As consumer awareness grows around the consequences of their buying choices, the focus has turned towards the ethical conduct of enterprises – with particular attention on small- and medium-sized businesses (SMEs).
But just how important is it to consumers that the businesses they purchase from are ethical? Money.co.uk business credit card experts surveyed 2,002 consumers to find out.
How does an SME’s ethical values affect their customer base?
The study found that an overwhelming majority of Brits are committed to buying from ethical businesses (70%). Thirty percent of Brits went even further, saying they actively chose not to purchase a product or service because they were dissatisfied with a business’s ethical practices.
It’s clear that being an ethical business currently can make a huge difference to customer bases and increase profits. This is highlighted even further when it comes to Gen Z, as over half (51%) of their age group said they have chosen not to purchase a product from a business if they are dissatisfied with its ethical values.
Paying a premium for ethical business products or services
Just over half (51%) of Brits are likely to pay a premium of up to 10% for products or services from a small business that is known for its ethical and green practices. SMEs should factor this into their decision-making when it comes to sourcing products or paying wages, as while going down more ethical routes may increase costs, they may be able to increase their prices accordingly to ensure the profit margin stays the same.
The bottom line is, consumers want to spend more money on your business, but they want you to be better, and they want you to shout about it.
Small business and corporate social responsibility
Two-thirds(66%) of Brits agree with the statement: ‘Small businesses have a responsibility to contribute positively to societal and environmental issues’. With this in mind, SMEs should consider factoring this into their growth strategies and communicating this with their customers.
With 71% of Brits aged 24-35 agreeing with the statement, it’s likely that this will remain public opinion for years to come.
How can a business become more ethical?
According to our survey, the top five ways Brits think small businesses can be greener/more ethical, are:
1. Sustainable sourcing of materials (56%)
2. Fair treatment of employees (51%)
3. Minimal environmental impact in production processes (49%)
4. Transparent supply chain(39%)
5. Community engagement and support (36%)
Aside from these, an SME’s banking and finance practices can contribute to them being more ethical.
How can a business best communicate its ethical practices?
The survey revealed that:
- Nearly three in five (57%) Brits said they would prefer small businesses to communicate their ethical practices on their website
- Just under half(49%)of Brits said they do/would prefer small businesses to communicate their ethical practices on social media
- Over a third(35%) of Brits said they do/would prefer small businesses to communicate their ethical practices on labels