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Consumerism v/s Sustainability
Debate on Consumer Ethics and Innovative Practices Promoting Sustainable Business
BSM302 CSR+SD
Carlos Fierro K1042263
MA Design for Development
31:04:2011
1
Content
Executive Summary 4
Introduction 5
I. Consumerism vs Sustainability, Framing the Issue 6
1. Consumerism: A Brief Historical Perspective 6
1.1 Consumer: An Active Participant in the Market 8
1.2 Social Issues in Marketing Communications 9
1.3 Business Impact on the Eco-sphere 10
1.4 Summary 10
II. Theoretical Framework 11
2.1 Ethical Perspectives of Consumerism 11
2.1.1 Ethics of Duty 11
2.1.2 Stakeholder theory 112.2 Unethical Perspectives of Consumption
2.2.1 Egoism
III. Current Initiatives 123.1 Global Initiatives
3.1.1 Consumer Rights 123.1.2 United Nations, Guideline on Consumer Protection
13
3.2 Corporate Initiatives 14
3.2.1 Ethical Consumption 14
3.2.2 Collaborative Consumption 14
2
IV. Case Study 15
4.1 ZIPcar, Innovation Business in Collaborative consumption 15
V. Conclusion 16
VI. Recommendations 16
VII. References 17
3
Executive Summary
This report aims to explore ethical issues related to consumerism in a global context, to
identify the agents of consumerism and their participation in production and consumption, to
explore the role of marketing communications in businesses and its ethical social responsibilities,
to explore global and corporate initiatives relevant to the issue and to examine socially
responsible and sustainable business approaches to consumption.
Research shows that consumerism includes not only individuals, but also organizations
and governments and all agents that participate in production and consumption. The ethical
debate surrounding consumerism is framed by applying the perspectives of the theory of ethics
and duties, stakeholder theory and from the egoist perspective. A theoretical analysis illustrates
that all the agents that participate in production and consumption have the duty to make ethical
decisions supporting the preservation of the environment and social responsibility. To empower
the decision makers to make ethical decisions, it is fundamental that organizations and
governments provide and reinforce the decision-making process with the necessary information.
The Stakeholder analysis shows that consumers should be considered the most important
stakeholders in any business, and maintains that marketing plays an important role in that matter.
Marketing communications is one area that has the power to build relationships of exchange, to
understand needs, and generate fair communicational strategies. From the utilitarian perspective,
consumer behavior based on an egotistic ethical approach to production and consumption might
be unethical since the decisions made based on short-term outcomes can harm the environment
and be socially irresponsible.
It is important that companies are aware of the conventions and laws that have evolved
over time to protect consumers and the environment and that they adjust their business practices
accordingly. Moreover, the development of green marketing and other alternatives of ethical
consumption might assist consumers in making better informed decisions to choose more
sustainable products and services. To embrace this challenge it is essential to educate the public
about the social and environmental impact of consumption while considering cultural differences
in the delivery and acquisition of knowledge.
This report recommends that businesses consider new innovative modalities of
collaborative trading and that they should endeavour to learn more about consumer needs and
desires, and consider how the consumer organically participates in patterns of exchange. The
rapid development of new technologies and consumer dynamics makes this recommendation
possible and cost effective for businesses. Moreover, companies should consider new value
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systems in trading and consumption for the development of more sustainable businesses and
products; considering for example the durability, exchange, cooperation, recycling and the
evolving life of products.
Introduction
Consumerism is one of the most influential social phenomena that have impacted the
social, economic and environmental characteristics of western cultures in the last 70 years.
Moreover, in the last 30 years the world has experienced an incremental globalization of
businesses and market places; countries, societies and cultures from diverse regions of the
planet have become more engaged in massive production, commercialization and consumption
of goods on the premise of economic growth, social development and wealth accumulation.
