How ethical is Etsy, Inc?
Our research highlights several ethical issues with Etsy including: tax avoidance, sales of dead bats, and accusations that it is profiting from Israel’s oppression of Palestine.
Below we outline some of these issues. To see the full detailed stories, and Etsy’s overall ethical rating, please sign in or subscribe.
Links to illegal Israeli settlements
At least 44 Etsy stores are operating in Israeli settlements – all of which are illegal under international law –, according to a report from media network The Institute for Journalism and Social Change (IJSC), and human rights organisations Global Justice Now, and War on Want published in August 2024. Etsy makes money when stores list and sell their items, leading to increased profits for the company, the report stated.
In July 2024, The International Court of Justice stated that not only Israel’s settlement policies but its entire presence in the occupied Palestinian territory (OPT) breaks international law and must cease as rapidly as possible.
An Etsy spokesperson told the Morning Star in response to the report: “We regularly screen our sellers against sanctions watchlists to ensure sanctioned individuals and entities are not able to sell on Etsy, and we constantly monitor for changes in applicable rules and take appropriate actions.”
Accused of withholding sellers’ money
In July 2023, the BBC published an article titled ‘Etsy accused of 'destroying' sellers by withholding money’. The article stated, "Online marketplace Etsy has come under fire from sellers for putting 75% of their takings on hold for 45 days. Hundreds of small businesses recently got an email from Etsy notifying them it was actioning its "reserve system", a policy which allows the company to hold money owed to sellers if their sales have recently increased or they’ve just had their first sale.
Small producers said they had been unable to buy materials or been forced to use credit cards after the site withheld between hundreds and thousands of pounds from them.
An Etsy spokesperson told the BBC that the vast majority of sellers received their funds when they made a sale, adding that the reserve system was used by many online sellers.
Poor workers’ rights policy
Etsy shows a shocking lack of responsibility for its supply chain, scoring 0/100 in Ethical Consumer’s workers rating.
In a section of its website titled ‘Ethical Expectations’, Etsy listed a number of expectations for its sellers, such as ‘no child labour’ and ‘humane conditions’. However, it stated that it was "not responsible for any production partners", did not "audit or approve production partners" and could not "guarantee the conditions under which products listed for sale on Etsy were made".
Positive steps on climate change
Etsy receives a relatively good score in Ethical Consumer’s climate rating.
The company reports on all its emissions, including those from its supply chain. It has also outlined ways in which it is trying to cut these emissions, such as advocating for policies supporting electrification of transport, particularly in the U.S., and using more renewable energy.
The company has reduction targets covering its whole supply chain that have been approved by the Science Based Targets Initiative – the leading approval body for corporate climate targets. For example, it commits to reduce emissions from its own activities and energy supply by 90% by 2040 from a 2020 baseline, and its supply chain emissions by 97% per dollar of profit in the same timeframe.
However, the company lost marks for making some climate claims that Ethical Consumer considered to be misleading. Its 2022 report stated that the company was carbon neutral. However, this was based on offsetting – which Ethical Consumer does not consider a meaningful way for cutting emissions.
Poor track record on animal rights
Etsy sells secondhand animal products, including leather, wool, and other clothing, as well as meat. In its ‘Prohibited items Policy’, Etsy prohibited the sale of animal products from endangered animals. However, the company did not appear to have a policy prohibiting even the worst of animal welfare outcomes for items like leather.
In February 2023, National Geographic published an article titled ‘Etsy and eBay are selling dead bats—and scientists are disturbed’. The article stated, "Last October alone, more than 500 listings of dead bats appeared on Etsy.”
The article stated that more than 130 adverts on the sites had featured a species known as painted woolly bats. “Although painted woolly bats live in numerous countries across Asia,” according to the article, “in 2019, the IUCN listed them as “near threatened” and decreasing. The “souvenir trade” is one of their main threats.”
Etsy had declined to comment.
Politics and finances
The ultimate parent company for Etsy is registered in Ireland, a tax haven.
Etsy UK published a tax policy on its website, which stated: "Our aim is to ensure that our tax planning is in line with our business objectives and strategy. The Tax Team strives to ensure compliance with all tax laws applicable to the Group.” The policy did not appear to prohibit tax avoidance or provide an explanation for location in tax havens.
In June 2022 that Guardian reported that “Etsy [had] paid just £128,000 in corporation tax in 2020 in the UK despite £160m in sales”. The article claimed that the business “would have been liable for almost £7m if it had booked all UK sales at Etsy UK, TaxWatch finds”, but funnelled its business through Ireland.
An Etsy spokesperson said the company had “paid or accrued for any known and material tax obligations in compliance with current cross-border tax laws”, arguing that it employed “dozens of people” in Ireland.
The text above was written February 2025, and most research was conducted in December 2023.
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