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Ethical Consumerism Report 2007

Household ethical expenditure almost doubles in five
years, but still a small proportion of total consumer spend

Household expenditure on ethical goods and services has almost doubled in the past five years according to the eighth Co-operative Bank Ethical Consumerism Report published 30th November 2007.

The Report, which acts as a barometer of ethical spending and boycotts in the UK, shows that last year, on average, every household in the UK spent £664 in line with their ethical values compared with just £366 in 2002, an increase of 81 per cent.

However, whilst the overall ethical market in the UK is now worth £32.3 billion a year, up nine per cent from £29.7 billion in the previous 12 months, it is still a small proportion of the total annual consumer spend of more than £600 billion.

The annual household expenditure includes £190 on ethical food and drink, such as fair trade and organic. Fairtrade sales grew by 46 per cent, driven, in part, by increased consumer awareness of the FAIRTRADE Mark, which is now recognised by almost three in five, and greater availability of Fairtrade products.

Households spent £213 on home products, including energy efficient light bulbs and “A” rated kitchen appliances. Aided in part by greater product choice and a general reduction in the price differential with incandescent light bulbs, sales of energy efficient light bulbs increased by 44 per cent.

However, only £6 per household is spent on renewable energy, including micro-generation. It is estimated that less than one per cent of households have invested in micro-generation and the government’s decision to reduce the level of grants available can only make micro-generation an uneconomic option for even more households.

However, whilst the overall market continues to grow steadily, the report shows that some areas have seen a marked decline. For example, charity shops, where sales are down 13 per cent, appear to have been squeezed by the budget retailers selling cheaper clothes and Internet auction sites offering an alternative outlet for second hand goods.

Interestingly, 2006 also saw the emergence of a significant number of consumers claiming to avoid budget clothing outlets on the basis that low cost is taken as a likely indicator of poor supplier labour conditions. Sales of ethical clothing increased by 79 per cent.

Overall, ethical food and drink registered the biggest sector increase of 17 per cent, up from £4.1 billion to £4.8 billion. The whole sector saw a year on year rise, but the market for sustainable fish increased a massive 224 per cent following the introduction of new lines by some of the leading brands. Sales of Fairtrade goods, such as tea, coffee and bananas, increased by £90 million to £285 million (46 per cent).

Although ethical investments were up 18 per cent, this was in line with the overall market. Ethical banking saw a 11 per cent increase from £5 billion to £5.6 billion.

Simon Williams, Director of Corporate Affairs, said: “The market share for ethical food and drink appears to have broken through the ‘green’ glass ceiling of 5 per cent, and factoring in the effect of consumer boycotts, this market share could be as high as 7 per cent. Potentially, we could see market share hit ten per cent in the next year or two.

“However, it’s vital that we do not lose sight of the fact that ethical consumerism is still a small proportion of total spend in the UK and cannot be relied upon to solve all the world’s problems such as deliver the significant 80 per cent reductions in CO2 needed to avoid catastrophic climate change. For example, the average annual spend per household on renewable energy is just £6, equivalent to the cost of a cinema ticket.

“Ethical consumers play a vital role in the early adoption and development of ethical products and services, but it will only be through legislation that we will secure the necessary changes to deliver mass market, low carbon lifestyles.”

Ethical consumerism in the UK, 2005 – 2006