The value of ethical appearances

Following up to my previous post, it’s important to consider what motivates a brand or company to want to be perceived by consumers as ethical. As nicely summed up in this paper, “morality has become an important factor for corporate brands, and an increasing number of companies are using the ethical dimension as a strategic element in terms of defining and promoting their brands”. You might think that it ultimately might not matter how ethical a company is or seems, since consumers are happy to say they want to buy ethically produced items but then don’t actually do so in practice. In light of that, you might think that a company that acts ethically might be choosing to act ethically because they really do wish to act ethically. Some [likely smaller] companies probably do conduct their business according to that sentiment (or were even founded with that sentiment in mind). But enormous international companies with shareholders to please and profits to maintain and extensive expansions to undertake? It’s probably going to be a bit more complicated.

Such a company might be motivated to pursue more ethical practices because it actually works out cheaper for them, which could be considered a not particularly virtuous win/win situation. For example, a company that decreases its energy costs per square metre of store space is decreasing its carbon footprint per square metre of store space (which, on the face of it, seems ethical), but more efficient energy measures also mean decreased energy consumption and decreased energy costs. So it might not be an entirely altruistic effort with only the good of the planet in mind, but ultimately some good comes of it.

But another more subtle factor to consider is what such a company stands to gain from appearing ethical to consumers (whether it’s through genuinely engaging in ethical practices or only making superficial efforts to seem ethical, or a mixture of both). What’s in it for the company?

Being perceived as ethical increases brand loyalty

A company that successfully portrays itself as being sustainable engenders increased brand trust and more positive brand affect (i.e. consumers’ feelings towards the brand), and these result in greater brand loyalty. Increasing these things likely results in increased patronage and increased profits. Quoting from the paper ‘Does Having an Ethical Brand Matter? The Influence of Consumer Perceived Ethicality on Trust, Affect and Loyalty’:

“…this research sheds light on one of the main concerns of marketing managers worldwide: do investments in CSR [corporate social responsibility] and ethics pay off at the corporate level? Of course, brands should behave ethically independently of the potential impact of such behavior on the bottom line. Moreover, in a connected world that has made brands more transparent, truly ethical behavior will be necessary to succeed in any marketplace. However, the findings of this research suggest that CPE [consumer perceived ethicality] positively impacts the product brand loyalty, and so can help facilitate customer retention, secure future purchases, and foster recommendation.”

So securing brand loyalty by being (or seeming) ethical pays off.

Consumers do pay attention to unethical behaviour

Despite that gap between ethical purchasing intentions and actual purchasing behaviour, consumers do have a reasonably complex awareness of potential ethical issues that might be associated with brands. As reported in the paper ‘Exploring origins of ethical company/brand perceptions — A consumer perspective of corporate ethics’, surveyed participants thought of issues in 36 different sub-categories that could describe possible ways that a company could act that would affect its ethical image: pollution, exploitation of labour, supporting questionable political regimes, involvement with charities, animal protection, pushing competitors out of business, fair trade involvement, corruption/bribery, sustainable farming, corporate travel policies and intellectual rights, among others. Given that consumers are becoming increasingly aware of these issues, brands need to make efforts to avoid being seen as unethical, as “often, unethical perceptions are at the root of a faltering company/brand image and reputation, with a potentially detrimental effect on consumer attitudes and purchase behavior following in its wake”. Especially since other research suggests that as consumer ethical awareness increases, that gap between purchase intentions and purchase behaviour will close.

Modelling the data shows that sustainable efforts improve profits

Depending on other assorted factors (such as customer satisfaction and brand innovativeness), sustainability efforts could increase profits. As reported in the paper ‘Corporate social responsibility, customer satisfaction, and market value’:

“Our finding that CSR [corporate social responsibility] contributes positively to market value suggests that managers can obtain competitive advantages and reap more financial benefits by investing in CSR. To be more specific, we calculated that for a typical company in our sample with an average market value of approximately $48 billion, one unit increase of CSR ratings would result in approximately $17 million more profits on average in subsequent years, a substantial increase of financial return”

In general, this is all something to keep in mind when considering your perception of a company that is positioning itself as ethical. It’s important to critically evaluate the information that is presented by a company about its ethical position. This is even more important given what I’ve said above because companies would have a vested interest in seeming ethical rather than being ethical, since successfully creating an image of being ethical could have financial benefits. You need to be able to critically evaluate the information that’s presented if you’re going to know whether a particular “ethical” initiative is a genuine effort or just lip service, otherwise you can’t assemble a clear idea of your position on a company nor make an informed decision regarding whether to be one of its customers.

