Written by Richard Evans,
ethics etc...
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What is the Ethical Purchasing Index?
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The Ethical Purchasing Index (EPI) i is a
Co-operative Bank initiative that seeks to measure
the UK market share of ethical consumer goods and
services and track emergent trends. The 'ethical
shopping basket' consists of domestic consumption in
the following sectors: food, energy, housing, household
goods, cosmetics and toiletries, transport, charity and
leisure. The bank published its third EPI Report in
December 2002. The key partner in this venture has
been the New Economics Foundation (NEF) ii, who, for
the past three years, has been commissioned to gather
annual sales data. The bank funds the costs of
research and publication of the report and distributes it
free to some 500 key opinion formers from UK
Government, charities and business. The report and
supplementary papers are also published on the
bank's website for use by researchers, business
and academics.
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The biggest growth has been seen in the following areas:
1: fair trade products - up 36% to £44.9m
2: organic food - up 33% to £802m
3: green energy - up to £14.2m. |
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Value of the EPI
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All of the organisations
interviewed, which included mainstream commercial
retailers and distributors, ethical traders, ethical trade
advocates and research bodies, were very positive
about the importance and value of the bank's EPI
initiative. All used the Index to evidence growth in the
ethical market and to help make the case for
expanding the market in order to create more
opportunity for consumers to choose ethical products.
However, as Alison Benjamin wrote in The Guardian, in
August 2002,
"...the EPI shows that ethical consumers still
command only a 1.6% share of the marketplace
across seven sectors. This consumption is a
fraction of the spending power of three-quarters of
consumers who tell pollsters that they care about
issues enough to sometimes purchase ethical
products."
The EPI highlights the gap between opinion surveys
about consumer interest in ethical products and actual
spending behaviour. But the Index also shows volume
and market share growing, albeit from a low base. The
report's authors readily acknowledge that the EPI
captures only actual expenditure for which data is
readily available and does not take into account other
consumer responses, such as product boycotts. But
while the Index may underestimate the size of the
'ethical' market, its monitoring of market growth is
seen as reasonably robust.
A real benefit of the EPI is that it has increased the
media's coverage of ethical consumerism in the UK;
not just at the level of the Index itself, but also in terms
of more specific trends, such as the greening of 'the
baby business' (nappies, organic baby foods, etc.).
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The bank's third Ethical Purchasing
Index was published in November 2002. |
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Can the EPI be improved?
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Accuracy and Scope NEF, the bank and the
organisations I consulted agree that the scope of the
Index could be expanded. Both NEF and the bank
pointed out that the necessary data is already often
difficult to collate. Many companies and trade
associations are unwilling to disclose sales figures on
the grounds of commercial confidentiality, or are simply
not inclined to respond to requests for information.
Furthermore, the definition of what is ethical in a
particular segment can itself be a problem. For
example, one organisation, which contributed data to
the Index, said it was not clearly stated in the EPI 2002
Report what definition had been used for cosmetics
and animal testing. It pointed out that there are very
precise internationally recognised definitions. The
same definitions have been used by the bank in its
recently revised Ethical Policy. Several supporters of
the EPI suggested the 'shopping basket' should be
expanded to include clothing, sportswear and
footwear. This is a huge sector of the consumer
market. It is also one in which a number of international
brands have had to defend themselves against well
researched accusations of human rights abuses in the
countries of production, and to respond with supplier
codes. However, the bank has researched this sector
and found that there are a few manufacturers who
would match campaigners' views of an ethical producer.
The specialist ethical producers said they would value
an accurate and timely understanding of the growth of
ethical products in their own markets. However, they
recognised that this was beyond the scope of the EPI
and was probably the responsibility of the producers
themselves.
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The EPI 2002 reported growth of
19% in the sale of ethical goods
and services in the UK. |
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At the end of 2002, the bank teamed up with The Big Issue in the
North to publish a guide to ethical consumerism that was
distributed free with the magazineiii. |
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Conclusions
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The Co-operative Bank's EPI
initiative has been widely welcomed by all categories of
stakeholders. There is a high level of trust in the bank
and a clear message that it should continue to be the
custodian of the project.
Many expressed very positive views of the impact that
the EPI has had, and of the real opportunities to build
on the momentum that has been generated. Attention
should be focused on building additional alliances in
order to extend the scope and reliability of the data and
on a more open discussion in the report of
methodological constraints and the significance of the
market trends tracked by the EPI.
Ultimately, I suggest, the bank should take the whole
debate about the impact of 'ethical consumption' to a
different level. To do this it will need to address the
impact of consumption on the global environment and
on issues of global economic justice, as well as the
response of suppliers and consumers at a national
level to ethical concerns.
The bank has made a unique contribution to
understanding an important change in consumer
behaviour. The Index's future role, in promoting greater
sustainability, will depend on the bank's ability to
enhance the scope of the project further still. In my
view, the bank may need to allocate additional
resources to achieve this. I also believe the bank could
now make a more robust challenge directly to the
commercial sector and to government about the
benefits and importance of ethical and sustainable
consumption.
Richard Evans,
ethics etc...
March 2003
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- www.co-operativebank.co.uk/ethics/ethicalpolicy_consumerism.html
- www.neweconomics.org
- The guide can be downloaded from the bank's website:
www.co-operativebank.co.uk/bigissue.html The bank has pledged to donate
£1 to The Big Issue in the North for every piece of feedback received about
the guide.
To follow any of the links mentioned within the Partnership Report 2002, please visit the links page.
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