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Green and Ethical Consumer Market Assessment 2000
Key Note Publications Ltd, Jan 2000
Environmental concerns have come of age in the year 2000. Parallel developments in consumer campaigning, legislation and industry action have ensured that green and ethical issues have moved from the fringe of public concern to the mainstream. The successful consumer campaign against GM food, which led to the rapid removal of foods with GM ingredients from supermarket shelves and a change of direction in supermarket policy, is one example of a rising trend.
Market Assessment has identified a number of demographic and economic factors which will contribute to growing pressure for 'green' solutions and add to demand for green and ethically sourced products. Our survey results show that those over 35 are far more responsive to green and ethical issues - and they are set to become more influential in the market. Numbers in the 35-44 age group have increased by 13% between 1995 and 2000, and numbers in the 55-64 age group will grow by the fastest rate of all age groups (13%) in the years 2000-2004.
The economy is in good shape and personal disposable income (PDI) is forecast to grow by 3.4% this year. The success of the economy is creating great pressure on the environment, particularly in the South East. The number of single person households is forecast to rise by over 12% between 2000 and 2004. This will lead to increased car mileage and increased building and pressure on land. One beneficiary will be rising demand for white goods. The pace of government action to a greener policy has been slow, but pressure for greener solutions is set to rise with the increase in petrol prices of 11% between 1999 and 2000.
Growing consumer expenditure and market competitiveness is shifting the focus of ethical consumer attention from traditional 'green' issues of environmentally friendly food production, to more careful scrutiny of the ethical criteria affecting pricing and service provision, particularly in areas such as banking and car manufacture.
The major difficulty confronting consumers who wish to make environmentally friendly choices is the lack of information provided by manufacturers and suppliers.
The success of voluntary codes where they exist remains partial, with information often presented in confusing forms. In 1998, the Government introduced a voluntary code of practice, the Green Claims Code, with the aim of eliminating information that may be misguiding. There has also been progress in provision of ethical trading schemes, and more responsivity by supermarkets in particular, to ethical consumerist concerns, most notably in supermarkets' promotion of organic farming and increased membership of the Ethical Trading Initiatives (ETI).
Legislative controls in the form of European directives are playing a key role in product development, with the introduction of European Union (EU) directives which mean manufacturers must comply with prescribed levels of energy consumption. This legislation is leading to increased sales for more energy efficient frost-free models. Recycling targets set by the EU will also increase pressure on manufacturers to demonstrate the recycleability of their goods. Product labelling will become more, rather than less, of an issue. Market Assessment forecasts that there will be greater differentiation and eventually, market segmentation, according to more advanced criteria of labelling and ethical sourcing.
Environmental concerns rank highly among those adults surveyed for this report. Some 72% of respondents in our survey recycle goods. Animal welfare is the top environmental concern, particularly among women, with 70% of respondents saying they would buy food advertised as animal-friendly. A surprisingly high percentage of respondents (60%) said they now buy ethically produced food. But concern for ethical sourcing is less pronounced in relation to services, including banking and holidays.
The results of our NOP survey show that women consistently demonstrate a more positive attitude to green and ethical issues than men. Women are more likely than men to buy ethically produced food products. Some 66% of female respondents said they would buy these products compared with only 54% of men. In contrast to attitudes to other ethically produced goods and services, women are less likely than men to respond positively to the offer of ethical financial services. This can be attributed to a more cautious attitude to money and saving among women, especially those with younger children.
There is also a wide variation in responses according to age. Those in the 25-34 age group, who are most likely to be in the family lifestage, ie have young children living at home are, in broad terms, are less inclined to be influenced by environmental or ethical factors when purchasing. They are also less likely than any other group to respond positively to ethical banking (79%). This trend can be attributed to higher levels of mortgage debt and higher outgoings on childcare.
Older respondents attach greater priority to ethical issues. Those in the empty nester 45-54 age group are most likely to have refused to purchase an item of clothing on ethical grounds (35%). Similarly, those aged 55-64 are most responsive to advertisements for ethical financial services and most likely to close their accounts if they find their bank is operating a non-ethical investment policy.
The results from our NOP survey suggest that time availability is also a crucial factor in participation in recycling of goods such as newspaper and glass. For example, readiness to recycle goods increases with age. Some 82% of respondents in the 65+ age bracket recycle on a regular basis compared with only 60% in the 25-34 age group.
Our survey also showed significant regional variations, particularly in relation to banking and finance. The Scots are most in favour of financial services that offer an ethical dimension and among those most likely to close a bank account if their bank does not operate an ethical investment policy. Consumers in the old industrial regions of Lancashire and the Midlands are less influenced by environmental and ethical concerns than consumers in any other region.
There are significant regional variations which indicate different attitudes to ethical issues in various regions. There is a conspicuously higher percentage of East Anglian respondents (42%) who admit to not having bought clothing where they felt that workers were being exploited. This suggests a greater sensitivity to issues of employment and exploitation in this region which has traditionally had a high proportion of rural workers.
A fall in individual donations to charities has been interpreted by many organisations as meaning that British consumers are less ethical or caring than they used to be. Market Assessment analysis shows that a fall in giving is directly related to perceptions of economic security. Young people are consistently less responsive because they now have less PDI than older adults. They do, however, respond to media led campaigns and a more 'corporate' approach. Respondents in the 16-24 age group are more likely to buy through charities than respondents in any other group (54%).
The Chancellor's Budget 2000 package of tax incentives is set to raise levels of giving to charities. The package has provided a boost for charities' income, which could provide a means for charities to raise an extra £400m a year. Market Assessment forecasts that charities' fund-raising will take on a more corporate style as larger fund-raising and tax incentive schemes grow in importance to charities' budgets.
Market Assessment shows that awareness of ethical issues in relation to the service issues is still low in comparison to awareness of issues such as cosmetic animal testing. In the case of the banking industry, increased legislation is expected to have a greater effect in the next decade, particularly if Britain moves into Euroland. It can be anticipated that Britain will consequently have to emulate the more advanced environmental policy practised by its European competitors.
The shift to a green public transport system and increasing taxes on fuel has been brought to a halt in early 2000 with a government turnaround on raising taxes, because of rising industry prices. Given this situation, Market Assessment predicts that the UK car market will experience continued strong growth through until 2004.
Global industries such as the holiday and clothing industries, continue to illustrate the long term difficulties of introducing ethical policy without universal standards of good practice. Only 28% of respondents in our survey have decided not to purchase an item of clothing on the basis that they felt its workers were exploited in the process of its production. Similarly, less than a third would choose a holiday which advertised environmentally friendly features.
As a result of the low priority attached to the environmentally friendly aspects of holidays, the level of activity in eco-friendly holidays and holiday policy is forecast to remain low. Given the increasingly global and competitive character of the tourist industry, it seems likely that any growth in the eco-holiday sector will be consumer rather than market led.
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