• home

    Profits for Progress?


    © International Trade Centre, International Trade Forum - Issue 1/2004

    Who is "the responsible consumer", that new and powerful figure in business school lectures and trade negotiations? Someone who buys from a firm that shows "corporate social responsibility", it seems.

    Responsible consumers - those who want organic products, environmentally friendly manufacturing methods and recyclable beverage containers - remain a minuscule minority of buyers, no doubt. But they represent a significant and growing segment of the market. As consumers gain access to more information about business practices, even large companies can suffer if they fail to take heed of these consumers' concerns. The trend, as discussions at the World Economic Forum's Annual Meeting in Davos showed, is expected to gain in momentum and power.

    "The field of responsible consumption can be described as manic but minuscule," said Ed Mayo, Chief Executive of the National Consumer Council, United Kingdom (UK). Consumers account for just 1-10% of market share, depending on the segment. But at US$ 23 billion a year, worldwide sales of organic produce, for example, are hardly insignificant.

    Neil Kearney, General Secretary of the International Textile, Garment and Leather Workers' Federation in Brussels, Belgium, expressed astonishment that many retailers still argue that the responsible consumer does not exist, that people shop for price and quality only. Look again, he suggested. Informed consumers have rebelled after learning, for example, of substandard labour conditions in overseas factories. Young men in Brooklyn, New York, held a demonstration in front of a Manhattan retail outlet where they threw their sneakers at the entrance in protest at exploitative practices by the maker of athletic shoes. Counterparts in Europe tied the shoelaces together and slung the shoes over telephone wires, turning a whole stretch of road into a performance art piece denouncing bad practices. "Some retailers complain that they're not rewarded for doing good," he said. "But I think consumers punish those who do wrong."

    Profile of the responsible consumer

    But what do we know about the responsible consumer apart from these concerns? Roberto Milk, Chief Executive Officer (CEO) of the United States-based online global crafts retailer, Novica, reported that in focus groups conducted by his company, the highest correlation is with a demographic segment called "cultural creatives". Author Paul Ray identified cultural creatives in his book of that title, as a group of 50 million people around the globe who are changing the world. Said Milk: "They are the fastest-growing segment. They have above-average education. They are socially conscious. They have high rates of international travel, and they are interested in learning about other cultures."

    They also rarely watch television, often preferring radio. In the United States, they tend to listen to the listener-sponsored, non-profit, ad-free National Public Radio. They are avid readers, and tend to be involved in neighbourhood affairs, supporting schools or local environmental groups, for example.

    Reaching these consumers requires new marketing and sales approaches. "They don't believe ads," said Milk. "They only believe a trusted source, like a journalist who writes an article. It also can be useful to form a partnership with a larger organization, as Novica did with National Geographic."

    Mel Young, President of the UK-based International Network of Street Papers, a 22-country network of newspapers published by the homeless, cited a survey that showed that younger people tend to be more aware of the issues surrounding responsible consumption but that older people are more likely to take action. His analysis: in order to make choices, people need sufficient disposable income; thus when today's young people begin to earn higher salaries, the responsible consumer movement will grow significantly, he predicted.

    Linking CSR to the bottom line

    If you are a company, can you look to your bottom line to see the benefits from corporate social responsibility (CSR)? Not necessarily, warn the experts. A leading proponent of CSR, Simon Zadek, Chief Executive of the non-profit organization AccountAbility, UK, answered that it pays "maybe, sometimes, usually in asymmetrical ways". Marilyn C. Nelson, Chair and CEO of the US-based conglomerate Carlson Companies, wanted to change the question. She'd rather ask, "Does it cost?"

    This is where business can welcome governments into the arena. The consensus seemed to be that corporate responsibility is only viable when imposed by government regulation, thus levelling the playing field by increasing the costs for the "Darth Vaders" of the corporate world.

    Ricardo Young Silva, Chairman of Brazil's Ethos Institute, a business association that encourages ethical behaviour, argued in addition that responsible practices can generate true sustainable development: progress that benefits everyone, including corporations themselves. "When executives make decisions that will not only benefit their shareholders but also their stake-holders in the community and the nation, they will create a stable business in the long run," he said. "We need to include poor people in development and not destroy the environment, which is one of our greatest assets."

    Getting from here to there is the challenge.

    ITC helps exporters target "conscientious consumers"

    • World markets for organic fruits and vegetables, an ITC publication, provides detailed information on the demand for fresh organic fruits and vegetables in the world's largest organic markets. The information is based on a joint ITC/FAO/Technical Centre for Agricultural and Rural Cooperation ACP-EU study. ITC has also produced studies on organic products in the United States, major European markets and Canada (forthcoming).

    Contact Peter Smit, Chief, ITC Market Development Section, at smit@intracen.org

    • Tropical timber products, a joint ITC-International Tropical Timber Organization publication, examines the development of further processing of timber from sources that are increasingly managed on a sustainable basis. Further processing helps reduce poverty - probably the greatest cause of forest destruction - by creating a source of export revenues and fostering a skilled workbase.

    Contact Peter Smit, Chief, ITC Market Development Section, at smit@intracen.org

    • ITC's Export Packaging service includes training and information components on "green" packaging for firms in developing countries.

    Contact Jacky Charbonneau, ITC Senior Export Packaging Officer, at charbonneau@intracen.org

    • An Introduction to Eco-labelling, a recent issue of ITC's Export Quality Bulletin, provides an overview of the main trade impacts of eco-labelling, and information and contacts for eco-labelling schemes in developing and developed countries.

    Contact Shyam K. Gujadhur, ITC Senior Adviser on Standards and Quality Management, at gujadhur@intracen.org

    • Under ITC's Export-led Poverty Reduction Programme, a community-based tourism project with major hotel chains in Costa do Sauípe, Bahia, Brazil has helped them to source goods and services for international tourists from the local communities.

    Contact Fabrice Leclercq, ITC Trade Promotion Adviser on Export-led Poverty Reduction, at leclercq@intracen.org

    Related Forum articles

    • Growing Taste for Organic Products in the United States
    • The Environmental Services Business: Big and Growing
    • Making Your Packaging Environ-mentally Friendly
    • Certification: Helping Markets Support the World's Forests
    • Environmental Competitiveness: "Green" PurchasingTop Market Opportunities for LDCs: Medicinal Plants; Tourism; Spices and Culinary Herbs

    These articles and more are available on the Forum web site (http://www.tradeforum.org).

    Prema de Sousa, Forum's Contributing Editor, wrote this box.

    A former correspondent for the Financial Times, São Paulo-based journalist and writer Bill Hinchberger is Editor and Publisher of BrazilMax: http://www.BrazilMax.com

    Peter Hulm also contributed to this article.