of the £19.9 billion ethical consumer marketplace in 2002.Simon WilliamsThe Co-operative BankWhat choices do we have as consumers to be more ‘ethical?’ Quite a lot, if this years’ Reportis any indication. In particular sectors it's now quite difficult to make an ‘unethical’ choice,whereas in others changes in consumer behaviour would have a substantial impact onsustainable development. But it’s not just about consumers: in the areas where growth hasbeen strongest, both government and business have played a powerful role in providing theinformation and incentives necessary to enable consumers to behave differently. And as thisresearch shows, there is still much more to be done.Deborah Doanenef (New Economics Foundation)The new ethical shopping panel demonstrates that the public consider a wide range of issueswhen deciding where to shop and what to buy, influencing billions of pounds of expenditureeach year. The use of boycotting, recycling and second hand purchasing, as a way toexpress personal values, is also in line with trends towards greater consumer engagement.This application of ‘ethical’ behaviour when shopping, highlights the need to assess the widereconomic impact of this activity to the UK.Melanie HowardThe Future Foundation4

SummaryIn 2002, the total value of ethical consumption in the UK was £19.9 billion.As part of this total, the Ethical Purchasing Index (EPI) recorded sales of ethically marketedgoods and services of £6.9 billion, representing a 13 per cent increase on 2001.The total value of ethical banking increased to £3.9 billion, a rise of 16 per cent. The value ofethical investments fell back to £3.5 billion, a contraction of 8 per cent against a marketdecline of 17 per cent.In 2002, the EPI has been supplemented by a range of measures aimed at capturing thevalue of other ethical consumer behaviours including: spend on public transport forenvironmental reasons; shopping to support the local community; avoidance of ‘unethical’brands and buying for re-use. Taken together, the economic value of these activities totalled£5.6 billion in 2002.Ethical Consumerism 2002Ethical 'invisibles'£5.6 billionSales of ethical goodsand services £6.9 billionEthical banking andinvestments £7.4 billionTotal £19.9 billionThere are some ethical products that are now close to being the product of consumer choicein their respective sectors. In particular, ‘A’ rated energy efficient household appliances nowaccount for 41 per cent of market share and free range eggs account for 40 per cent of retailegg sales.5

However, in contrast, the total market share for ethical goods and services, as measured bythe EPI, is still less than 2 per cent. Whilst ethical consumers can act as innovators in gettingnew products to the market, for real progress to be made supply side influences orgovernment intervention may be required for some products and services to achieve massmarket adoption.Ethical Consumerism in the UK (2002)Description Spending Sub-totalFood (including Fairtrade & organics)£1,770mGreen Household Goods£1,473mPersonal Items (including cosmetics not tested on animals) £187mResponsible Tourism £107mGreen Housing Spend (including green mortgage repayments) £33mGreen Transport Spend (including grants for purchase of clean fuel vehicles) £21mCharitable Donations £3,309m £6,900mBuying for Re-use£1,255mEthical Boycotts£2,582mLocal Shopping£1,568mPublic Transport £162m £5,567mEthical Banking£3,886mEthical Investment £3,510m £7,396mTotal for 2002£19,863mOn the following pages we report, in more detail, on a range of the indicators highlighted here.6

Defining the Ethical MarketplaceSince 1999 the bank and nef have produced the Ethical Purchasing Index (EPI) to record andreport on UK sales of goods and services marketed as ‘ethical’. ‘Ethical’, in this context, isdefined as personal consumption where a choice of product or service exists which supportsa particular ethical issue – be it human rights, the environment or animal welfare.In defining ethics in this way, it has been understood that it may have resulted in anunder-reporting of the total contribution that ethical consumption makes to the UK economy.In response to this, the Ethical Consumer Research Association (ECRA) has beencommissioned to provide advice on what should be measured and reported upon. For 2002,this is based on ECRA’s ‘Ten Shopping Tips for the Ethical Consumer’ 1 (see table overleaf).Ethical Purchasing Index19992000Total Sales£4.8 billion£5.7 billion150125100Index2001£6.1 billion752002£6.9 billion501999 2000 2001 2002The EPI measures the growth in market share for ethical products. From a base line of 100 in1999 the Index stands up 30 points at 130 in 2002.1www.ethicalconsumer.org7