16 Thoughts on “The value of ethical appearances

  1. That makes a lot of sense actually, in the end it is all linked to brand image and values – as in perceived values in the consumer’s mind. Appearing ethical, especially these days where environmental and work condition issues are a popular debate, is a key value to leverage one’s communication on. Besides, as you mentioned in a previous post, a lot of people would like to consume more ethically but, in action, keep to their habits, so if there is a big company within reach of their habits who communicates on their efforts to be ethical, it will attract these people.

    Of course, I guess there is no way of knowing to what extent this kind of company is actually making ethical efforts, and what part is really a PR game of words, fancy graphics and promises. The real question is, as a consumer who wants to buy more ethical products, how should we react to that? I guess it comes down to being educated to what a well honed PR speech is. The examples you give in your previous posts are typical and, if trained enough, we could discern, within their ethical communication, which facts seem to be real and which are communication tricks…

    • Yeah, in terms of PR spin I think there are some clues that people could relatively easily pick up on that would point to empty rhetoric by a company on its ethical stance, e.g. when they merely say they’re “striving” or “aiming” to improve a particular practice but then don’t provide any details about how they plan to achieve that improvement – they can thereby make themselves appear conscious and aware without really investing any resources into doing something. Especially since I find that companies that really do care about improving or maintaining ethical practices (such as ones founded on ethical principles, like People Tree) are keen to provide plenty of detail about exactly how they’re achieving that. Even within the H&M report, sections on some initiatives contained a lot of detail about the exact practical steps being taken to improve particular processes, whereas others were suspiciously sparse in detail.

      Hopefully more and more people do become more concerned about these issues (and the research seems to suggest things are going that way and that there’s a growing awareness) but at the moment I still think plenty of people are indifferent. If I explained to them how a particular brand was deceiving and manipulating them into forming a particular image of that brand, I think a lot of people simply wouldn’t care. I guess that’s why I’m in science – because I care about evidence and information and I care about it being used correctly rather than misleadingly.

  2. Well said. Although I suspect big corporations behave ‘ethically’ not for the sake of being ethical but for the sake of being *seen* by their customers as ethical. For example there are a lot of clueless customers that assume ‘organic’ automagically equals ‘sweatshop free’ or that ‘Fairtrade’ equals ‘totally harmless to everything and everyone’.. =( The golden glow of advertising..

    • Very true, although hopefully there’s also some truth in that paper I mentioned that said that there’s a growing awareness among consumers regarding these ethical issues, and it’s going to become harder for companies to only make superficial efforts to be ethical – they’re going to have to really buckle down and invest money in genuine efforts if they’re going to convince people of their ethical position.

      Still, as I think might be the case with H&M, a company can make a genuine effort for some initiatives, and make a bare minimum or almost non-existent effort for other initiatives, and the genuine effort will still make the company look amazingly progressive and aware to a lot of consumers, even though the company could and should be doing a lot more. I guess the aim for such companies would maybe be to try to make just enough genuine effort that people can’t accuse them of always greenwashing.

  3. Aaargh – why did they have to write “conventional cotton used in a T-shirt needs as many as 15 bathtubs of water to grow”?!?! As if organic cotton used any less. That’s plain and simple intentional misleading.

    I had to do a round of google to check if there was something special about irrigating certified organic cotton that uses less water than conventional, but no there isn’t. It might even use slightly more water, although at least it won’t be poisoned with pesticides etc.

    This sort of fact-muddling makes me question the rest of their statements. I *want* to believe H&M is at least on some level honestly aiming at more fair and sustainable practices (as far as it’s possible within fast fashion), but why do they have to be so muddy and vague about it?

      • Thanks so much for pointing out that article too, Rinna! I’m glad that people do seem to be quite cynical about whether they can trust the claims made by big companies, but yeah, the research I’ve seen all seems to point in that same direction – people would like to buy more ethical options, but until they are given plenty of those options that are easily accessible, and at a price that isn’t too different from the less ethical options, then they’re going to keep purchasing the less ethical options. But it’s encouraging to know that there’s the potential demand there, which could slowly drive a change in the market over time.