The relationship between companies and customers is defined by marketing, which
provides companies with product policies, marketing communications, pricing approaches and
distribution practices. Marketing generally has been criticized for encouraging consumerism and
materialism. Consequentially, marketing influences not only individuals but also the economic,
social and cultural dimensions of societies and their environments. In addition, the role of
marketing communications is to develop communication strategies to inform and persuade
customers about the selection and consumption of products and services.
The aim of this report is to explore the ethical debates on the subjects of consumerism
versus sustainability and innovative global and local approaches towards sustainable business
practices from a responsive corporate angle. The debate involves exploring the theoretical the
framework that provides ethical perspectives on the issues of marketing communications,
consumer behavior and their social and cultural impact on society and the environment.. The
report will then examine relevant global and corporate initiatives developed to address the issues
of consumerism and sustainability. Finally, a case study will be used to illustrate innovative
practices for sustainable businesses.
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I. Consumerism vs Sustainability, Framing the Issue
1. Consumerism: A Brief Historical Perspective
In 1899 the Norwegian economist and sociologist Thorstein Veblen (1899) invented the
concept of ‘conspicuous consumption’. He instates the concept to describe the nouveau riche -- a
new social class that emerged in the early Nineteenth Century. The nouveau riche was people
eager to exhibit their wealth, social supremacy, and prosperity. They spent an incredible amount
of resources on all types of material goods like jewellery and clothing that visually differentiated
them from the masses.
After the Second World War, the western world experienced an incremental development
of science, new technologies, organization of mass production, and the invention of new
materials and products. This so-called second industrial revolution was characterized by an
increase in employment opportunities, economic growth and developments in the areas of health
and education. Western societies experienced a change in consumer behaviour that promoted
“throwaway living,” which was made possible by economic growth and the creation of new
markets and products intended to serve the needs of growing populations. (Thake, 2008). In the
context of businesses and the expansion of growing markets, marketing and advertisement
developed strategic tools to produce, promote, price and deliver new products and services. (Id).
The US economist and retail analyst Victor Lebow, (1955) published The Real Meaning
of Consumer Demand, which encompassed his vision of an economic system of unlimited
consumption. He wrote, “Our enormously productive economy demands that we make
consumption our way of life, that we convert the buying and use of goods into rituals, that we
seek spiritual satisfaction, our ego satisfaction, in consumption. The economy needs things
consumed, burned up, worn out, replaced and discarded at an ever increasing rate.” (Lebow,
1955).
In the last half of the 20th century the world’s consumption and expenditure rose at
unparalleled speed. In 1900, consumption spending was just about $1.5 trillion (UNDP, 1998).
By 1998, the public and private sector was expending over $24 trillion a year, doubling the levels
of consumption from 1975 and growing over six times above expenditures in the 1950’s. The
rise of consumerism in our globalized world not only has impacted the cultural advances and
incremental accumulation of wealth in western countries, but it has also engendered the
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construction of an unsustainable landscape of social inequalities, individualism, environmental
degradation, exploitation and economic disparities.
(The state of human development, United Nations Human Development Report 1998)
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(United Nations, Human Development Report, 2010)
1.1 Consumer: An Active Participant in the Market
In the last 70 years consumption has evolved from local to global; the consumer is not
identified only as ‘the individual’ but as a collective of companies, organizations and governments
that actively participate in producing and consuming.
The environmental damage induced by businesses does not rely only on the incompetent
strategic decision by companies. Social practices and cultural idiosyncratic consumer behaviour
are the principal variables that impact the environment. (Griseri and Seppala, 2010). Brinkmann
and Peattie (2008) in an article about consumer ethics, on one hand describe consumers as
amoral, self-interested individuals with an economical agenda seeking to satisfy their own needs.
On the other hand, Brinkmann also presents the consumer as an ethical individual with social
responsibilities who has the moral compass to choose what to consume, to respect the law, to
responsibly sustain themselves, meet society’s expectations and participate in philanthropic
initiatives.
