Ethical spending soars £3.5bn

By NICK GOODWAY FOR MAILONLINE
Updated:

 

DEMAND for ethical goods and services has rocketed £3.5bn to £24.7bn, latest annual figures show. The Co-operative Bank Ethical Index published today shows that since 1999 the value of ethical spending has soared 39% against a 29% rise in total household spending.

But Co-op Financial Services director Simon Williams believes the Government could, and should, do more to encourage ethical spending.

'It is clear UK consumers are increasingly willing to take action through their wallets to support business they consider to be ethical and to avoid companies they consider to be unethical.

'At the same time, our report suggests we could be at a crucial point in the development of certain ethical products and services. Now may be the time for the Government to recognise their wider value to the UK economy and intervene to ensure their growth is continued.'

He highlighted the market for energy-efficient electrical appliances, boosted by Government-backed labels displaying various ratings. Sales of such goods grew £173m to £1.1bn in 2003 - the most recent figures available - and, for the first time, accounted for more than half of all appliances sold.

Another area of huge growth was timber grown and harvested under the Forest Stewardship scheme where sales rose £225m to £869m.

Sales of Fair Trade goods such as tea, coffee, chocolate and bananas shot up more than 40% by £26m to £85m. This still, however, accounts for only 4% of the total grocery market, albeit up from 1% in 1999.

The Co-op Ethical Index also measures the value of goods boycotted by ethical shoppers. It reckoned these rose by £600m to £3.2bn last year.

Notable has been the boycott of several US brands, particularly those associated with poor environmental performance or unacceptable labour practices. The value of lost sales to these brands more than doubled to £1.8bn.

The other component in the index is ethical investments and savings, which rose 18% to £9bn.

Investors who want to profit from the increasing interest in ethical goods and services can invest in funds that follow the FTSE4Good indices. The main UK index is made up of 305 stocks with a total market capitalisation of £1.13bn at the end of November.

The top 10 stocks in it are BP, HSBC, Vodafone, GlaxoSmithKline, Royal Bank of Scotland, Shell, Barclays, AstraZeneca, HBOS and Lloyds TSB.

Inclusion involves meeting major global social responsibility standards. Over the past five years, the FTSE4Good UK index has fallen 26.2%. But more recently it has performed well, rising by 7.8% over the last year and easily outstripping the rise in the benchmark FTSE 100 index.

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