In a further effort to more accurately reflect ethical consumer behaviour, The FutureFoundation has constructed an Ethical Consumer Panel as a vehicle to analyse a range ofadditional ethical consumer behaviours, not captured within the EPI. In 2002, thesebehaviours included; spend on public transport for environmental reasons, shopping tosupport the local community, avoidance of ‘unethical’ brands and buying for re-use.A panel of 400 individuals were invited to provide a detailed analysis of their spending overthe course of a year. Using this methodology, it is possible to identify and report onconsumption where the prime motivation is ethical issues. From this it has been calculatedthat up to a further £5.6 billion of annual consumer expenditure is influenced primarily byethical considerations.Ethical Consumer’s ‘Ten Shopping Tips for the Ethical Consumer’1. Local Shops ✓ Page 132. Health Food Shops ✘ No data available3. Fairtrade ✓ Page 94. Products not tested on animals Page 115. Vegan and Vegetarian products Page 96. Organic Produce ✓ Page 107. Non-genetically altered food Page 138. Ethical Money ✓ Page 149. Recycling and second hand ✓ Page 1210. Wood products and FSC logo ✓ Page 108Key:✓ Data available ✘ No data available Partial data available

FairtradeThe Fairtrade sector continued its stronggrowth in 2002. Sales of produce bearingthe Fairtrade mark have been measuredthrough The Fairtrade Foundation 2 .• Fairtrade tea and coffee purchases grewfrom £24.5 million in 2001 to £30.3 millionin 2002. Market share increased from2.3 per cent to 2.4 per cent.• However, Fairtrade ground coffee nowhas more than 14 per cent of the UKground coffee market.• Fairtrade honey, chocolate and bananaspurchases grew from £23.8 million in2001 to £29.2 million in 2002, growth of23 per cent.1999200020012002£21.8 millionFairtrade Sales£32.9 million£48.3 million£59.5 millionVegetarian/Meat Alternatives5 per cent of the population are vegetarianand 51 per cent cite ethical or moralreasons as their prime motivation 3 .• In 2002, total sales of vegetarian/meatalternatives increased by 6 per cent to£582 million. However, this was againstan increase in sales of meat products of13 per cent.• No data is available on sales ofvegan produce.Free Range Eggs86 per cent of people oppose the use ofcaged egg production 4 . Increasingly, this isinfluencing the supply side, as much as thedemand for free range eggs.• Against a backdrop of falling eggs sales,the sales of free range eggs, in 2002,increased to £209 million.• Free range eggs now account for 40 percent of total retail egg sales.3www.vegsoc.org2www.fairtrade.org.uk4www.rspca.org.uk9

Organic FoodsContinued impressive growth in the sale oforganic produce has seen total salesincrease from £390 million in 1999 to reach£920 million in 2002.• When asked, buying organic is thenumber one activity that people claim todo for ethical reasons.• Total purchases increased 14 per centfrom £805 million in 2001 to £920 millionin 2002.• Market share increased from 1.3 percent in 2001 to 1.5 per cent in 2002,representing growth of 13 per cent inmarket share.19992000Organic Food Sales£390 million£605 millionGreen Household GoodsIn 2002, sales of ‘ethical’ household goodsincluded:Forestry Stewardship Council 6wood and timber productsEnergy efficient householdappliancesEco-cleaning products• For the first time we have only includedsales of Grade ‘A’ energy efficientappliances which now account for41 per cent of total sales of appliances.• Sales of wood and timber productscarrying the FSC logo reached£636 million. Sales have increased80 per cent from an estimated£351 million sales in 1999.2002£636 million£829 million£8 million20012002£805 million£920 million55www.soilassociation.org6www.fsc-uk.info10

Personal ItemsMore than 8 out of 10 consumers areopposed to the testing of cosmeticproducts or ingredients on animals.Furthermore, no licences have been grantedfor cosmetic testing in the UK since 1998.• In this report, only sales of cosmeticsand toiletries not tested on animals andapproved under the Humane CosmeticsStandard 7 (HCS) are included.• In 2002, this totalled £187 million, 4 percent growth on 2001.• However, sales of HCS productsaccounted for just 2 per cent of totalcosmetics and toiletries sales in 2002.Responsible TourismThe number of international tourists isreportedly set to double by 2020 to1.6 billion.For the first time total sales for touroperators promoting responsible tourismare included in the index.In addition, for the second year, totalreceipts from UK environmental touristattractions are included.• £81 million was spent with responsibletour operators in 2002. This representedgrowth of 3 per cent in a market that fellback by 7 per cent.• £25 million (up 31 per cent) was spenton visits to UK environmental touristattractions in 2002.7www.buav.orgwww.responsibletravel.com11

