As the world witnessed and weathered recent events including the COVID-19 pandemic, natural disasters, civil unrest and a heavy focus on social issues, retailers and consumers alike have developed a deeper understanding of the relationship between business, humans and the planet we all share. That awareness has prompted a shift toward more mindful buying, with 68% of consumers saying they plan to increase their efforts to identify brands that reduce environmental impact and 74% of Millennials reporting they’re more conscious of spending their money to support more Black-owned businesses and creators.
For their part, retailers are also keen to be good members of both local and global communities. The result is an intentional move toward ethical commerce — which benefits both consumers and businesses — to create measurable and material change for the environment and society.
What is Ethical Commerce?
A range of terms have been attached to the concept of ethical commerce throughout its evolution, but two components are at its heart: environmental issues and social issues.
Environmental issues include concepts such as sustainability and the health of the planet, which in turn ties in with the health of humans. These concerns have long been of interest to consumers and retailers, although the areas of focus have shifted and matured over the years. Retailer leaders today look toward reducing their carbon footprint, sourcing environmentally friendly materials and reducing waste through adaptions in production, packaging and transportation as places where they can affect positive change.
Discussions around social issues have gained greater attention through the years, with high-profile Black Lives Matter (BLM) protests and anti-Asian hate crimes in 2020 generating further interest. The subject of human rights, an ongoing area of focus for retailers and their suppliers, has become more explicit in narrowing the issues that can address them. The first, explicit bias, centers largely around treating workers fairly. The other is implicit bias, in which attitudes and business practices are evolving to reduce racial, gender and social inequities.
The Business Case for Ethical Commerce
The pandemic highlighted a wide swath of environmental and social issues woven throughout the retail sphere. The BLM movement prompted consumers to evaluate how they could buy from more Black-owned businesses, for example. As a result, consumers are developing a greater interest in how brands are connecting authentically with traditionally marginalized groups through collaborations, advertising and other initiatives. Shoppers are showing a stronger commitment than ever before to vote with their wallets as they determine the causes most important to them, and to patronize retailers that consciously nurture inclusivity and a positive environmental strategy.
61% of consumers report making more sustainable, environmentally friendly or ethical purchases, and 89% say they’re likely to continue doing so post-pandemic.Source: Accenture, COVID-19: New Habits Are Here to Stay For Retail Consumers, Aug. 2020
Today’s shoppers have higher expectations of retailers and CPG brands as it relates to ethical commerce. Many are mindful of the environmental impact of fashion, , choosing to shop brands that source more sustainable materials and offer recycling and upcycling programs. Some consumers focus on supporting brands that align with their own values for the food chain, including sustainable crop production, reduction of chemicals, and fair practices for livestock and fishing. And other consumers seek out brands that support fair and safe labor practices in farming, factories and other industrial environments.
Easy access to up-to-the-minute information through both traditional and social media has boosted consumers’ awareness of ethical commerce issues, highlighting the organizations that lead and those that lag. Increased use of technology to collect and analyze data related to ethical commerce issues is also driving a growing number of business and influencing buying decisions for retailers, suppliers and shoppers alike.
With increased consumer pressure to comply with a growing body of regulations, brands need to be out in front of both environmental and social issues. For example, a business that doesn’t leverage tools to analyze its use of plastic products and take steps to reduce its plastic waste today may find itself in reactive mode when a ban on plastic straws suddenly leaves it with few options to quickly shift vendors or manufacturing practices. Or a U.S.-based retailer with an eye toward overseas expansion could be left behind as it struggles to keep up with the strict regulations that increasingly guide operations in the EU.
The wider availability of powerful data and analytics also has helped to shape the way customers and retailers view ethical commerce. Brands have access to better and faster insight into the impact of manufacturing and transportation practices. Carbon footprint calculations are more accurate and actionable today thanks to the application of IoT services and targeted data analytics. It’s also possible for consumers to use similar data and technology tools to spot opportunities to mobilize as global citizens and affect positive change.
This maturity in data and analytics means retailers can identify the business impact and success of meaningful change faster, while shoppers can understand which brands are making the most positive impact more clearly.
Developing a Data-Driven Strategy
Research revealed that 60% of consumers are more likely to consider brands whose stance on equality aligns with their own. But demonstrating authenticity and transparency of an ethical commerce strategy is key, both in how a company makes decisions about their ethical commerce goals as well as the results of those initiatives.
Today’s consumers know which retailers are authentic in pursuit of their ethical commerce goals and which ones are “greenwashing,” or using ethical commerce as marketing spin, with no substance behind it. Those that provide misleading information about the environmental benefits of their products risk an erosion of consumer trust.
There is no one-size-fits-all approach to ethical commerce initiatives. Retailers create authenticity and build consumer trust by developing clearly defined and measurable goals that match back to the company’s values.
With so much data available today, retailers need advanced analytics and capabilities to identify ethical commerce opportunities and recommend actionable insights that will drive progress within their organizations. Companies need to look at ways to improve meaningful data capture through IoT-connected devices, computer vision or other technology. Analysis, conducted through AI/ML, robotic process automation or other capabilities, can be utilized to create a constant feedback loop for improvement. This is all predicated on a cloud architecture that allows for real-time access to data, giving retailers the tools they need to deliver on their ethical commerce promise and earn customer trust through transparency.
Robyn Hill leads Amazon Web Services’ Retail & CPG strategy in Asia Pacific, where she focuses on thought leadership, strategy and partnering with customers across the region. Hill has over 18 years of CPG, Retail, and Data Analytics experience spanning merchant buying, category management, product development, analytical consulting and executive leadership. Previously, Hill was an executive at Quantium within the Fast Moving Consumer Goods consulting practice, and has held category management roles at Coles, where she focused on the Health, Beauty, and Baby segments. Prior to Coles, Hill was Group Category Development Manager for L’Oreal Australia’s Consumer Products Division, and has held various sales and category roles within Unilever in both Australia and South Africa.