Published on March 24th, 2015 | by Ashley Sheets

The Business Case for Ethics in Business

If you’re working in a big business with big budgets, introducing a fluffy concept like ethics and transparency can be the steepest of uphill struggles. How many sales will we make through ethical behaviour? What’s the ROI on transparency?

Slowly, though, the larger businesses of the world are coming around to the idea that behaving responsibly and treating your fellow human as you wish to be treated is good business practice – and the driving force is that nebulous consumer group known as millennials.

The old adage goes that a company does not control their brand, their consumer does. Kirk Phillips, Principal at marketing agency Conrad | Phillips | Vutech, puts it this way:

“A brand is not a name, trademark, logo, package or product. A brand is a collection of your thoughts and feelings about your experiences with it.”

As millennials become the largest-spending consumer group the inquisitiveness that comes with growing up online has come to the fore. Their purchasing habits are different from those of Generation X and Baby Boomers before them in many ways. They are more confident, more impatient, and more communicative. Millennials don’t just want just your product – they want to know where it came from, how it got here and the hourly wage of the person serving it to them.

All of these factors mean that being a business that would generally be considered unethical isn’t an option any more. A twentysomething consumer won’t just take their custom elsewhere, they’ll Instagram pictures of your dirty food preparation area. They’ll start a petition to get you to end your unpaid internship programme. They’ll choose a quirky local bookshop if they find out your tax payments resemble Amazon’s.

A recent study by Elite Daily found that 75% of all millennial-aged consumers expect companies to give back to society rather than just turn a profit. If current trends continue, it won’t be enough to be not-unethical – companies will have to be ethical by default and compete for custom on their corporate transparency credentials. Micah Solomon writing in Forbes sums up the situation tidily:

“[Millennials] will reward your company if its behavior matches their own ethics and punish you if it doesn’t.”

We can see this trend infiltrating the biggest of businesses already. McDonalds have switched all their eggs in UK stores to free range. Starbucks have moved their HQ so they cannot be accused of tax avoidance. Some of the UK’s largest clothes retailers have started schemes to educate and support workers in their third-world garment factories, and regularly inspect working conditions.

Which is all well and good – but what about the numbers? Is it really feasible to construct a business case for good behaviour? Well, yes.

The bottom line is this – millennials are more populous than the previous generation, they shop more often, and have more money to spend than any previous generation. Estimates put their annual spending power in the US alone at $200 billion, with their indirect spending topping $500 billion. As the previous generation retire, that spending power is only set to rise.

A 2011 report by Barcley found that 30% of male millennials shop for clothes several times a month, three times more than older generations. A small proportion – 8% – even shop more than once a week, something unheard of amongst their older peers.

The market is unquestionably there, with wads of disposable income lining their pockets. If your boss still needs convincing, try this. Ethical business practices can effectively give you license to raise your prices. A study carried out by Remi Trudel and June Cotte of the University of Western Ontario’s Ivey School of Business found that consumers would be willing to pay $5.89 for a t-shirt ostensibly produced in sweatshop conditions. Take away the information about the shirt’s origins, though, and the price jumped up to $8.31.

And here’s that business case you’ve been looking for: tell consumers the t-shirt was ethically produced and wallets fly open – with people on average willing to pay $9.71. A 65% increase in revenue will be hard to ignore for even the most ethically-challenged executive.


Jon Norris is a freelance writer and content strategist.

Tags: ,

About the Author

Ashley is an American writer now making a life in the UK. She has a passion for exploring ethical actions and mindfulness in all things. Writing about her transcontinental observations and continually learning make her truly happy.

Comments are closed.

Back to Top ↑