8
Consumer behaviour and consumer ethics model. Source: Johannes Brinkmann (2008)
A typology of primary ethical shopping motives (source: Etisk forbrug..., 2003, p. 21; authors’ table construction and transl.
from Danish).
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1.2 Social Issues in Marketing Communications
Marketing communications generally has been criticized for encouraging consumerism
and materialism, individualism, creating artificial needs, being intrusive, perpetuating social
stereotypes, and creating insecurity and perpetual dissatisfaction. (Crane & Matten, 2010). In the
book Global Problems and the Culture of Capitalism, Richard Robins (2005) asserts that the goal
of advertisers has been focused on the promotion of desire and in the imprint of values on
commodities, which the consumer uses to define his identity and desirability. Consequentially,
marketing impacts not only the individual but also the economic, social and cultural dynamics of
societies and their environments.
1.3 Business Impact on the Eco-sphere
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The current debate on sustainability and social responsibility has grown louder as it has
become widely accepted that the planet does not have enough resources to sustain the existing
economic models of consumerism,. The current lifestyle patterns of convenience and a
throwaway mindset have contributed to the degradation of the earth’s ecosystem by 60 percent in
the last 50 years (UNEP, 2010). Currently 90 percent of raw materials extracted from the earth
become waste within 90 days (Chapman, 2005).
Consumerism is seen as the foundation of western economic strength, and has been
rapidly adopted as a role model by developing countries like China. However, analysts such as
Jonathon Porrit (2007) emphasize that consumerism is a behavioral factor that contradicts
sustainability.. Porrit argues that the application of current economic western models to emergent
markets like China, with a population over 1.3 billion (Wikipedia, 2010), will be impossible to
sustain in the next 10 years since the planet does not have enough resources to supply the
production of products for those markets.
1.4 Summary
Consumerism is a cultural outcome produced by a complex set of economic social and
political decisions, actions and interactions. Such decisions involve several actors, which in their
particular contexts are responsible for making decisions on either side of the production and
trading chain. Those decisions can be influenced by communicational strategies used by
marketing management. As a consequence, those decisions provide a parameter for future
actions and policy development in local and global businesses and markets with the subsequent
environmental, social and economic impact.
II. Theoretical Framework
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2.1 Ethical perspectives of Consumerism2.1.1 Ethics of Duty
The theory of ethics of duty derived from the work of the German philosopher Imannuel
Kant (Crane and Matten, 2010) is a relevant parameter to support moral decision-making in the
area of consumption and its environmental impact. The theory states that humans are rational
and moral actors who, under any circumstances, desires or needs should be able to make ethical
decisions. The theory has a three part rational principle called the ‘categorical imperative.’ The
method frames decision-making by reflections on consistency, human dignity and the universal
recognition of the principles.
According to the tenets of Kant’s theory, in order to alleviate the impact consumerism has
on the environment and to support a sustainable balance between business practices and social
responsibility, it is the duty of all participants to be responsible for the moral decisions they make
when producing and consuming. The categorical imperative provides the necessary knowledge
and background to the public to enable them to engage with environmental and social problems
and for them to make better-informed decisions when producing or consuming. Furthermore, the
imperative is not only the responsibility of companies; it is also the responsibility of institutions
and governments to support the delivery of the knowledge by using all available media and
communication channels.
Universal recognition of such knowledge and background is crucial for the generation of
ethical decisions that will, in turn, have an overall positive impact. A communication strategy
must consider the agent and the agent’s cultural context to make sense in human terms. (Grisery
and Seppala, 2010).
2.1.2 Stakeholder theory
Stakeholder theory maintains that consumers should be considered the most important
stakeholders in any business because they actively support and help to sustain businesses over
time when buying or demanding a product or service.
In 1984, Evan and Freeman developed a compelling argument as to why companies
should consider the stakeholder and act in their best interest. The Stakeholder theory states “A
stakeholder of a corporation is an individual or a group which either: is harmed by, or benefits
from, the corporation; or whose rights can be violated, or have to be respected, by the
corporation.” (Crane and Matten, 2010).
