As consumer awareness grows around the consequences of their buying choices, the focus has turned towards the ethical conduct of enterprises - with particular attention on small and medium-sized businesses (SMEs).
But just how important is it to consumers that the businesses they purchase from are ethical? Money.co.uk business credit card experts surveyed 2,002 consumers to find out.
How does an SME's ethical values affect their customer base?
The study found that an overwhelming majority of Brits are committed to buying from ethical businesses (70%). 30% of Brits went even further, saying they actively chose not to purchase a product or service because they were dissatisfied with a business's ethical practices.
Key Findings:
89% of Brits said it is important that a small business has strong ethical values
70% of Brits would be more likely to support a small business that actively communicates its commitment to ethical and green practices
51% of Brits would be likely to pay a premium of up to 10% for products or services from a small business that is known for its ethical and green practices
65% of Brits would be more likely to become a loyal customer of a small business that consistently demonstrates ethical practices compared to one that doesn't
It’s clear that being an ethical business in this day and age can make a huge difference to customer bases and increase profits. This is highlighted even further when it comes to Gen Z, as over half (51%) of their age group said they have chosen not to purchase a product from a business if they are dissatisfied with its ethical values.
Paying A Premium For Ethical Business Products/Services
Just over half (51%) of Brits are likely to pay a premium of up to 10% for products or services from a small business that is known for its ethical and green practices. SMEs should factor this into their decision-making when it comes to sourcing products or paying wages, as while going down more ethical routes may increase costs, they may be able to increase their prices accordingly to ensure the profit margin stays the same.
The bottom line is, consumers want to spend more money on your business, but they want you to be better, and they want you to shout about it!
Small Business And Corporate Social Responsibility
Two-thirds (66%) of Brits agree with the statement: ‘Small businesses have a responsibility to contribute positively to societal and environmental issues.’ With this in mind, SMEs should consider factoring this into their growth strategies and communicating this with their customers.
With 71% of Brits aged 24-35 agreeing with the statement, it’s likely that this will remain public opinion for years to come.
How Can A Business Become More Ethical?
According to our survey, the top five ways Brits think small businesses can be greener/more ethical, are:
Sustainable sourcing of materials (56%)
Fair treatment of employees (51%)
Minimal environmental impact in production processes (49%)
Transparent supply chain (39%)
Community engagement and support (36%)
Aside from these, an SME's banking and finance practices can contribute to them being more ethical.
For example, just over a fifth (21%) of Brits think small businesses can be more ethical by not using banks that contribute to fossil fuel production. Furthermore, a fifth (20%) of Brits think small businesses can be more ethical by using ethical business banking e.g. an ethical business credit card.
How Can A Business Best Communicate Its Ethical Practices?
It’s clear from the survey results that consumers are more likely to buy from ethical and green businesses, so it's in their interest to clearly communicate these values to potential consumers. But how can they best do this?
The survey revealed that:
Nearly 3 in 5 (57%) Brits said they would prefer small businesses to communicate their ethical practices on their website.
Just under half (49%) of Brits said they do/would prefer small businesses to communicate their ethical practices on social media.
Over a third (35%) of Brits said they do/would prefer small businesses to communicate their ethical practices on labels.
Top Tips For SMEs On Increasing Ethical Practices
Kyle Eaton, money.co.uk business credit cards expert gives his top tips for SMEs on how they can be more ethical:
Choose Ethical Banks and Financial Products:
Research and choose a bank that aligns with your values and ethical principles. Look for banks that prioritise environmental sustainability, social responsibility, and ethical investment practices.
Consider factors such as the bank's commitment to environmental conservation, support for community development initiatives, and transparency in its operations.
Look for credit card issuers that offer ethical business credit cards with features such as competitive interest rates, rewards programs that support charitable causes, and transparent fee structures.
Consider credit card companies that have policies in place to avoid financing activities that harm the environment or violate human rights.
Investment Screening:
Inquire about the bank's investment screening policies to ensure that your money is not being used to support industries or companies involved in activities such as fossil fuel extraction, weapons manufacturing, or human rights violations.
Choose a bank that offers investment options aligned with your values, such as socially responsible investment (SRI) funds or impact investing portfolios.
Support Local and Community Banks:
Consider banking with local or community banks that prioritise serving the needs of their local communities and businesses.
Local banks often have a better understanding of local economic challenges and can provide personalised services tailored to your business's needs.
Energy Efficiency:
Invest in energy-efficient appliances, lighting, and machinery to reduce energy consumption. Implement policies to turn off lights, computers, and other equipment when not in use.
Consider renewable energy sources such as solar panels or wind turbines.
Reduce, Reuse, Recycle:
Encourage employees to minimise waste by using reusable items such as mugs, water bottles, and containers.
Set up recycling bins for paper, plastic, glass, and other recyclable materials.
Partner with local recycling centres or organisations to properly dispose of or recycle waste.
Sustainable Procurement:
Source products and materials from suppliers with sustainable practices and ethical labour standards.
Prioritise suppliers who use eco-friendly packaging and shipping methods. Consider the entire lifecycle of products, including their production, transportation, and disposal.
Transportation and Logistics:
Encourage carpooling, biking, or the use of public transportation for commuting.
Optimise delivery routes to minimise fuel consumption and emissions. Consider switching to electric or hybrid vehicles for company transportation needs.
Community Engagement:
Participate in local environmental initiatives or volunteer programs.
Support community projects focused on sustainability, such as tree planting or beach cleanups.
Engage with local businesses and organisations to promote sustainability efforts collectively.
Transparency and Accountability:
Be transparent about your environmental and ethical practices with customers, employees, and stakeholders.
Regularly review and assess your sustainability initiatives to identify areas for improvement.
Consider obtaining certifications or accreditations related to sustainability and ethical practices.
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