Ethical consumerism (alternatively called ethical consumption, ethical purchasing, moral purchasing, ethical sourcing, ethical shopping or green consumerism) is a type of consumer activism that is based on the concept of dollar voting. It is practiced through 'positive buying' in that ethical products are favoured, or 'moral boycott', that is negative purchasing and company-based purchasing.
The term "ethical consumer", now used generically, was first popularised by the UK magazine Ethical Consumer, first published in 1989.Ethical Consumer magazine's key innovation was to produce 'ratings tables', inspired by the criteria-based approach of the then emerging ethical investment movement. Ethical Consumer's ratings tables awarded companies negative marks (and from 2005 overall scores) across a range of ethical and environmental categories such as 'animal rights', 'human rights' and 'pollution and toxics', empowering consumers to make ethically informed consumption choices and providing campaigners with reliable information on corporate behaviour. Such criteria-based ethical and environmental ratings have subsequently become commonplace both in providing consumer information and in business-to-business corporate social responsibility and sustainability ratings such as those provided by Innovest, Calvert Foundation, Domini, IRRC, TIAA-CREF and KLD Analytics. Today, Bloomberg and Reuters provide "environmental, social and governance" ratings direct to the financial data screens of hundreds of thousands of stock market traders. The not-for-profit Ethical Consumer Research Association continues to publish Ethical Consumer and its associated website, which provides free access to ethical ratings tables.
In Unequal Freedoms: The Global Market As An Ethical System (1998), John McMurtry argues that no purchasing decision exists that does not itself imply some moral choice, and that there is no purchasing that is not ultimately moral in nature. This mirrors older arguments, especially by the Anabaptists, e.g. Mennonites, Amish, that one must accept all personal moral and spiritual liability of all harms done at any distance in space or time to anyone by one's own choices. It is often suggested that Judeo-Christian scriptures further direct followers towards practising good stewardship of the Earth, under an obligation to a God who is believed to have created the planet for us to share with other creatures. A similar argument presented from a secular humanist point of view is that it is simply better for human beings to acknowledge that the planet supports life only because of a delicate balance of many different factors.
Some trust criteria, e.g. creditworthiness or implied warranty, are considered to be part of any purchasing or sourcing decision. However, these terms refer to broader systems of guidance that would, ideally, cause any purchasing decision to disqualify offered products or services based on non-price criteria that affect the moral rather than the functional liabilities of the entire production process. Paul Hawken, a proponent of Natural Capitalism, refers to "comprehensive outcomes" of production services as opposed to the "culminative outcomes" of using the product of such services. Often, moral criteria are part of a much broader shift away from commodity markets towards a deeper service economy where all activities, from growing to harvesting to processing to delivery, are considered part of the value chain and for which consumers are "responsible".
Andrew Wilson, Director of the UK's Ashridge Centre for Business and Society, argues that "Shopping is more important than voting", and that the disposition of money is the most basic role we play in any system of economics. Some theorists believe that it is the clearest way that we express our actual moral choices, i.e., if we say we care about something but continue to buy from parties that have a high probability of risk of harm or destruction of that thing, we don't really care about it, we are practicing a form of simple hypocrisy.
In an effort by churches to advocate moral and ethical consumerism, many have become involved in the Fair Trade movement:
A number of standards, labels and marks have been introduced for ethical consumers, such as the following:
Along with disclosure of ingredients, some mandatory labelling of origins of clothing or food is required in all developed nations. This practice has been extended in some developing nations, e.g., where every item carries the name, phone number and fax number of the factory where it was made so a buyer can inspect its conditions. And, more importantly, to prove that the item was not made by "prison labor", use of which to produce export goods is banned in most developed nations. Such labels have also been used for boycotts, as when the merchandise mark Made in Germany was introduced in 1887.
These labels serve as tokens of some reliable validation process, some instructional capital, much as does a brand name or a nation's flag. They also signal some social capital, or trust, in some community of auditors that must follow those instructions to validate those labels.
Some companies in the United States, though currently not required to reduce their carbon footprint, are doing so voluntarily by changing their energy use practices, as well as by directly funding (through carbon offsets), businesses that are already sustainable--or are developing or improving green technologies for the future.
In 2009, Atlanta's Virginia-Highland neighborhood became the first Carbon-Neutral Zone in the United States. Seventeen merchants in Virginia-Highland allowed their carbon footprint to be audited. Now, they are partnered with the Valley Wood Carbon Sequestration Project--thousands of acres of forest in rural Georgia--through the Chicago Climate Exchange (CCX). The businesses involved in the partnership display the Verus Carbon Neutral seal in each store front and posted a sign prominently declaring the area's Carbon Neutral status. (CCX ceased trading carbon credits at the end of 2010 due to inactivity in the U.S. carbon markets, although carbon exchanges were intended to still be facilitated.)
