Conscious consumerism?: How consumers are shaping the business commitment to human rights
As consumers, we would likely be appalled to discover that many of the goods which we purchase – from our smartphones to our favourite t-shirt to the cup of coffee that we enjoy every morning – were in fact produced under modern slavery. At the same time, the lack of proximity between consumers and workers at the lower tiers of a supply chain often means that consumers are not aware of how their purchasing decisions could potentially be linked to forced labour, or to other unacceptable and inhumane labour practices.
Indeed, as businesses seek to maximise profit and to meet consumer expectations of low prices, many business operations are increasingly offshored to third countries with cheaper labour and input, where the protection and enforcement of human rights is weak. Thus, as supply chains grow more global and complex, two developments take place simultaneously: on one hand, the risk of modern slavery is heightened, but at the same time, limited transparency and traceability in global supply chains makes it difficult to detect and address such serious human rights abuses.
In this context, how can we make sense of the role of consumers in the business and human rights landscape? Are consumers solely driven by affordable prices, even if it means turning a blind eye to the exploitation of vulnerable workers? The evidence says no. Here are some key trends shaping consumer awareness and expectations on business and human rights, which are likely to reinforce the corporate shift towards greater human rights due diligence in the future.
Consumer views on socially responsible businesses are becoming more and more favourable
Consumer behaviour and expectations regarding the social responsibility of businesses are changing rapidly. The millennial generation has often been identified as a key consumer segment driving this change, which offers a promising outlook on the long-term business prospects of socially-responsible companies. Indeed, research findings highlight that millennials are more likely to be discerning shoppers, who are concerned about the social and environmental impact of their purchasing decisions. According to Nielsen’s Global Sustainability Report, ‘72% [of consumers] aged 34 and under say that they would pay more for goods produced responsibly’. Nevertheless, while millennials take the lead, this trend is not generation-specific. In fact, 51% of consumers in the age bracket of 45-64 years also reported that they would be willing to pay more for responsibly-produced goods.
This favourable perception of socially-responsible businesses is not limited by age, nor location. A 2017 study by Unilever found that the demand for ethical and sustainable products is stronger in some emerging economies than in developed markets. For instance, while 53% of consumers in the UK and 78% in the US report feeling better when they buy products which are sustainably produced, that number rises to 88% in India and 85% in both Brazil and Turkey. These two market trends thus point to the fact that global consumers are increasingly becoming a force in the business and human rights landscape, with the ability to incentivise companies to make the shift towards more responsible business practices.
While the attitude-behaviour gap exists, consumers do take action through their purchasing decisions
When looking at consumer behaviour, there is a need to account for the ‘attitude-behaviour gap’; that is, the idea that consumers do not necessarily make purchases in accordance with their professed values and principles. The evidence that consumers are morally opposed to purchasing goods produced under modern slavery is strong.
- A survey by Walk Free Foundation found that 66% of consumers in the U.K. would stop buying a product if they learned that its production involved modern slavery
- Meanwhile in India, 74% of consumers said they would pay more for their favourite products in order to ensure they were free from modern slavery
- An Oxfam survey in Italy highlighted that 72% of people were willing to buy food free from any form of slave labour, regardless of the price
But are these values translated to action? While the attitude-behaviour gap exists, consumers do in fact express and withdraw support for businesses, through their purchasing patterns. In the fashion industry for instance, the human rights performance of certain retailers have come under media scrutiny, prompting consumers to shift their business elsewhere. This reputational risk, and its potential negative impact on a company’s earnings, is cited by many businesses to be a key motivator for them to be more socially responsible. In Germany, Primark’s weak sales growth (attributed to consumer concerns over the company’s social responsibility performance), prompted the retailer to strengthen its ethical focus as a means of regaining its market share vis-a-vis other high street retailers. Today, Primark offers several sustainable labels, produced under enhanced supply chain visibility to guarantee that ethical working conditions are met. Indeed, while such initiatives still have some way to go, they nevertheless demonstrate that reputational risk and consumer pressure can be effective in driving business transformation.
Consumer action is facilitated thanks to greater transparency and access to information
Through the internet and social media, consumer awareness on the human rights performance of businesses is growing rapidly. These tools allow concerned individuals, activists and organisations to easily share news, amplify their voices and mobilise for action, through boycotts or (or its reverse), so-termed ‘buycotts’. As social media facilitates consumer activism, businesses are thus coming under greater and more constant scrutiny, leading to increased pressure for positive change.
Information on the social and environmental impact of businesses is also becoming more transparent and easily available. As more and more businesses begin to improve reporting on their ESG (environmental, social and governance) indicators, shoppers are now able to make more informed ethical purchasing decisions. Furthermore, with the emergence of new and more effective technologies (such as blockchain) for monitoring the human rights performance of companies, it is likely that consumers’ access to information will only improve in the future. Therefore, as better ESG reporting becomes the new norm, businesses who are not transparent about their human rights performance could risk losing their market share to more proactive businesses which are able to provide transparent and credible human rights data to support their claims.
Consumer preferences and behaviour are also being targeted as part of multi-stakeholder initiatives on business and human rights
This is the last trend which is likely to influence the role of consumers in the business and human rights landscape. In recent years, strategies aimed at leveraging consumer power to influence corporate human rights performance have become more sophisticated and complex. Several multi-stakeholder initiatives for instance, recognise consumers as an important target stakeholder, and thus seek to orient consumer beliefs, attitudes and buying behaviour, towards greater social responsibility. These campaigns are not only driven by governments or civil society organisations, but also emerge from within the business community. In a recent Xynteo report, CEOs of 27 of Europe’s largest firms reported that changing consumer behaviour was a key focus of their companies’ sustainability efforts. Therefore, as leading businesses increasingly work towards improving their social and environmental impact (including dedicating resources towards shaping consumer preferences and behaviour), this will likely set the market standard for how other companies engage in responsible business conduct in the future.
Integrating human rights into a company’s operations and activities creates value for society and drives business performance at the same time. Now is the right time for business leaders to begin preparing their organisations for the future, through reinforcing their commitment to respect and uphold human rights.