Moreover, the Stakeholder theory maintains that marketing communication practices
should not violate the rights of others by using manipulative communication strategies. Marketing
communications should provide fair and truthful information about products and services,
avoiding the encouragement of consumerism and materialism, the creation of artificial needs,
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being intrusive, perpetuating social stereotypes, and creating insecurity and perpetual
dissatisfaction.
In addition, the corporate effect principle implicit in the stakeholder theory means that
companies are responsible for the effects of their performance on others. In the case of mass
marketing of products and brands, in the context of a globalized economy, an unethical practice
on a global scale can endanger the survival of local cultures and ultimately lead to an increase in
cultural homogenization. (Baughn and Buchanan, 2001).
2.2 Unethical perspectives on Consumerism
2.2.1 EgoismEgoism defines an action as morally right when the decision maker freely chooses to
pursue its own desires or interests. Adam Smith asserted that an economic system constructed
on the principles of free competition and individual self-interest was instrumental in the formation
of a fair and productive society. (Smith, 1776). In the case of consumerism it can be argued that
companies can introduce products or services on the market acting in their own economic interest
and without any interest in the common good, for example, the tobacco businesses. Furthermore,
the consumer can act in its own self interest and make unethical choices based upon its short-
term desires and long-term interest, for example, a consumer that buys African blood diamonds
without considering that a percentage of the money he paid will go to finance insurgency, or
warlord activities. According to egoism, the consumer’s unethical decision is justified even if
based only on self-indulgence or the satisfaction of short-term desires.
III. Current Initiatives
3. Global Initiatives3.0.1 Consumer Rights
On the opposite side of the consumer is the seller, who profits from trading products and
services. Several standards have been created to protect consumers based on the concept of
consumer rights. Crane and Matten (2011) state, “Consumer rights are inalienable entitlements to
fair treatment when entering into exchange with sellers. They rest upon the assumption that
consumer dignity should be respected, and that sellers have a duty to treat consumers as ends in
themselves, and not only as means to the end of the sellers.”
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3.0.1 United Nations Guidelines on Consumer Protection
Another global initiative to protect the consumer is the United Nations Guidelines on
Consumer Protection, which sets the needs of consumers and operates as a guide for
governments to legislate in a manner that protects the consumer. Laws evolve over time to
respond to cultural changes and governments are now interested in the development of new
business models that can assist them in developing new policies to respond to economic, societal
and environmental demands.
The United Nations guideline on consumer protection, (Source: Business and Ethics, Crate and Matten, 2010)
3.1 Corporate Initiatives
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Currently, global and local policies, self-regulations and business ethics support the
development of an ethical approach to marketing. Green marketing, the development of ethical
brands, third party sources and investment in promoting community relations are some of the
marketing initiatives developed to respond to CSR criteria and business ethics. Nevertheless, a
“recent research by Du, Bhattacharya and Sen (2007) indicates that not all CSR initiatives are
developed equal, consumers react positively to a brand that relate itself on CSR, than to brands
that only engage in CSR for convenience. If CSR strategy is integrated with core business
strategy, consumers are more likely to hold positive beliefs towards the brand, have greater
purchase likelihood, be more loyal and engage in advocacy behaviour” (Dall’Olmo Riley, 2011).
3.1.1 Ethical Consumption
Third party sources, ethical organizations working in social responsibility or
environmental issues, are important marketing factors that can influence ethical consumption. The choice of purchasing becomes a voting behavior; the consumer evaluates the product
beyond its physical condition by considering the product’s social impact before its acquisition.
Information and awareness are key elements for ethical decision-making. For example, when a
consumer chooses to buy Fair Trade products like coffee or chocolate bars because the
consumer understands, and buys into, the long-term social impacts promised by the Fair Trade
label.