Over time, some[who?] theorists suggest, the amount of social capital or trust invested in nation-states (or "flags") will continue to decrease, and that placed in corporations (or "brands") will increase. This can only be offset by retrenched national sovereignty to reinforce shared national standards in tax, trade, and tariff laws, and by placing the trust in civil society in such "moral labels". These arguments have been a major focus of the anti-globalization movement, which includes many broader arguments against the amoral nature of markets as such. However, the economic school of Public Choice Theory pioneered by James M. Buchanan has offered counter-arguments based on economic demonstration to this theory of 'amoral markets' versus 'moral governments'.
Ethical Consumer Research Association, the alternative consumer organisation, collects and categorises information of more than 30,000 companies according to their performance in five main areas, composing the Ethiscore:
GfK NOP, the market research group, has made a five-country study of consumer beliefs about the ethics of large companies. The report was described in a Financial Times article published on February 20, 2007 entitled "Ethical consumption makes mark on branding", and was followed up by an online debate/discussion hosted by FT.com. The countries surveyed were Germany, the United States, Britain, France and Spain. More than half of respondents in Germany and the US believed there is a serious deterioration in standards of corporate practice. Almost half of those surveyed in Britain, France and Spain held similar beliefs.
About a third of respondents told researchers they would pay higher prices for ethical brands though perception of various companies' ethical or unethical status varied considerably from country to country.
The most ethically perceived brands were The Co-op (in the UK), Coca-Cola (in the US), Danone (in France), Adidas (in Germany) and Nestlé (in Spain). Coca-Cola, Danone, Adidas and Nestlé did not appear anywhere in the UK's list of 15 most ethical companies. Nike appeared in the lists of the other four countries but not in the UK's list.
In the UK, The Co-operative Bank has produced an Ethical Consumerism Report (formerly the Ethical Purchasing Index) since 2001. The report measures the market size and growth of a basket of 'ethical' products and services, and valued UK ethical consumerism at GBP36.0 billion (~USD54.4 billion) in 2008, and GBP47.2 billion (USD72.5 billion) in 2012.
A number of organisations provide research-based evaluations of the behavior of companies around the world, assessing them along ethical dimensions such as human rights, the environment, animal welfare and politics. Green America is a not-for-profit membership organization founded in 1982 that provides the Green American Seal of Approval and produces a "Responsible Shopper" guide to "alert consumers and investors to problems with companies that they may shop with or invest in." The Ethical Consumer Research Association is a not-for-profit workers' co-operative founded in the UK in 1988 to "provide information on the companies behind the brand names and to promote the ethical use of consumer power" which provides an online searchable database under the name Corporate Critic or Ethiscore. The Ethiscore is a weightable numerical rating designed as a quick guide to the ethical status of companies, or brands in a particular area, and is linked to a more detailed ethical assessment. "alonovo" is an online shopping portal that provides similar weightable ethical ratings termed the "Corporate Social Behavior Index".
The consumer rationalizes unnecessary and even unwanted consumption by saying that "it's for a good cause". As a result, the consumer buys pink ribbons during National Breast Cancer Awareness Month, green products to support the environment, candy and popcorn from school children, greeting cards and gift wrap from charities, and many other, often unwanted objects. The consumer avoids considering whether the price offered is fair, whether a small cash donation would be more effective with far less work, or even whether selling the item is consistent with the ostensible mission, such as when sports teams sell candy.
In response to an increasing demand for ethical consumerism surrounding gift giving occasions, charities have promoted an alternative gift market, in which charitable contributions are made on behalf of the gift "recipient". The "recipient" receives a card explaining the selected gift, while the actual gift item (frequently agricultural supplies or domestic animals) is sent to a family in a poor community.
Critics argue that the ability to effect structural change is limited in ethical consumerism. Some cite the preponderance of niche markets as the actual effect of ethical consumerism, while others argue that information is limited regarding the outcomes of a given purchase, preventing consumers from making informed ethical choices. Critics have also argued that the uneven distribution of wealth prevents consumerism, ethical or otherwise, from fulfilling its democratic potential.
One study suggests that "Buying Green" serves as a license for unethical behavior - in their 2009 paper, "Do Green Products Make Us Better People?", Nina Mazar, Chen-Bo Zhong state the following:
In line with the halo associated with green consumerism, people act more altruistically after mere exposure to green than conventional products. However, people act less altruistically and are more likely to cheat and steal after purchasing green products as opposed to conventional products. Together, the studies show that consumption is more tightly connected to our social and ethical behaviors in directions and domains other than previously thought.
In a 2010 The Guardian article, British environmental writer and activist George Monbiot argued that green consumers who do not articulate their values are part of "a catastrophic mistake" on the grounds that such consumerism "strengthens extrinsic values" (those that "concern status and self-advancement"), thereby "making future campaigns less likely to succeed".