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Last Updated: Wednesday, 1 November 2006, 00:08 GMT
Business embraces its ethical future
By Ben Richardson
Business reporter, BBC News

Man putting his hand in his back pocket
Will we put our hands deeper into our pockets for ethical goods?

Oi, you! Yes, you - the consumer. Put down that plastic-packaged, plane-imported mango, or the world gets it.

Step away from the shelf and make a better choice.

Today, whether you like it or not, every purchase on the shop floor of life carries environmental implications.

And while Monday's Stern report warned of the dire economic consequences should we ignore global warming, many companies have been excited by the prospects of business with a conscience.

Ethical investments by UK companies are worth more than 6bn ($11.4bn), and the food and clothing industries have seen a surge in demand for environmentally friendly products made by firms that look after workers.

Momentum has been building steadily since the early days of a movement which can trace its roots back to the founding of the Soil Association in 1946, and was popularised in the 1970s by companies such as Body Shop.

'Mass market'

One man who has been at the forefront of trying to change attitudes has been Jeremy Leggett, a former Greenpeace member who set up Solarcentury, a company that promotes the use of the sun's power.

Solar panels
To gain mass appeal, technology must be cheap enough for everyone

"I see business as a different form of campaigning," he says. "We want to make a huge profit because that is how we know we are making a difference in the fight against global warming."

Solarcentury sells solar panels that are used to provide electricity for homes and business, and last year made a profit of $1m (526,000) on sales of $25m.

Although it is a niche industry, Mr Leggett said he was optimistic about future demand because he expected the cost of goods such as solar panels to decline and the price of pollution-causing products to increase.

"At some time the two will meet, and then we will have a mass market," he explains.

'Clear conscience'

In the food and clothing industries the take up has been quicker and somewhat easier.

Supermarkets have boosted their organic range of products, often buying from national if not local growers, and companies such as Marks & Spencer have launched clothes made from materials such as Fairtrade cotton.

If you follow your heart, it's interesting to see if there is a business there
Dave Hieatt, Howies co-founder

Pop singer Bono was instrumental in developing the Product Red range of goods and services that promise to donate a percentage of their earnings to help fight Aids in Africa.

Among the firms to sign up are Apple, Gap and American Express.

"British shoppers increasingly look to shop with a clear conscience," research firm Mintel says, which predicts UK consumers will spend over 2bn on ethical foods this year - up 62% since 2002.

'Common sense'

Dave Hieatt is a co-founder of Howies, a clothing company that uses organic cotton to produce its T-shirts, jumpers and jeans.

"If you follow your heart, it's interesting to see if there is a business there," says the 41-year-old, who still wears shorts and left his job as an advertising copywriter in London to move back to Wales and see if he could do well by doing good.

Rock singer Bono
Ethical consumerism has become something of a cause celebre

Mr Hieatt expects sales at Howies to double to about 4m this year, and admits that producing ethically means he is more expensive than rivals.

However, he believes that the key to success is providing a product that does not sell itself only on its ethical credentials.

"We don't survive on our principles," he explains. "We work hard on the quality, the fit, and all the functions.

"The fact that we use organic cotton should just be one of the things because it is common sense."

'Pretty savvy'

Even though there has been a significant shift in attitudes, there is still a long way to go before everyone buys into the ethical way of life and shopping.

In a recent poll commissioned by the Observer, the newspaper found that two out of three people in the UK "agree to some extent with the view that advertising products as 'ethical' is often simply a way to charge more".

Accusations of profiteering are not likely to be helped by another result from the poll: almost half of the people asked would be willing to pay up to 10% more for goods or services that were "ethically sound" - a golden opportunity, naysayers might argue, for bumping up prices.

Ten years ago, they may not have understood branding, but consumers are pretty savvy
Stephen Cheliotis, Superbrands

However, trying to cash in on the green feel-good factor may prove to be a dangerous business, market research firm Superbrands says.

According to the company, the majority of consumers buying into the idea of ethical living are in the A, B and C1 categories - or in simpler terms, the ones with the most disposable income to spend.

Permanent shift?

But while these groups have more cash to splash, they are also less likely to be taken in by false promises and acts of so-called "greenwashing".

"Ten years ago, they may not have understood branding, but consumers are pretty savvy," says Superbrand's Stephen Cheliotis.

Only brands that can prove their ethical credentials will benefit from a shift in consumer behaviour, he believes.

Mr Cheliotis, who analyses which brands are the UK's coolest, also sees ethical consumerism as more than just a hip fad.

"Cool is of the moment, but this goes beyond that," he explains. "I don't think it is going to go away. Why would you deliberately buy a product that damages the environment?"

Should shoppers continue to change their ways, then the experts reckon that global warming may have an unexpected side-effect - helping to turn business into a moral and lastingly fashionable pastime.

Climate change fight 'can't wait'
31 Oct 06 |  Business
Stark warning over climate change
30 Jan 06 |  Science/Nature
World 'warmest for 12,000 years'
26 Sep 06 |  Science/Nature
UK sales of 'ethical' foods surge
13 Oct 06 |  Business
Global Fairtrade sales taking off
28 Jun 06 |  Business

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