In a previous article, we covered how to improve ethical trade. Here, we examine the 4 reasons why ethical trade is important to your business.
Why? Not only does ethical trade create enormous benefits for people around the world but it also represents an opportunity for brands. This is because ethical trade is changing the entire buying cycle. From investment decisions to consumer motivations, it is clear that a focus on ethical trade is key now criteria.
The rise of the conscious consumer
Buying behaviour is changing and the relationship between global brands and the customers who support them is being transformed by the rise of the conscious consumer.
Consumers are more aware of issues like the quality and safety of products, where they might have come from, who might have made them and how workers might have been treated during their manufacture. The Old Customer to New Customer profile is drastically different:
The COVID-19 pandemic has not changed this trend. A report published by Deloitte states that the pandemic has only served for consumers to think more about their buying habits. As we shift out of the pandemic, brands that shift to a business model that reflects a more equitable and conscientious approach to trade will likely benefit from consumer loyalty.
Changing Regulation around the world
Another reason to shift towards an ethical business model is that it will soon become a legal requirement to do so. Momentum is shifting as an increasing number of regulators are introducing laws to penalise companies that put profit before their people, including people in their supply chains.
From Australia, the US, to the EU, regulations are being developed to tackle modern slavery, child labour, protection of human rights, and fair wages. By becoming an ethical business now, you reduce the likelihood of falling foul of the law in the future.
Regulation isn't also limited to government intervention. Innovators in markets are aware of the issues around ethics and trade. Self-regulation is an essential part of improving standards around the world. This is why the BRCGS Ethical trade and Responsible Sourcing Global Standard embraces the realities of modern global supply chains and provides brands and manufacturers with a genuine pathway to demonstrate social compliance. Self-regulation, therefore, is an obvious way to say to consumers, "we care".
Influencing investment decisions
We are seeing investment decisions based on ethical and social governance playing a critical role in long-term investment strategies as shareholders demand value-based investment options. For example, Ernst and Young report the tangible and growing impact poor governance practices, such as poor worker rights practices, have on investment decisions.
And financial performance data clearly shows that investors want to invest in ethical businesses. The Global Sustainable Investment Review reveals an increase of 15% of sustainable and responsible investments (SRI) in the last two years bringing the total to USD 35.3 trillion.
A commercial opportunity
Combine consumer motivation, regulatory obligations and investment reward, you already have a strong case for moving towards an ethically certificated business.
And leaving aside the obvious benefits for people working under better conditions, plus positive environmental impacts, there is also a commercial benefit to going ethical.
Brands and retailers that signal their ethical credentials to consumers ensure they are providing them with the assurance that their products aren’t harming people. Other brands and retailers need to develop effective strategies that make their supply chains stronger, resilient and sustainable, ensuring that workers’ rights and freedoms are protected. If they do not do this consumer confidence may be lost, sales revenue reduced and they may even go out of business.
Thus, the market potential for brands to respond to the needs of the conscious consumer is significant.
The BRCGS Ethical Trade and Responsible Sourcing Global Standard
Our Global Standard can help businesses with implementing the operations and processes to become an ethically recognised organisation.
The requirements of the standard are based on universally applicable conventions from the International Labour Organisation as well as core principles of the Ethical Trading Initiatives’ Base Code. The Standard is designed to allow an assessment of a company's premises, operational systems and procedures by a competent third party – the certiﬁcation body – against the requirements of the Standard and in accordance with global best practice for social/ethical audits.
It is applicable for sites where manufacturing and secondary processing/packing take place. It is also applicable to the provision of services associated with audited sites; for example, the provision of labour. The Standard can be delivered as a 'stand-alone' audit or alongside another BRCGS Standard. This can streamline the audit process and provide cost savings.