The market for ethical business is growing. The value of ethical consumer spending grew to £38 billion in the UK in 2015 (an average growth of 8.5%).
But what is an ethical business?
There’s no one definitive profile of an ethical business – it’s all about making a profit and doing good. It’s not a legal structure (unless you’re a charity or not-for-profit), but it does impact how your business operates.
Running an ethical business is much like living an ethical lifestyle – it’s all about considering the impact of your actions, products and services on people, animals and the environment.
Ethical businesses try to minimise any negative impact they make on society or the environment. They may also try to make a positive impact on a particular cause – a business model that is often known as a social enterprise.
So why should businesses be ethical?
If you’re a small business owner, you have the opportunity to run your business in line with your personal values – which can help you create a standout brand.
According to Forbes, employees also care about the ethics of the companies they work for. 65% of employees would seriously consider leaving their job if their company harmed the environment, and 83% would consider leaving if their employer used child labour in sweatshops.
Operating ethically can also bring a commercial advantage. A recent study revealed that 87% of consumers would purchase a product because a company advocated for an issue they cared about, and more than 75% would refuse to purchase a product if they found out a company supported an issue contrary to their beliefs.
Big brands are building ethics into their business models and using this to stand out in crowded marketplaces and make a difference.
Cosmetics company Lush consider themselves a ‘campaigning company’ and regularly take on ethical campaigns, and have won awards and regular press coverage for their social impact work.
How can you spot an ethical company?
Large companies have realised the commercial value of being ethical, which has unfortunately led to a rise in the damaging trend of ‘greenwashing’.
Greenwashing is the practice of using advertising and marketing messages to make your business appear greener and more ethical than it actually is.
With an increase in greenwashing, it can be hard to tell whether a company is ethical. There are industry standards and certifications, like Fair Trade, but they can be expensive – which means that smaller businesses aren’t always able to achieve them, even if they meet the ethical standards.
If you’re trying to identify an ethical brand, the first place to start is to identify which issues you care most about, then engage the business in conversation.
As a general rule ethical brands will be transparent, open and honest about their credentials. They’ll be willing to talk to you about their behaviour and express intentions to improve – after all, no brand is perfect.
As an ethical brand, winning awards for your social or environmental impact can be an excellent way to demonstrate your credibility to potential customers.
They’re a great way to showcase the positive work you’re doing and give people confidence in your credibility by showing that you can provide evidence of your impact, and you’re not just greenwashing.
This year, #EthicalHour Founder Sian Conway will be judging the Blue Patch Social Impact Award – which is an exciting opportunity for ethical businesses to raise their profile. Applications are open until 24th July.
Guest blog by Sian Conway, founder of #EthicalHour.