An overview of ethical markets in the UK

This includes information on the: 

• ethical food
• home
• travel & transport
• finance
• personal products, and
• community sectors. 

We include key figures on growth, and provide forecasts for the future of ethical spending in the UK based on attitudinal survey data. A summary from our new 2022 report is available, and a full report will be published shortly.

Overview of current ethical markets in the UK

Overall, ethical consumer spending in the UK is growing. Our figures show that the value of ethical spending in the UK has increased by 2.4% in the past decade from £51bn in 2010. 

This figure reached £122bn in 2020, an increase of 23.7%, or £23.4bn from the previous year.

Our research also found that people are increasingly interested in exploring more sustainable transport options. Eco-travel & Transport was the fastest growing category covered in the 2021 report. Sales in the sector increased by over 72%, driven by a sharp rise in sales of alternative fuelled vehicles.

These figures are drawn from our annual Ethical Consumer Markets Report, which analyses ethical spending habits in the UK each year. Your can download the current 2021 report here.

Read on for a breakdown of ethical spending in different market sectors.

Ethical Food & Drink

Sales of ethical food products increased by 12.3% compared with 8.5% in the total UK food retail sector in 2020.

Our research shows that the most popular product areas in the sector were Vegetarian & Plant-based Alternatives, Free Range Eggs and Fairtrade. The rise in sales of meat-free alternatives reflects the increasing popularity of vegetarian and vegan diets in the UK.

And Sainsbury’s helped boost the market share of free-range and organic eggs by joining Waitrose and Coop in discontinuing cage eggs.

Meat & Dairy Free

According to our YouGov survey, the proportion of respondents following a vegetarian or vegan diet in 2021 remained flat at 15%.

The market for meat-free and dairy-free products grew by 33.7% from 2019 to 2020, rising from £1.1bn to around £1.5bn. In 2010, the meat-and dairy-free market was valued at £541m.

Panic buying in the early months of the pandemic is likely to have contributed to the increase in ethical food sales. But the figures also reflect the rising popularity of plant-based diets. In the three months to April 2020 when consumers across the country were stockpiling groceries, sales of meat-free and dairy-free product increased by 25% and 28% respectively. 

Total grocery sales increased by just 15% over the same period.

Organic

The organic market increased by 12.7% to 2.6bn in 2020 from £2.3bn in 2019 and £1.5bn in 2010. Sales of organic food rose by 19% in the 12 weeks ending May 2020.

The pandemic boosted sales for local organic producers, with consumers over-subscribing to veg box schemes to minimise their risk of infection and avoid supermarket food supply shortages. 

Abel & Cole reported a 25% increase in sales orders during this period. And Riverford Organics increased its capacity by 40%.

Fair Trade

The market for Fairtrade products increased by 13.7% to £1.9bn in 2020 from £1.7bn in 2019. 

Total grocery sales rose by 9.4% over the same period. In 2010, Fairtrade sales totalled £1.1bn.

Growth of the fair trade market looks set to continue, with 28% of people planning to purchase fair trade in the future, compared with just 15% pre-pandemic.

Ethical Finance

The ethical finance sector grew by 18.6% to £57.1bn in 2020 from £48.2bn in 2019.

Ethical investments accounted for much of this change, increasing by 31.6% to £33.3bn over the period compared with £19.7bn the previous year. 

EIRIS, the source of our Ethical Investments figure, said that the increase “reflects a growing demand for investment products that incorporate consumer concerns for environmental and social issues.”

A report published by Morning Star in June 2020 found that sustainable funds outperformed traditional funds both during the global pandemic and the decade up to and including the Covid-19 sell-off.

Ethical share issues grew by 12.2% in 2020, while ethical banking and credit unions both increased by less than 5%.

Ethical Home

The ethical home market increased in value by 16.3% to £15bn in 2020 from £12.9bn in 2019. Our figures show that there was a growth in sales of energy efficient appliances and boilers, ethical cleaning products, sustainable timber and paper, and buying for re-use household products, and green energy tariffs in 2020.

The Ethical Cleaning Products market continued to benefit from the increased focus on home hygiene during the pandemic, but growth in the sector has slowed since 2019.

Despite the rise in sales, many consumers shifted towards using harsher cleaning products at the height of the pandemic, according to analysts. Speaking to the Independent, Richard Hopping, global household analyst at research firm Mintel, said: “Post-pandemic, we expect the environment to come back into consumer thinking at an even greater level.”

Sales of energy efficient light bulbs fell in 2020 after the global lockdown and restrictions hit supply chains.

Meanwhile, the total value of solar PV (Micro Generation) household installations in the UK fell by 29.6% to £146 million in 2020, after the government removed its Feed-in Tariff (FiT) for renewable energy generation.

The markets for energy efficient boilers, energy efficient light bulbs, ethical cleaning products, and sustainable timber and paper also saw small increases in value since 2018.

Ethical Travel & Transport

The pandemic boosted the popularity of cycling. Analysis from the cycling industry showed that 1.3 million consumers bought bikes in the UK during this period.

Around 45% of people are interested in cycling or walking wherever possible post-lockdown, and multiple reports show a surge in demand for bicycles. Our figures show that the value of bike sales increased by 26.4% to £1.2bn from £940m in 2019.

Public transport usage stalled during lockdown. And people remain cautious about using public transport after the easing of pandemic restrictions. The report found that 16% of people plan to avoid travelling with others in the future.

Car Sales

Sales of alternative fuelled vehicles (AFV) grew by 93% to £10.5bn in 2020 from £5.4bn the previous year. The increasing demand for vehicles with lower emissions is linked to improvements in technology, infrastructure, government support and decreasing costs of electric and hybrid cars. There are over 100 plug-in car models on the UK market, with more than 35 set to be introduced in 2021.

Tax Band A car sales fell by 23.8% to £558m over the same period after years of road tax increases for non-electric vehicles.

Ethical Personal Products & Clothing

The ethical personal products market grew by 8% to £57m in 2020 from £53m in 2019.

Buying for Re-use (purchasing second-hand clothing) rose by 23.5% following a decline in 2019, with apps such as Depop becoming increasingly popular among consumers.

Sales of in ethical cosmetics increased by 11% to £976m, following a shift towards online shopping and skin-care products during the pandemic. A report in the Guardian found that shoppers eschewed traditional make-up products, including lipstick, for skin-care, body and hair products in 2020. It said that online beauty sales for 2020 were likely to have increased to 40% from 20% in 2019.

The ethical clothing market also grew in 2020, with sales of Fairtrade and organic certified cotton increasing by 8% to £57m.

Ethical Community

The Ethical community sector returned to growth in 2020, boosted by a 20.8% increase in charity donations to £8.3bn. Overall community spending increased by 15.1% to £12.2bn from £10.6bn in 2019.

The increase in charity donations contradicts reports which found that charities have struggled throughout the pandemic due to a downturn in giving and spiralling costs following the outbreak of Covid-19.

The donations total could have been distorted by incomplete figures from the Charities Aid Foundation (CAF) for the past two years. The Charities Aid Foundation did not publish full year donations figures in 2020. We have therefore calculated the performance in this sector based on reported charitable donations from January – June 2020.

Charity shop sales fell 1.3% to £746m in 2020 driven by months of forced store closures under Covid-19 restrictions. Half of the sixteen charities in our survey reported a drop in income at their outlets as the high street suffered its worst annual fall since the British Retail Consortium (BRC) started collating sales data in 1995.

According to a report by accountants BDO, 85% of charity shops are seeking to grow their online sales division, and 8% are launching online operations to weather the impacts of the pandemic.