Ethical consumerism is contributing to the impact of business operations on a global and local level, the connections of ethical consumerism impact the initiatives of corporate social responsibility policy implementation.
The threat to the sustainability of the environment and the health and well being of people have been major triggers for consumers to make ethical buying decisions. Consumer buying power has been an igniting force in the market, ethical consumerism motivations are to transform and shape the global market to align with ethical business practices.
Technology has enabled transparency and unveiled unethical and inhumane practices in businesses. Ethical consumerism is creating empowerment by discerning and choosing to support ethical businesses operations with buying power, and boycott business that are considered unethical. Corporations are now promoting themselves as ethically and socially sustainable, using Corporate Social Responsibility (CSR) policy implementation which may include issues that address animal rights, environmental concerns, social and economic equity. CSR promotes the company is abiding by ethical practices, assuring more of a value based corporate governance, as well as installing trust into consumers.
In many cases, consumer power has further created a threat to businesses thereby causing them to implement, transform and operate into a socially responsible business model. CSR policy implementation is a response to consumer demands and preferences. There are however companies that have foundations in operating and aligning themselves with ethical principles, there business model is based on ethical principles and in many cases caters to this niche in the marketplace. The dark side to this is that many companies will claim they are operating ethically for profit market strategies being manipulative and using “greenwashing” to claim their company or product abides by these principles.
Companies that perform corporate social responsibility as well as produce ethical products have a differential value on the market than those that don’t. This research will further explore the differential value aspects of the ethical product market as well as CSR practices. The differences will be reflected in the price the consumer is willing to pay for the product as well as the reputation and market image the company and product has. These products have a differential value offer competitors because of them being ethically produced. Many companies will create a “greenwashing” effect so they can create appeal the ethical consumer.
It is proven that the customer is the most powerful determinant of corporate behavior (Morrison & Bridwell 2011, p. 5) Consumerism is the main contributing factor to the development of global concerns about sustainability. The role of consumerism in achieving long-term sustainability lies in the fundamental decision-making power of the individual consumer. Consumer Social Responsibility has the ability to impact the global market place and promote humanitarian principles and ethics in the economy (Primeaux 2002, p. 86).
The importance of CSR is being recognized through the implementation of policies and departments in structural business operations. Corporations see how sustainability issues affect the bottom line and are looking beyond traditional business and financial factors to map out their priorities and strategies (Global Compact, 2013, 4).
The world economy is strongly structured in historical foundations of hegemony; our economy has been operating in a distorted ideology of the “free market”. This belief is based on old economic ideologies and is not supporting progression in the economy or humanity as a whole (Ransom 2003, p. 10). It is based on increased production of making more, selling more and consuming more and here the consumer society is born (Gorringe 1999, p. 24). Most traditional arguments for “free market” are based on growth not on efficiency (Charlton & Stiglitz 2005, p.153) this theoretical model is inconclusive in consistency (Gorringe 1999, p. 7).
Globalization increases the practical importance of international business ethics. CSR has attracted global attention in an increasingly integrated world economy. Corporations from the richer industrial nations have continued to increase their share of global profitability at the expense of third world peoples (Ransom 2003, p. 6). The reduction of trade barriers has allowed companies to source products and services from countries where labor is significantly lower in cost. The availability of low cost labor is possible because of the tremendous gap in living standards between the developed and the developing nations of the world (Morrison & Bridwell 2011; Jenkins et al. 2002; Grimes & Milgram 2000).
An example of this is corporations in the manufacturing and garment sector which tend to employ a large workforce in countries without strict judicial references; this means that human rights compliance is often not sufficiently embedded in the national law, such as labour laws. Most garment and manufacturing industries are based in developing countries because the production costs are low. These developing countries are often ruled by undemocratic and repressive governments, which pose as another human rights challenge.
Corporations consider doing business in developing nations without striving to improve working and social conditions. The use of low cost labor from developing economies often highlights legal, ethical, and social standards that are exploitative and not in line with Western ideals (Standing 2010; Jenkins et al. 2002; Primeaux 2002). Many scholars argue that globalization has negative social consequences in developing countries (Jenkins, R, Pearson, R. & Seyfang, G 2002; Gorringe 1999; Grimes & Milgram 2000).
The ideologies of ‘fair trade” is based on the underlying principle of ensuring fair prices and a regular income for growers, producers (Strong 1997, p. 5) and ensuring certain standards and conditions for workers. Fair trade is a method of trading which seeks to establish an equal basis of exchange between the Western and developing nations(Strong 1997, p. 3). Fair trade is developed in a parallel with the process of globalization (Ransom 2003, p. 20). Fair Trade consumerism can also be a source of competitive advantage for the socially and ethically aware.
Primeaux, P. (2002). Re-Imaging Business Ethics: Meaningful Solutions for a Global Economy (pp 21-83). Elsevier Sciences Ltd.
Grimes M. K & Milgram, L. (2000). Artisans and Cooperatives: Developing Alternative Trade for the Global Economy . The University of Arizona Press.
Tallontire, A, Retsendorj, E & Blowfield, M (2001). Ethical Consumers and Ethical Trade- A review of current literature. Social and Economic Development. Natural Resources Institute. University of Greenwich.
Gorringe, T. (1999). Fair Shares: Ethics and the Global Economy. Thames & Hudson Inc.
Morrison. E & Bridwell. L. (2011). Consumer Social Responsibility – The True Corporate Social Responsibility Edward Vol. 9(1) (pp 1-7). Morrison Pace University.
Dawson, E. (1998). The Relevance of Social Audit for Oxfam GB Journal of Business Ethics (pp 1457-1469). Kluwer Academic Publishers.
Global Corporate Sustainability Report 2013. United Nations Global Compact. New York-Published by the UN Global Compact office Contact: firstname.lastname@example.org September 2013