3.1.2 Collaborative consumption
Collaborative consumption is a social-economic phenomenon that is spreading full-speed
around the world. The defining characteristic of this business model is the use of the Internet as a
vehicle for locating and trading goods, services and collaborations. The business has grown
organically with the development of Internet and digital technologies that support international
transactions and online banking. The collaboration arises in all imaginable areas of human
development, from Wikipedia, to eBay to ‘Couch Sharing’ around the world.
Botsman and Rogers (2011) identify four underlying common principles across
collaborative consumption practices: critical mass, idling capacity, belief in the commons, and
trust between strangers. Critical mass is a sociological term used to describe the existence of
enough momentum to make a system self-sustained. Idling capacity refers to the resting time our
possessions have between uses. Belief in the commons comes from Roman times when certain
property and space was defined as res- publica, meaning that they were set aside for public use.
Trust between strangers is perhaps one of the most interesting phenomena to arise from the
Internet which has allowed unacquainted users to enter into exchanges that require trust..
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IV. Case Study
4. ZIPcar, Innovation Business in Collaborative Consumption
Car sharing has become one of the signature actions of sustainable consumption with
considerable benefits to personal, local and environmental interests. Zipcar is a company based
in Cambridge, Massachusetts, USA with 900% growth since 2009 and covering European and
US markets with more than 400.000 members. (Frost & Sullivan's Automotive Practice, 2010).
The Company took its idea from the European car-sharing system more than 10 years ago and
formulated a new business model. The Zipcar business model relies on membership and
members can drive whenever and wherever they want without having to own a car, and with the
opportunity to choose what car to drive. The business uses state of the art technology to engage
customers in new levels of service and sustainable consumption. Members share car ownership
without the headaches of owning a car. The service provided is a cost-effective platform that
enables thousand of users to change their own behaviour through consumption of a service that
ultimately results in more sustainable practices. The advantages are not only a cost-benefit
service; the business operation also generates a positive environmental impact when scalable to
a global situation.
The business has also influenced the development of public policy and the Company has
a very inclusive and open relationship with his stakeholders, using social media channels for
communication and regional programs for participation. The Company’s website posts tips on
various environmental issues and tools that can be accessed by the user. (Zipcar, 2010).
David Zhao, a research analyst from Frost and Sullivan (2010), said that a car-sharing
program like Zipcar could reduce up to 70% of the members’ transportation costs. Zhao’s studies
demonstrate that car-sharing companies, like Zipcar, can also benefit the environment. Each
shared car replaces 15 individually owned vehicles. According to a Frost and Sullivan survey, the
members’ driving behaviour changed, and the miles travelled using a shared car were reduced by
almost 50%. In 2009 the reductions in CO2 emissions by Zipters amounted to 482,000 tons.
V. Conclusions
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Markets and technology are developing at a speed never before seen, and generating
rapid transactions and the overwhelming production of new goods and new global markets. From
a corporate social responsibility perspective, it is key for individuals, organizations and
governments to recognize the impact of consumerism on the environment and society and to
explore the issues with the public through an open discussion. The development of green
marketing and other ethical consumption alternatives could encourage consumers to make better
informed decisions and choose more sustainable business products and services.
Furthermore, innovative businesses premised on collaborative consumption break with
the traditional forms of marketing and bring a fresh dynamic to business practices. Collaborative
consumption demonstrates that markets have changed and the customer has become more
savvy than the marketer.. Collaborative consumption has revived the interactions familiar to small
village economies , demonstrating that technology can help us to be more human and reconsider
values like trust and sharing as part of common business practices.
VI. RecommendationsIn our global market, behavioural consumption is changing, technology is becoming more
ubiquitous and business practices are recognizing that the active participation of stakeholders in
the marketing process results in a more successful business.
New business should consider new innovative modalities of collaborative trading, and
should learn more about consumer wants and how the consumer organically participates in the
flux of exchange. Moreover, companies should place higher value on trading in the development
of more sustainable businesses and products; considering for example the durability, exchange,
cooperation, recycling and the evolving life of products.
