The rise of ethical business

Sam WilliamsThe range of ethical companies has grown rapidly in recent years, but can adopting a set of principles be good for business? SAM WILLIAMS reports.Sam Williams

The range of ethical companies has grown rapidly in recent years, but can adopting a set of principles be good for business? SAM WILLIAMS reports.

From Fair Trade bananas and chocolate to eco-friendly pensions and investments, the range of ethical products on the market has soared in the past decade.

And as well as offering a fair wage to producers or helping protect the environment, adopting a sound set of principles can be good for business.

In Norfolk alone, there is an array of companies offering ethical products including Fair Trade cafes and clothes shops to health food stores, environmentally friendly cleaners, gift shops, printers, marketing firms and financial advisors and investment companies.

Most Read

And plans are being drawn up for a networking group for ethical businesses, to offer support to each other and create a website to help customers find ethical products.

While the constitution and aims of the group have not yet been agreed, about 50 companies are on the mailing list.

The group is the idea of Alan Kirkham, a director of Norwich fund management firm Investing Ethically, and Jill Roberson, of the Living Rooms, in Framingham Earl, near Poringland, which sells ethically sourced and fair traded gifts and furniture from around the world.

A definition of what constitutes an 'ethical' company will also be up for discussion as the group is formed, but Mr Kirkham said for him there are two principles which, if adopted in earnest, were the foundations of any ethical business model - transparency and equality.

He said: 'Anybody that has a set of principles that encourages equality, discourages unequal treatment of suppliers, and are very open with their customers has got a good start in being an ethical business.'

In practice, running an ethical business can be more complicated.

Investing Ethically, which offers investment products for individuals or businesses, offers investments which are 'screened' for anything up to 50 criteria.

Mr Kirkham added: 'We can screen out companies that use child labour, firms that invest in tobacco or armaments.

'More importantly we can bring in other companies that other investment companies wouldn't look at, such as ones helping prevent climate change.

'What marks out ethical investment is it has ethical criteria. Our job is to mix clients' ethical criteria with our funds' criteria.'

While ethical investments (EIs) will not touch potentially lucrative sectors such as tobacco companies and arms firms, funds in growing green industries such as renewable energy have the potential to perform well.

And EI has grown hugely - up 10-fold in three years, according to Mr Kirkham, driven partly by the loss of faith in mainstream financial businesses in the banking crisis.

'I'm not an ethical evangelist', he said. 'There are a lot of people who say EIs are brilliant.

'EI has grown 10-fold in three years. If it was useless it wouldn't have had that growth. If it was better than anything else everybody would be doing it.

'At a time that a lot of independent financial advisers are going out of business, we are still really busy.

'People have lost trust in the financial world.

'We get a lot of clients who come to us who don't care about investing ethically but see that because we call ourselves ethical and work to a set of principles we are not going to rip them off.'

He added: 'If you are looking at two cleaning companies which are the same except one of them uses environmentally friendly products and one doesn't, which one are you going to pick?

'There's a clear business advantage to having clear principles.'

While not for everyone, growing numbers of people are looking to spend their money with companies with principles, according to Jill Roberson.

The Living Rooms, which she runs with her husband Stephen, is one of the region's biggest fair and ethically trading retailers, offering furniture, rugs, gifts and accessories from countries including India, Ghana, Haiti and Indonesia.

And Ms Roberson said like many ethical businesses the Living Rooms put a lot of emphasis on good customer service.

'Ethical business practices appeal to a certain market. For some companies it won't make a difference, but there are a growing number of people, both businesses and individuals, looking to spend their money with businesses that apply ethical values.

'You tend to find companies who put emphasis on being ethical ensure they offer a really good service and interact with customers really well because that's the core of what they do.'

But she said in her experience many people don't take ethical businesses seriously.

'Sometimes people think my business is just a lifestyle thing and won't make money,' she said. 'All businesses struggle at some point, but this is a business that can go places.

'Ethical companies have been thought of very much a hippy-dippy idea. That's changing now.

'What's been the cause of the economic situation? It has been the worst excesses of the capitalist system.

'If someone had thought a bit more about whether what they were doing was right or wrong we wouldn't be in such a pickle.'

As well as Fair Trade products, which guarantee a fair level of payment to the producers, Ms Roberson said The Living Rooms stocked natural products from renewable, recycled or reclaimed sources, and which were made in a 'non-exploitative' way.

And she said the products made a difference to the producers' lives, through offering fair wages, education and healthcare,

She said: 'People who come in here have really good service. We know a lot about our suppliers and about the material something is made from.

'The person who receives it as a gift knows it's made a difference to someone else's life.'