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Ethical market worth £32.3bn in 2006 30.11.07

The Co-op Bank’s ethical consumerism report for 2006 show the sector has grown from 29.3 billion in 2005 to £32.3bn in 2006. Household spending on ethical goods and services is now £664, up from just £366 in 2002 an 81% increase in five years.

While the overall ethical market in the UK is now worth £32.3bn a year, up 9% from £29.7bn in the previous 12 months, it is still a small proportion of the total annual consumer spend of more than £600bn, the bank says.

Six per cent of the UK adult population (2.8 million people) are now committed ethical consumers, shopping for ethical productsand services every week. The annual household expenditure includes £190 on ethical food and drink, such as fair trade and organic.

Fairtrade sales grew by 46%, 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. Sales of Fairtrade goods, such as tea, coffee and bananas, increased by £90m to £285m.

Overall, ethical food and drink registered the biggest sector increase of 17%, up from £4.1bn to £4.8bn.

The market for sustainable fish increased a massive 224% following the introduction of new lines by some of the leading brands.

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.

Green home: Within an overall spend of £6.2 billion on environmentally friendly and energyefficient home products. On average 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.

In May 2007, the Low Carbon Buildings Programme which provides funding for household micro-renewables reduced the grant money available from £15,000 to £2,500 per household, and the rules under which money can be claimed were tightened up.

Simon William points out, “The average annual spend per household on renewable energy is just £6, equivalent to the cost of a cinema ticket.”

Ethical clothing sales are estimated to have risen by 79%, however charity shops have seen their sales drop by 13% as they are squeezed by hard discounters and online by the likes of second hand portals such as e-bay. However a significant number of consumers claimed to avoid budget clothing outlets on the basis that low cost is taken as a likely indicator of poor supplier labour conditions.

Eco-travel and transport: Six per cent growth to £1.7 billion reflects limited consumer choices for eco-travel. However, an increased proportion of consumers did report using public transport for environmental reasons, in 2006

Ethical personal products: Overall spend is static at £1.5 billion. Consumer boycotts of clothing retailers did grow by 20 per cent reflecting a concern amongst some consumers that low prices could mean poor labour conditions.

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

In 2007, ethical investment funds have out grown the overall funds market. According to the Investment Management Association, in the third quarter of 2007, a net £135 million flowed into ethical funds. This represents a 500 per cent increase on the third quarter of 2006, and year on year total ethical funds under management increased by 29 per cent against an overall market rate of 21 per cent.

While the growth in ethical consumerism is very positive it is important not to loose track of the overall picture, at an estimated 5.38% of the market it is a small but growing part of the economy.

For Barry Clevin, ethical policies manager at the Co-op, "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 deliver the 60%-80% reductions in C02 emissions needed," he explained.

"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,"

Peter Shield

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