    • Their comparison there is Better Cotton rather than organic cotton, which apparently requires 20% less water than conventional cotton, but still – Better Cotton only makes up 3.6% of H&M’s cotton use at the moment, so it’s hardly a useful comparison since it currently means that Better Cotton accounts for a meagre 0.7% decrease in water usage overall for H&M. And their goals for cotton use are still bit vague – they want to be using only “more sustainable” cotton by 2020 (so I guess that’s anything that could be considered “more sustainable” in any respect to conventional cotton, so it would include organic cotton even though that would for example mean less pesticide used but not necessarily less water used), but they don’t say how much of that “more sustainable” cotton will be organic, how much will be Better Cotton, or what other options there are. So yeah, they’re still being vague about it and it’s difficult to tell how much of an impact their efforts are actually going to have (there is surely going to be some lessening of the negative impacts overall, but the question would be whether H&M could be doing a lot more to decrease that impact even further).

      • Ooops I was to quick to condemn them. BCI really is a step in better direction waterwise so no fact muddling there – well except of course that they use so little of it!
        And I guess H&M is lessening the water use of their cotton just by avoiding child-picked Uzbek cotton, which apparently is also the most wastefully irrigated cotton in the world (or at least very very very wasteful).

  4. Such an interesting post, as per usual! I’ve been doing a lot of reading on the subject as of late (is fashion wearing out the world et al.) and it really does a lot to make you think. When I read about how much energy and water goes into producing clothing of any kind it makes me cringe because regardless I know I’m going to shop and buy something. And the tanning process for leathers… which has a terrible effect on the environment.

    As for your comments – I was in Sydney for Fashion Week (still seems unreal that I was there) – SO many stunning models, and oh my god so glad I only took one pair of heels. Definitely felt a little underdressed compared to most of the other women there though!

    • Yeah, the damage caused is kind of terrifying, but I have found that being conscious of that damage has certainly led to me being more cautious and limited in what I buy in general. But yeah, I still buy some items that I can’t verify the sustainability/ethical credentials of, and I wish I could either avoid that or that I could have a greater number of more transparent options. The brands with excellent transparency and comprehensive credentials (Honest by Bruno Pieters, People Tree, etc.) just don’t make many of the type of clothes I like to wear, unfortunately.

      Haha I have a folder of photos of people looking incredibly glamourous and sophisticated in flats, and I use that to check myself on the rare occasions where I’m tempted to wear footwear that I know I will regret by the end of the day.

  5. I just saw a feature on a range of “vegan leather” bags before I saw your post..I suppose while it makes vegans happy, it’s essentially a bag made of plastic, and nowhere does it say that it’s made from recycled materials or produced in a ecological fashion, and it made me suspect it was another kind of “green washing”, but this time targeting the animal lovers. Is nothing spin? Haha. But I think I’m in a better place than 3 or 4 years ago where I didn’t consider these things as much.

    Looking at the processes for procuring cotton, I think the solution isn’t just finding a way to process them more sustainably – it’s cutting down our consumption (and manufacture) of cheap clothing. Nothing would have that devastating an effect if we weren’t making them at at such tremendous volumes.

    Lots to think about as always.

    • I think a similar thing has happened with Stella McCartney – her products have been declared in various articles to be “ethical” and “green” because they don’t contain any animal products, so no animals used, no gross chemicals leaching out of tanning factories, etc. Except as far as I can tell (and from what I’ve read from people in the industry) the alternatives she uses aren’t exactly sustainable either – plenty of petrochemical-derived materials. Yet several times I’ve seen articles about how consumers can finally buy ethically/sustainably produced products, and then it lists Stella McCartney, or one new collection of garments at TopShop that incorporates organic cotton, or whatever.

      The truly sustainable option is, as you say, to consume less, not to consume in a slightly less damaging way. But I don’t think that fits into any highly profitable business models, alas…

  6. I’m blown away by the amount of research and thought that went into this post. I helped a student with her thesis about the exact same topic last year. Call me cynical but after reading all the research materials she’d gathered, most, if not all major corporations pursue CSR not because it’s the right thing to do but consumers’ perception is important in order to drive a higher profit and brand loyalty. It’s the so called “fashionable” thing to do.

  7. I don’t have anything clever to add that hasn’t already been said, but I really really like these posts Jess! It is so good to see someone take a critical look at not only the obviously bad sides of fashion consumption, but at the supposedly good sides as well. It is all business at the end of the day, after all. I’m always staggered when confronted with numbers like the ones in that infographic – I mean, I know cotton production is terrible for the environment, but I tend to forget exactly HOW bad it is. At least I don’t own a dryer.

  8. Purchasing an ethical product is made far easier if we purchase from traders that have done all the hard work for us. One such company is the leading community for ethical brands; this online store has a very simple mission.They believe that customers should be able to make easy choices about their ethical shopping

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