20.3 Being judged as ethical and socially responsible
The strategy of sourcing raw materials from sustainable sources is one way a business can be judged as having strong ethics and being socially responsible in their business practices. It also acts to differentiate its product or service from that of a competitor. The unique attributes of sourcing raw materials in this manner is often valued by customers who are then willing to pay a premium price for the product. The business hopes that the higher price will more than cover the extra costs incurred in offering this unique product.
The Rainforest Alliance (see the website at www.cambridge.edu.au/hass9weblinks) is an international non-profit organisation that works to conserve biodiversity and ensure sustainable livelihoods by transforming land practices, business practices and human behaviour. It helps companies to do well while also doing good, identifying sustainable sources for their needs. For the employees, investors and other stakeholders of the business, the business demonstrates how serious it is about sustainability and transparency in its business practices.
By adopting the strategy of sourcing materials from sustainable sources, the producer is being ethical and socially responsible. It is taking into account the impact the product it is producing or selling will have on the environment or society more generally. While wanting to earn revenue for their business, such producers are also concerned about how the raw materials are purchased, either locally or from overseas, and the impacts these may have on things such as global warming, depletion of natural resources, pollution, animal welfare and exploitation of workers. These concerns come from the underlying values that are important to the business and they can have a very powerful impact on the products it produces and sells.
Source 20.7 The Rainforest Alliance CertifiedTM seal assures consumers that the produce they are purchasing has been harvested using environmentally and socially responsible practices. (03:51)
DEVELOPING YOUR UNDERSTANDING 20.3
Read the extract and answer the questions below.
Nick Savaidis founded Etiko in 2005 after finding that, no matter how hard he tried, he couldn’t buy stuff such as sportsballs, clothing and footwear, which he could be 100% confident hadn’t been made by a child or some poor worker being ripped off in a developing country. Sweatshops, corporate greed, globalisation, call it what you want, all he knew was that it sucked andit was time for an alternative. Since our launch we’ve achieved quite a bit for a small operation based in the outer south east suburbs of Melbourne, Australia.
Some of these achievements include:
- first non-food brand to gain Fairtrade certification (Australia/New Zealand/Pacific region)
- first eco-friendly range of footwear (Australia/New Zealand/Pacific region)
- winner of more business sustainability and social justice awards than any other Australian company, big or small, between 2008 and 2009
- teamed up with worker owned cooperatives in Argentina
- helped fund the creation of more than 300 micro businesses in Pakistan.
Etiko has made it possible to access Australia and New Zealand’s biggest range of ethically produced fashion and footwear (Etiko Fair Trade) and sports gear (Jinta Sport) and it all comes with the added satisfaction of knowing everything it does is also as eco-friendly as can be.
Source 20.8 Etiko won the Fairtrade Product of the Year Award in September 2013 and received an A+ rating in the 2013 Australian Fashion Report.
- Identify the underlying values that are held by Etiko when sourcing its products.
- Research the 2013 Fairtrade winners online. Choose two of the other winners of the 2013 Fairtrade awards and describe the reasons why they received this award.
- Discuss whether these awards would act to influence you when purchasing products.
In Australia, Fairtrade coffee has evolved from a niche product when it was introduced to the market a decade ago, to now having a competitive retail presence. In 2012, of the approximately 23 million kilograms of coffee sold that year, more than 1.5 million kilograms were Fairtrade certified and available at almost 4000 retail outlets nationwide earning in excess of $6000 billion annually. Large manufacturers and retailers such as Cadbury and Coles rely on Fairtrade’s distinctive blue and green logo on their products to bolster their own social (responsibility) credentials.
Source 20.8a Fairtrade Coffee covers the economic, environmental and social areas of sustainability. (00:51)
A business that focuses too much on profit without fully taking into account the effects of its activity on society would be judged as not being ethical or socially responsible. Such a business may release waste into rivers and waterways, have insufficient emission controls in place (pollute the air), destroy natural environments, exploit its workers and conduct product testing on animals.
It is good business to be judged as an ethical producer or manufacturer as greater sections of society are now demanding that businesses minimise the negative effects that its activities have on the community and society. Many customers make considered decisions when purchasing products and services to ensure they are dealing with ethical businesses.
Coffee is one of the world’s most traded commodities. More than 1.4 billion cups of coffee are estimated to be consumed every day across the globe.
Another way businesses can demonstrate their positive approach to ethics and social responsibility is in the way they interact and give back to the community. Many businesses give generously to the community, but it is done without seeking any media attention and often the actions go unnoticed by their customers. It is done without the intention of gaining any competitive advantage.