Consumers and Business Ethics
Lecture Week Nine (Part Two)
Reading:
• Chapter 8, ‘Customer and Business Ethics’, Pages 361, Crane et al
(2019) ‘Business Ethics
Additional useful input:
• Chapter 9, ‘CSR Reporting and Auditing’, Pages 401-442 of Crane et al
(2014) ‘Corporate Social Responsibility: Readings and Cases in a
Global Context
The Consumer and corporate
citizenship
The Concept of ‘Consumer sovereignty’ and the ‘politics of purchasing’
The Concept of Consumer
Sovereignty
• Concept posits that under ‘perfect competition’, consumers drive market
• Ethical limitations based on the notion of ‘equity’ (fairness)
• Consumer sovereignty – [the]customer is ‘king’ or ‘queen’
How can consumer sovereignty be assessed? Application of the ‘Consumer sovereignty test’
• The consumer’s capability to judge rationally
• Access to relevant information
• Choice
https://www.intelligenteconomist.com/consumer-sovereignty/
Consumer Sovereignty Test
Sample Criteria for Establishing
Dimension Definition
adequacy
Consumer Freedom from limitations Vulnerability factors, e.g. age,
Capability in rational decision makingFree education, health
Consumer Information Quantity, comparability
Availability and quality of relevant
Sovereignty Information andcomplexity of information;degree
data
Test of bias or deception
Number of competitors and level of
Choice Opportunity for switching
competition; switching costs
adapted from Smith (1995)
Ethical consumption
‘Ethical consumption’ is the conscious and deliberate decision to make particular
consumption choices due to personal moral beliefs and values
A UK survey found that spending on ethical goods and services grew by 3% in 2017 to a
market value of £81.3 billion
• Consumer activism on increase – positive
• Downside of ethical consumption
• Underlying motives of corporations will be primarily economic rather than moral
• Consumers may decide they no longer want [to] or can afford to pay a premium
for these ethical ‘accessories’
• If purchases (i.e. capacity to spend) equate to ‘votes’ then the ‘rich’ are allocated
more power than those ‘poorer’
‘Sustainable’ consumption
So what actually is ‘sustainable’ consumption?
• Sustainable consumption consists of:
‘…the use of goods and services that respond to basic [human] needs
and bring a better quality of life, while minimising the use of natural
resources, toxic materials and emissions of waste and pollutants over
the life-cycle, so as not to jeopardise the needs of future generations…’
(The European Environment Agency)
The challenge of ‘sustainable’
consumption
THe Ethic (which)Imposes limits to (and) Promotes
Work Ethic Consumption Investment in productive capacity
Consumerism ethic Saving Instant gratification and consumption
Alternative meanings of growth and investment
Environmental ethic Consumption
in the environment
Source: Craven et al (2019) derived from
Buchholz (1998)
What are the steps towards more ‘sustainable’
consumption?
• Producing environmentally responsible products
• e.g. Eco-labels are important
• Product recapture
• Service replacements for products
• Selling (e.g.) mobility rather than cars, or leasing photocopiers
• Product sharing
• Examples: sharing economy businesses, e.g. ‘Uber’, ‘AirBnB’ (both controversial)
• Reducing demand
• Example, the ban on ‘free’ plastic shopping bags
• Implementing “the polluter pays” principle to create financial incentive for
lower consumption
‘Product Recapture’ - From a ‘linear’ to a
‘circular’ flow of resources
Moving from the linear:
• Extract-Manufacture-Distribute-Consume-Dispose
To
• A circular model which involves recapture of materials, recycling,
reuse etc.
The Week Nine Core
‘Takeaways’
We examined the unique stake held by consumers (in the corporation) and outlined some of
the main consumer rights, including the right to:
• safe products
• honest and truthful communications
• fair prices
• air treatment
• privacy
• The rise of ethical consumption
• The challenges of sustainability
We concluded that in the consumer society that many currently live in, it seems that
consumers might (reasonably) be expected to take increased responsibilities as well as being
allocated certain rights(rights versus duties concerns)
