Business response to ethical consumerism

Business leaders are far from the only actors on the economic scene. We should also consider the role of consumers and how businesses can properly respond to the influence consumers may try to wield over them. Consumers can engage in coordinated activities, ranging from publicly shaming or praising certain companies to refusing to buy (boycott) or purchasing only (buycott) from certain companies. If they use their purchasing power in boycotts or buycotts on the basis of moral concerns, then they are engaged in ethical consumerism. Especially now that information can be shared quickly through social media, boycotts and buycotts are a readily available tool for consumers who wish to shape company behavior and economic outcomes.

When is it OK for consumers to engage in ethical consumerism? How should businesses respond when they are the target of it? These questions require a principled, critical understanding of the role of consumers and the effects of their economic activism, not just on firms but society at large.

The Ethical Consumer

As Waheed Hussain points out in his critical discussion of ethical consumerism, various forms of ethical consumerism have existed for a long time, including the boycott involving the famous “Boston Tea Party” in revolutionary America. Given the ease with which contemporary ethical consumer movements can spread through internet platforms, though, they are now a much more readily available tool at consumers’ disposal. When consumers are successful in using this tool, they can bring about broader socioeconomic changes. They do not simply alter the behavior of firms; they can change what kinds of goods and services are available and how expensive they are, wage levels and the availability of jobs in a given area, and broader norms about how certain groups are treated and the rights and opportunities they enjoy. At its best, ethical consumerism effects these changes so as to remedy injustice. But even when it is well-intended, ethical consumerism can go morally awry. Good intentions do not make boycotts and buycotts ethically permissible. Hussain notes the following concerns:

• Compromising basic liberties: Sometimes ethical consumerism aims to remedy injustice (good!) by violating certain basic freedoms and rights (bad!), e.g., a boycott that pressures companies to impose a restrictive speech code on employees.
• Undermining political equality: Ethical consumerism gives those with more purchasing power influence over society-wide outcomes, thereby undermining the democratic ideal of equal opportunity for political influence for citizens.
• Restricting democratic deliberation: Given how boycotts and buycotts can take off with little time for public engagement and argumentation, they can achieve society-wide outcomes without any serious public debate.
• Expanding politicization: Once an ethical consumer movement is widespread and known, then purchasing decisions implicated by the movement become a political signal. Purchasing a sandwich, a t-shirt, or a coffee expresses (whether one likes it or not) whether one is for or against the movement. This makes a wide range of purchasing decisions politically charged, perhaps straining what could otherwise be friendly relations between citizens in a supermarket or mall.

The above concerns do not entail that consumers should never engage in coordinated efforts to influence businesses. They simply entail that consumers need to be mindful and careful about how they go about doing so. The stakes are high, and they should take the decision to participate in a boycott or buycott seriously, with some caution.

Business Response to Ethical Consumerism

How should businesses respond when they are the target of ethical consumerism? There are (at least) two interrelated questions that they need to address. First, is the ethical consumer movement at all justified? That is, do consumers have a legitimate point in what they are opposing or supporting through their coordinated behavior? Second, what are the company’s responsibilities to its stakeholders in responding to the consumer movement?

The first question is the corporate correlate of when individuals ask themselves, “Am I in the wrong?” when confronted by some sort of blaming behavior that grabs our attention. Someone angrily confronts us about something we said or did, and if we’re able to rise above our defensive impulses, we sincerely consider whether the accuser is correct at all to charge us with wrongdoing. An ethically motivated consumer boycott can be understood, in part, as a kind of blaming activity, by which certain companies are accused of wrongdoing. Like individual moral agents, they should make room for considering in their corporate deliberations whether there is any merit to the consumer concerns. If so, a corporate apology and recompense (a large issue which we cannot explore here) may be in order.

The second question overlaps with, but is strictly independent of, the first. There is overlap, because a part of why consumers might be justified in boycotting a company is that it treats some of its stakeholders wrongfully. For instance, a company might have a history of discriminatory behavior toward its LGBTQ employees. If consumers are protesting the company’s treatment of the LGBTQ community, then settling the question of how the company is to respond responsibly toward its stakeholders is a part of settling the question of whether consumers are justified in their boycott, for LGBTQ employees are among the company’s relevant stakeholder groups.

But the second question goes beyond the first. Perhaps the company determines that consumers are mistaken to be protesting the company. There is no merit to the boycott, or, for the reasons given by Hussain, it is an illegitimate use of consumer power. Still, there may be much for the company to do on behalf of its stakeholders. Boycotts can damage a company’s reputation and impose many kinds of direct and indirect costs. A responsible response to unjustified boycotts will be mindful of all of the stakeholders potentially impacted by these costs, with (as we saw when we were introduced to stakeholder theory) no priority automatically assigned to one stakeholder group at the expense of the others. If we adopt the stakeholder legitimacy approach, we will be especially concerned for those stakeholders most vulnerable to the harm done by the boycott. These may include lower-paid employees, who can ill afford to lose their jobs.

References

Hussain, W. (2012). Is ethical consumerism an impermissible form of vigilantism? Philosophy & Public Affairs, 111-143. https://doi.org/10.1111/j.1088-4963.2012.01218.x