Green Housing SpendGreen Housing Spend is made up of:Green Mortgage RepaymentsGreen Energy Sales2002£17.8 million£14.6 million• Green mortgage repayments is a risingstar of ethical consumption with totalrepayments doubling between 2001to 2002.• Amongst other features, green mortgagesoften include an element of carbonoffset, whereby the mortgage providerwill agree to offset a certain amount ofthe carbon dioxide produced by theproperty during the life of the mortgage.1999Green Mortgage Repayments£4.3 millionRe-use and RecyclingReducing consumption through re-use andrecycling is vital to the advancement ofsustainable consumption.In this year’s report we set about measuringthe economic contribution from secondhand markets, including charity shops,second hand furniture shops, jumble salesand car boot sales.• 24 per cent of people shop at charityshops or second hand clothes shopsprimarily to support a good cause.• 17 per cent of people buy second handgoods, where their main motivation isthat they believe that it is better for theenvironment to re-use.• In 2002, this represents a total spend onsecond hand goods for ‘ethical’ reasonsof £1,255 million.20002001£4.4 million£9.0 million2002£17.8 million12

Ethical Boycotts52 per cent of consumers claim to haveboycotted at least one product in the last12 months.Furthermore, two thirds of consumers claimnot to return to a brand once they haveboycotted it.• The value attached to consumersswitching brands for ethical reasons wasan estimated £2.6 billion in 2002.• Boycotts of clothing manufacturers andoutlets totalled £232 million.• £787 million of grocery spend wasswitched between brands for ethicalreasons.• The value of boycotts linked to transportexpenditure totalled £454 million:primarily petrol retailers.• Consumers have switched a further£167 million of spend where labels havenot been sufficiently explicit on certainissues, such as whether a product isGM free.Local ShoppingOver 80 per cent of consumers regularlyshop at independent, local stores and, onaverage, this accounts for 11 per cent oftheir total, weekly, grocery spend.• For 19 per cent of consumerssupporting their community is the mostimportant reason why they shop atindependent, local stores.• On this basis, it is estimated thatconsumers spent £1,568 million insupport of independent, local shopsin 2002.13

Public TransportThe Ethical Consumer Panel was used toevaluate the proportion of people who usepublic transport to reduce theirenvironmental impact.• Whilst almost 1 in 5 commuters areconscious of reducing theirenvironmental impact through usingpublic transport, for 4 per cent it is theirprime motivation.• The value of public transport attributableto those whose prime motivation is“to do my bit for the environment” isestimated to be £162 million for 2002.Ethical Banking andInvestmentIn 2002, the total value of personal depositsin ethical banks has overtaken the totalvalue invested in ethical and green funds.• Total value of personal deposits placedwith banks that have ethical investmentcriteria increased by 16 per cent to£3.9 billion.• The total value invested in UK ethicalfunds and ISAs fell back by8 per cent to £3.5 billion. However, thetotal value of investment funds undermanagement declined by 17 per cent to£195 billion.1999Growth of Personal Banking Deposits£2.1 billion200020012002£2.6 billion£3.4 billion£3.9 billion14

Further InformationPrevious EPI Reports are available atwww.co-operativebank.co.uk/epiFor further information contact:Barry Clavin, The Co-operative Bank –barry.clavin@co-operativebank.co.ukDeborah Doane, nef –Deborah.Doane@neweconomics.orgMelanie Howard, The Future Foundation –MelanieH@Futurefoundaton.orgThe Ethical Consumerism Report 2003 wasproduced by: The Co-operative Bank, nefand The Future Foundation.With thanks to: GFK Marketing Services,DEFRA, BUAV, FSC, The FairtradeFoundation, www.responsibletravel.com,EIRIS Services Ltd, ONS data source:National Statistics website:www.statistics.gov.uk, Crown copyrightmaterial is reproduced with the permissionof the Controller of HMSO.Feedback formFeedback is vital to the further developmentof the Ethical Consumerism Report. We’dlike to know what you think about:How useful is the report as a measure ofethical consumption?Very usefulNot very usefulQuite usefulNot at all usefulDo you think the content of the report is:Too detailedAbout rightLacking detailDo you refer to the Report in yourown work?YesNoAny other commentsName:Organisation:Please tick the box if you would like to receive furtherinformation on Ethical Consumerism fromThe Co-operative Bank. Your details willnot be passed on to any third parties.15

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