Does ethical consumption have to cost so much?

VAIDEHI SHAH Today Online 13 May 16;

Eat organic food. Drive an electric car, not a gas-guzzler. Buy clothes made by fairly paid workers: Such calls have grown louder and more frequent in recent years.

While responsible consumption advocates mean well, they often overlook the fact that not everyone can afford these sustainable goods, which are usually more expensive than mass-market products.

The poor are being priced out of sustainable and ethical consumer options, and this is wrong for many reasons.

First, it is a fundamental injustice that pesticide-free food and non-toxic household items are a privilege only for the wealthy.

Second, some may assume that those who do not buy ethical options are ignorant or apathetic. This moral burden is misplaced, as many people simply cannot afford them.

Third, a responsible consumer society will never be a reality if sustainable goods remain out of reach for an entire cross-section of the population.

Many ground-up movements such as food cooperatives and do-it-yourself websites are working to bring healthy and safe essentials to people in an affordable way, but it is not possible to forgo buying from stores altogether.

Do sustainable products in supermarkets have to be so much costlier than their mass-market counterparts? And how can companies and policymakers help make these products affordable for mainstream consumers?

Closer scrutiny is needed over the price mark-ups on sustainable goods.

In Singapore, for example, an online search reveals that organic apples cost four times as much as non-certified ones. Meanwhile, eco-friendly detergent from a speciality brand costs twice as much as those from a housebrand manufacturer.

Yes, responsible manufacturing is not cheap. Obtaining environmental certifications is resource-intensive, as is following industry guidelines on fair labour practices and reporting.

But the lack of data makes it difficult to determine whether the high cost of sustainable products is justified or simply opportunistic marketing targeted at affluent customers, and the only way to get this information is for companies to report it.

One manufacturer which does this is the American clothing company Everlane. The firm, which prides itself on “radical transparency”, breaks down the price of each product into materials, labour, transport, and other expenses, as well as its own cut.

Companies have traditionally been tight-lipped about their finances, arguing that revealing such information would undermine their competitiveness. But Everlane’s continuing growth shows that transparency does not have to mean commercial suicide.

Determining whether a mark-up is fair is bound to be subjective. But if prices are several times higher than the cost of goods sold, then consumers should ask if making goods for only an exclusive segment is truly ethical or just hollow marketing.

Here, governments can help defray costs for companies by providing grants for innovating cost-effective, sustainable technologies or subsidising environmental certifications. They can also introduce legislation on minimum sustainability standards for products.

Singapore already has some schemes in place, such as the National Environment Agency’s Environment Technology Research Programme, which provides seed funding for clean technology development.

The Singapore Government’s recent move to buy only paper that carries the Singapore Green Label environmental certification also shows that the public sector can support sustainable companies by aggregating demand for their products.

The other issue that needs to be addressed is the wide spectrum of standards. While there are regulations governing minimum safety and environmental standards for products, these do not always ensure important outcomes such as avoiding deforestation or exploitation.

Governments are constantly tightening criteria, but bureaucratic progress can be slow. Firms should not passively wait for policies when they can take the lead on improving sustainability across their products — not just for altruistic reasons, but also because of a strong business case for doing so.

For instance, the Norwegian pension fund’s recent decision to drop 11 companies from its portfolio over links to deforestation and the fossil fuel divestment movement shows that businesses must be sustainable to stay afloat.

To some extent, companies like Unilever and Nestle have made it a company-wide policy to source only certified sustainable agricultural raw materials as well as reduce greenhouse gas emissions and water use, among other things.

Yet, even so-called leaders in corporate environmental stewardship make products with varying safety and environmental credentials.

Unilever, for example, makes St Ives, a line of all-natural personal care products that are free of parabens, a preservative with suspected but unconfirmed links to cancer. But it also freely admits to using parabens for its Simple brand of toiletries, saying they are safe. This inconsistency is disturbing. Should companies not apply the same standards to all their products?

Would it not be more cost effective for companies to stop spending on developing, designing and marketing multiple unsustainable brands, and instead put their resources behind fewer, sustainable ones? The savings from canning the former could fund certifications or higher wages for the latter.

These are just some ways companies can ensure their products help the rich and poor alike.

We should all keep up the pressure on companies to do this. But while we wait for change, those of us who can afford ethical options should continue to buy them, to signal that there is demand for these products.

Some companies may take this as a sign to continue with business as usual. But more visionary players can use this consumer support to make an affordable, mass-market solution.

This is what American electric automaker Tesla did when it launched the US$35,000 (S$48,000) Model 3 last month. The company’s chairman, Mr Elon Musk, noted that the Model 3’s development was supported by profits from earlier cars, which sold for about US$100,000 each.

Making sustainable, ethical products the new normal should be a top priority for all companies today. As long as it is not their prime concern, this failure will always undermine their sustainability claims or, worse, their bottom line.

ABOUT THE AUTHOR:

Vaidehi Shah is a correspondent for Eco-Business, an Asia-Pacific sustainable business online publication.