On behalf of promoting CSR, companies, organizations and governments might use all
available media to learn and advocate for more innovative practices towards sustainable
businesses. To embrace this challenge it is essential to educate the public about the social and
environmental impact of consumption while considering cultural differences on the delivery and
acquisition of knowledge.
VII. References
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Crane, A. and Matten, D. (2010), Business Ethics. 3rd. edn. Oxford University Press Inc., New York, US.
Botsman,R. and Rogers, R. (2011), What’s Mine is Yours. Revised Updated. edn. HarperCollinsPublishers, London, UK.
Chapman, J. (2005), Emotional durable Design: Object, Experiences & Empathy. Trowbridge: Cromwell Press
Dall’Olmo Riley, F. (2011), Lecture 9 CSR in a Marketing Context. [Online]. Available at: http://lms.kingston.ac.uk/webapps/portal/frameset.jsp?tab_id=_2_1&url=%2fwebapps%2fblackboard%2fexecute%2flauncher%3ftype%3dCourse%26id%3d_5792818_1%26url%3d (Accessed: 24 March, 2011).
Grisery, P. and Seppala, N. (2010), Business Ethics and Corporate Social Responsibility. 1st. edn. London: South-Western.
García-Rosell and Moisander, J. (2008), Ethical Dimensions of Sustainable Marketing: A Consumer Policy Perspective. European Advances in Consumer Research, Vol. 8.
Lebow, V. (1955), The real meaning of consumer demand. [Online]. Available at: http://classroom.sdmesa.edu/pjacoby/journal-of-retailing.pdf (Accessed: 24 February 2011).
Brinkmann, V and Peattie, K. (2008), Consumer Ethics Research: Reframing the Debate about Consumption for Good. [Online]. Available at: http://ejbo.jyu.fi/pdf/ejbo_vol13_no1_pages_22-31.pdf (Accessed: 24 February 2011).
Porrit, J. (2007), Consumerism vs. Sustainability. [Online]. Available at: http://www.livevideo.com/video/Drachnid/47799F974537428E8ADEA5B7991221A2/consumerism-vs-sustainability-.aspx/(Accessed: 24 February 2011).
Robins, R. (2005), Consumerism vs. Sustainability. [Online]. Available at: www.pearsonhighered.com/assets/hip/us/hip_us.../0205407412.pdf (Accessed: 24 February 2011).
Smith, A. (1776), The Wealth of Nations. [Online]. Available at: http://www.econlib.org/library/Smith/smWN.html (Accessed: 24 February 2011).
Thake, S. (2008), Individualism and consumerism: reframing the debate. [Online]. Available at: http://www.jrf.org.uk/publications/individualism-and-consumerism-reframing-debate (Accessed: 24 February 2011).
Veblen, T. (1899), The Theory of the Leisure Class. [Online]. Available at: www2.hn.psu.edu/faculty/jmanis/veblen/theory-leisure-class.pdf (Accessed: 24 February 2011).
United Nations Development Program, UNDP. (2008), Annual Report. [Online]. Available at: www.undp.org/publications/annualreport2008/ (Accessed: 24 February 2011).
United Nations Development Program, UNDP. (2010), Human Development Report. [Online]. Available at: http://hdr.undp.org/en/reports/ (Accessed: 24 February 2011).
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Wikipedia. (2010), Demographics of the People's Republic of China. [Online]. Available at: http://en.wikipedia.org/wiki/Chinese_population(Accessed: 24 February 2011).
Zaho, D. (2010), Zipcar's Acquisition of Streetcar Accelerates Carsharing Growth. Frost & Sullivan's Automotive Practice. [Online]. Available at: http://www.frost.com/prod/servlet/market-insight-top.pag?docid=190795176/ (Accessed: 24 February 2011).
Zipcar. (2010), [Online]. Available at: http://zipcar.csrroom.com/ (Accessed: 24 February 2011).
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