Ethical Consumerism in the current UK adverse economic climate

Are consumers with a conscience still prevalent in the credit crunch?

What’s on the horizon?

Will the often ‘premium’ nature of eco-ethical products make them less attractive than value-orientated propositions?

• research consistently shows environmental and ethical propositions are stronger motivators for the consumers of today than for those of previous decades (or even those of a few years ago)
• growth has – theoretically and evidentially – been based on consumers’ rising affluence
• income growth means essential purchases now constitute a lower proportion of household budgets, and consumers have been free to focus their attention on more philosophical purchasing concerns
• rising inflation raises the cost of every day essentials and cut into household budgets
• people are finding that the cost of living now exceeds their income

What’s the current focus?

Are ethical and ecological considerations still on the consumer radar?

• consumer recognition of environmental issues remains very strong:
• 84% Europeans agree “climate change is definitely happening”
• 72% Europeans agree”I am concerned about what I personally can do to help protect the environment” – up from 62% in 2007
• environmental issues are now firmly embedded in the public consciousness and this is not about to change
• foundation of long-term disposable income growth is still a valid assumption that continues to underpin attitudes towards eco-ethical concerns
• issue of ethical consumption is now integrated within consumption habits and repertoires

What are the key issues?

What’s the forecast?

Will product choice expression of ethical concerns remain robust?

• short-term economic clouds cannot be ignored
• market indications that people’s concerns are gravitating back towards the more prosaic needs of their household bottom line
• economic troubles have bounced back onto the radar of the consumer-citizen
• ecological concerns rose in importance for many people during 2006 and 2007 – before the credit crunch subsumed global financial markets and inflation headed alarmingly upwards
• importance of environmental concerns is not under question, but short-term priorities for spending and purchasing behaviour will realign
• argument for eco-friendly products actually benefiting from (some aspects of) potential economic troubles

What changes can we expect?

• key areas for growth could be where cutting costs and helping the environment can be achieved simultaneously
• environmental and ethical propositions, so often premium in nature, face, at the very least, a challenge from more constrained household spending
• eco-ethical can mean trading down rather than trading up
• financial efficiency often means carbon efficiency
• long-term trend of concern about the environment looks set to be as strong as ever

“the credit crunch will affect people’s enthusiasm for making choices based on environmental considerations” – Ben Stewart, Greenpeace

“ when the going gets tough, the environment goes out of the economic window” – Prof. Dieter Helm, Oxford University

What does this mean in real terms?

• firms that once trumpeted sustainability initiatives are now talking only about “profitable growth”, “staff retention” and “customer focus”
• The “latte effect”: when it comes to actual policy as we tighten our belts in the face of a looming economic slowdown that the ethical concerns are one of the first things to suffer
• climate change is still tough for politicians to sell – instinct suggests: politicians will use current economic climate as opportunity to go slower on green initiatives – lifting them from the forefront of the consumer radar

But it’s not all bad…..

“greenery is well-embedded: economic gloom can knock it back, but it will return, and each time, it returns more strongly” – Bob Worcester, Mori

• until we know whether the public sees the present economic downturn as a blip or a more permanent shift in the global economy, it may be hard to say whether the consumer is becoming less green
• at the moment, it’s a blip feeling, not a doom-and-gloom one
• impact the economic downturn will be selective, particularly in terms of the effect on green behaviour

What does this mean for our clients?

It’s about getting the balance right…

Consumer issues are still key to many households.

Rather than compromising on their values, they’ll be looking to piggy-back – purchasing well-performing products and services that are underpinned by a strong ethical and ecological standpoint.

Quality and Performance will be the key product decision-making factors in the short-term.

but… Any ethical or ecological standpoint should not be ignored or hidden:

• Eco-Ethical prevalence will return in the medium-term
• Eco-Ethical provenance will be key in the future: consumers will be cynical of brands with new-found ethical value stances appearing overnight

[Blog originally posted at Brightfire Blog, 12/1/10]


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