Companies that don't communicate their environmental and social progress will lose out to competitors that do. Here's how not to get left behind. By Coral Rose

"Ethical consumerism" - purchasing only products that have been made without harming people or the environment - is on the rise.

According to a recent poll conducted by the Global Strategy Group, 87% of consumers are more likely to buy products from a retailer that is committed to environmentally sound practices.

With this increased awareness, the question for many companies becomes, how to achieve the maximum economic benefit from environmentally and socially responsible products and practices while at the same time increasing shareholder value and increasing stakeholder trust?

Name That Benefit!

Defining exactly what is or isn't ethical will be one of the most difficult issues of our economic times - just ask any company that's ever tried to slap an "eco-label" on one of its products.

Not surprisingly, the eco-labels with the most visibility in today's market reflect the environmental impacts that interest consumers the most, i.e. "Chasing Arrows" (recyclability), USDA Organic, (safe to eat), and Fair Trade (safe for global workers). SMaRT covers the four basic elements that make a successful company tick – profit, lean manufacturing, safety, and happy workers.

It's important to note, however, that none of these systems has matched the impact of U.S. EPA's Energy Star certification. Why? Energy efficiency = lower energy costs, an obvious win for consumers.

Reward...and Punishment

Earning third-party certification for your company's environmentally and socially responsible practices would be a good investment, as noted in these survey results from the Wall Street Journal:

Question: What are consumers were willing to pay for a pound of coffee based on what they were told about the company's production standards?

Ethical standards . . . . . . . . $9.71
Unethical standards . . . . . . $5.89
Control (no information) . . . $8.31

Green consumers may be willing to purchase unethically produced products, but only at a steep discount, according to the WSJ survey.

Another recent study indicated that 72% of all Americans would avoid a product because of a company's practices.

"People may not pay more for green products, but they may punish products and companies perceived as not socially or environmentally responsible."

~Green business guru Andrew Winston

With the rise of online social media such as blogging, if you're lucky, your consumers will punish you by not buying the product. If you're unlucky, they'll punish you by posting a bad review that will follow your company and the product around for decades.

So What Can You Do?

1. Incorporate ethical concerns into core business strategy. Formulate eco-strategies to save energy, minimize waste, stop the pollutants and take care of workers producing your products. Those are the top areas that will resonate with consumers.

2. Not only understand but "own" your product's lifecycle. This is a mindset shift at the design level. Lifecycle includes understanding and owning the environmental and social impacts along the supply value chain.
3. Choose materials that can be authenticated to the source. Think independent third-party certification of accredited standards e.g. SMaRT, Organic, Fair Trade, etc.
4. Educate your purchasing agents, consumers, and investors. Focus on energy saved, waste reduced, pollutants eliminated and workers rights issues. Be prepared to link to a source that can prove all of the above statements and tell the whole story across the supply chain. Note both the successes and the places you have to improve. Talking up the good and leaving out the bad is ok when talking about your family, but not your products. Truth and proof is the new marketing mantra.
5. Keep your eye on the future. Plan now. Should consumers opt to buy less and they will, how will this affect your business model? Will you be offering more services to offset the lower product sales?

These strategies can give you an important edge among ethical consumers - a demographic companies can no longer afford to ignore.

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Coral Rose has more than two decades of experience in the apparel and retail industry as a merchandise buyer and in product development. Rose is founder of Eco-Innovations, a consulting firm focused on supporting businesses with the integration of "sustainable value" into their core strategies, product design, and development.

This article has been adapted from Sustainable Action Leadership, Coral Rose's blog on eco-design and sustainable innovation.