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The UK Ethical Market

Clare Carlile looks at the reasons behind the slow down revealed in our 2018 Ethical Consumer Markets Report.

Government changes to taxation and subsidies have caused the collapse of two key green markets, according to the 2018 Ethical Consumer Markets Report. Falling sales for solar panels and energy efficient cars accounted for the slow growth seen by the ethical market overall which, at +2.5%, was outstripped by inflation, despite growing environmental concerns. 

Ethical Consumer has been producing its Markets Report annually since 1999. The report acts as a key barometer for ethical spending in the UK, and tracks sales across a wide range of sectors from ethically certified food and drink to green energy providers. Since 2005, Ethical Consumer has also commissioned a YouGov opinion survey about ethical consumer behaviour, in conjunction with the report.

Graph: Ethical Markets Report

Green concerns grow

The 2018 report shows that, in many sectors, consumers are turning towards more sustainable options as their concern for the environment grows. Green energy grew 56.3% in 2017. Ethical clothing increased by 19.9% and buying second-hand clothing for environment reasons increased by 22.5%, in a year which contained much media reporting about the environmental impacts of fast fashion.

Ethical Food and Drink was amongst the sectors most clearly reflecting this trend. It also grew 16.3% in 2017, the largest increase since 2012, fuelled by growing sales of vegetarian products. The strength of such spending is remarkable since UK retail sales fell in 2017 for the first time since 2013 and have continued to decline ever since.

Our YouGov survey also exposed growing environmental concern. It found that 11% of people reported to be vegetarian and 3% vegan – an increase of 52% and 153% respectively since 2016.

Over a quarter of those who responded to our YouGov survey also stated that they had avoided buying a product or using a service due to its negative environmental impact in the past year – an increase of 65% since 2016. It also suggests that younger people are the most likely age group to avoid buying or using a product or service that has negative impact on the environment in the last year, with 34% of 18-24 year olds, and 29% of 25-34 year olds reporting it was a reason for them to withhold spending.

Rob Harrison from Ethical Consumer said: “There’s a growing awareness of the impact that our personal choices at the shops has on the environment; it’s no coincidence that we’ve seen such sharp increases in sales of ethical products and services. Over the last two years communities across the UK have experienced first hand the terrible impact of changing weather patterns, as well as witnessing devastation across the globe.

"This is a huge moment and we should encourage more consideration of the impact of what we use and how to ensure we can live more sustainably.”

Image: Average ethical spending per household
Average Ethical Spend (£ per household, per year)

Yet, this drive for green options was offset by the removal of government support for green spending. Sales of solar panels fell by 87.4% in 2017 after the government reduced support for at-home solar energy generation. The market for energy efficient cars also fell by 28.4%, following changes to road taxation.

In 2016, the government cut incentives for solar panels known as Feed-in Tariffs (FITs) by 65% and, in 2017, it ended subsidies for solar thermal schemes. The market has been declining ever since and, in 2017, it was less than a quarter of its 2010 size, when FITs were first introduced. As of April 2017, the government also changed its rules on road taxation. The new rules leave buyers of fuel-efficient cars £140 worse off after the first year than under the previous regulations. Sales of alternative fuel vehicles continued to grow. (Pure Electric Vehicles are not affected by the changes in regulation.)


What’s the impact?

The impact of such changes on the market as a whole are apparent. If the decline in solar panel sales and energy-efficient cars is excluded, growth in ethical spending looks healthy at 5.5%.

Over the years, the Markets Report has repeatedly shown the significant impact that government measures can have on ethical spending. The solar panel market boomed after the government introduced Feed-In Tariffs in 2010, before declining when they were curtailed in 2012, prior to being cut last year. Similarly, steady growth in energy-efficient boilers and household appliances has been backed by government legislation setting efficiency standards.

Indeed, since the EU began its phase out of halogen lightbulbs in 2016, sales of more energy-efficient options have increased significantly. The energy-efficient lightbulb market grew 42.9% in 2016 and 23.8% in 2017, as more and more consumers turned to LED bulbs, ahead of the 2018 EU Ban.

The 2018 Markets Report, therefore, shows that government legislation has the power to control green markets at a time when the cost of unsustainable purchases is increasingly known.

Rob Harrison says, "At a time when the cost of unsustainable purchases is increasingly known, we hope that the government will act to support consumers who despite living through an extended period of austerity, and continued future uncertainty, are increasingly making every day purchases as ethically as possible. These big ticket items like cars and solar panels clearly still need the support of government to help consumers who want to play their part in a more sustainable way of life in the UK.”

Read the full Ethical Consumer Markets Report 2018 >

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