Why Ethical Consumers Talk the Talk But Don’t Walk the Walk

Written by on October 1, 2012 in CSR, Green, Strategy - No comments

Evidence shows that a significant portion of people who identify as “ethical consumers” do not make purchases accordingly.  Instead of seeing this as a problem, it should be seen as an opportunity.

They call it the 3:30 Paradox, named because evidence shows that about 30% of individuals say they are ethical consumers while only 3% actually are.  It is discussed at length in the study “Why ethical consumers don’t walk their talk” by Michal J. Carrington, Benjamin A. Neville, and Gregory J. Whitwell and the recent article “In search of the elusive ethical consumer” by Michael Skapinker of the Financial Times.  If true, then there does not seem to be a significant demand for socially responsible goods, and therefore not much of an incentive for businesses to produce them.  But a proper explanation of the paradox might signal more of an opportunity for responsible manufacturers than anything else.

Explaining the Paradox

The pessimistic explanation of the paradox is that self-identified ethical consumers are lying or lack self-awareness.  The study’s authors considered the possibility that social pressure influenced those surveyed to give what they considered the “right” or “socially acceptable” answer.  This explanation, however, seems insufficient (and the authors agree).  After all, 70% of surveyed individuals were not concerned about the ethics of their purchases, so there does not seem to be social pressure (levied by a majority) to care.  Furthermore, while identifying as an ethical consumer involves a simple yes or no answer, actual purchasing is not that simple.  Actual ethical consumption needs to be understood across a spectrum where some consumers always purchase ethically, others never do so, and most are somewhere in between.

The authors of the original study instead argue that the discrepancy can be primarily explained by the difficulty in being an ethical consumer.  While the survey indicates an intention to purchase ethically, the intention simply goes unfulfilled.   Being an ethical consumer, after all, requires having a great deal of information about products and involves paying a premium.  The idea here is that ethical consumers would walk the walk if they could, but the path is simply too steep.  This answer explains where consumers are on the spectrum mentioned above; when the cost is too high and the information to hard to come by, only the rarest few still make ethical purchases.  But when these burdens are smaller, more individuals make the ethical purchase and accordingly consider themselves ethical consumers.

What does this mean for Socially and Environmentally Responsible Companies?

If the difficulty of being an ethical consumer is the primary cause of the paradox (and it seems more likely)—then the proposed problem for responsibility-minded businesses actually signals an opportunity.  If most ethical consumers are in a part of the spectrum where they purchase ethically when it is not too difficult, producers simply need to appeal to this group by making it easier.

Reducing the burden on the consumer involves a few things.  First, efficient methods for making ethical products need to allow those goods to be sold at competitive prices.  Ethical consumers can be expected to pay a reasonable premium for ethically responsible goods, but it cannot be too high.  If the number of businesses offering socially and environmentally responsible products grows, then presumably innovation and competition amongst those businesses will lead to more reasonable pricing.

Besides prices, ethically responsible products need to be easier to find.   Such products might not be readily available, and if they are available they might not be clearly identified.   The growth of e-commerce sites that cater specifically to ethical products can help with the availability issue.  Furthermore, an information infrastructure that properly labels ethical products through third-party certifications and markets them as such will give consumers the information to easily decide based on their own preferences.  As these devices mature, it should only get easier for consumers to purchase ethically.  That relief will hopefully close the gap between what ethical consumers say and do.

What does it mean to purchase ethically?

Finally, it is necessary to get a better sense of what it means when individuals identify themselves as “ethical consumers.”  It has thus far been assumed that purchasing ethically means purchasing products that create positive impact (or minimize negative impact), but it could also involve something more.  Perhaps it is not just about the practices of a company but the reasons behind those practices.  If a company offers ethical products for the wrong reasons, then ethical consumers still might not be motivated to purchase those goods.

Skapinker discusses Unilever’s recent moves to make more sustainable products and their frustration with the fact that the change did not motivate ethical consumers to buy their products.  Skapinker notes that Unilever, however, initiated those reforms only after a negative ad campaign against them by Greenpeace.  Ethical consumers might want companies to share their values, not just cater to them.  The challenge is differentiating between the companies that share the values of ethical consumers and those that don’t.

The development of benefit corporations and social enterprises, where these values are explicitly built into the purpose of the business, could itself do a great deal to bridge the gap between the intention and the action of ethical consumers by giving those consumers businesses they can trust.   Social enterprises and benefit corporations could have an advantage over traditional businesses in the ethical consumer demographic and bring more of them from words to action, to the point where the 3:30 paradox might not apply to them at all.

 

 

Dan Osusky

Dan Osusky is an Associate at B Revolution Consulting, a benefit corporation consulting firm that advises social entrepreneurs in business plan development and strategy, and COO of B Revolution’s ezBcorp service, an online services platform that provides quick and convenient business solutions for social entrepreneurs. He has a graduate degree in Philosophy and believes that as a complement to the passion of social entrepreneurs it is necessary to develop an intellectual framework that can provide insight into the societal, economic, and moral implications of social enterprise.

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