Does Being Ethical Pay?

As the first and only Fair Trade certified company in Malaysia (we are a member of the Netherlands based World Fair Trade Organization) this is a question that we ask ourselves constantly. This question arises particularly during our meeting with potential wholesale companies interested in retailing our Indochine Natural products or having us manufacture under their own label.

For many companies, social responsibility has become a big business, and large amounts are spent on doing good things and then trumpeting these efforts to the public. But, does it reap commercial benefits and boost profits?

The rationale applied here is that consumers will pay a premium for products made with higher ethical standards. The big question of course is how far does a company really need to go to win people over?

What we have found over the years we have been meeting with potential wholesale buyers is that even though we may assume ethical production can lead to higher sales, some buyers prefer a lower price even if they know a product is produced unethically. What we have learnt out of this is that we should be very careful where we place Indochine Natural products, because if we are associated with unethical products, while consumers are willing to purchase, they will only do so at a significant discount.

What we have also found is that increasing levels of ethical production do not necessarily correlate with increasing price premiums. Once we have reached a certain ethical threshold, anything beyond that point might reinforce our company image, but doesn’t encourage people to pay more.

The bottom line at the end of the day is that the expectations of the buyer….those with high ethical expectations are willing to pay premiums for ethically produced products, while those with low expectations are not willing to pay.

What have we learnt from these experiences, and how do we implement these lessons in day-to-day business practice?  We have learnt to screen potential wholesale customers from first contact, usually incoming phone calls or emails. By putting our own ethical standards up front, and asking a few simple questions, this initial screening aims to reach out to buyers with high ethical standards. It these wholesalers who ultimately will deliver the biggest potential profits on our ethically produced Fair Trade products. From this initial screening we then move forward with a face-to-face meeting and tour of our production facility, and if all goes well orders will follow. This way we have been able to associate with similarly minded ethical wholesalers, and obtain premium wholesale prices for our products.

What is the difference between Fair Trade & Ethical Trade?

As the first and only World Fair Trade Organization (WFTO) certified company in Malaysia, at Indochine Natural we are often asked this question.

Firstly, the term “ethical trade” is a fairly broad term that covers a range of business practices that are designed to promote more socially and environmentally responsible business practices. For example, this includes adherence to internationally recognized codes of practice for labor and ethical business behavior, plus other practices that minimizes harm that may be caused by trade.

On the other hand, “Fair Trade,” while embracing the principles of ethical trade, goes one step further and seeks to encourage and find opportunities for the economic development of disadvantaged people. This is not in the form of charity, but positive capacity development to enable these disadvantaged people to take part in business and generate income to help them along the road to economic independence.

In Viet Nam, Indochine Natural worked with poor farmers to develop capacity in growing and producing loofah products. In Malaysia we work with a group of rural based intellectually disabled people to produce a range of household cleaning products made from recycled oil collected from local restaurants. In both cases the capacity development provided by Indochine Natural has helped these groups to become more finically independent and has made a positive contribution to their lives.

As a consumer you cal also make a positive impact on these people's lives by purchasing these Fair Trade products from all JustLifestores in Malaysia, or from our online store.

More details of our Fair Trade activities are available on our website 

THAT GREEN & ETHICAL PRODUCT YOU BUY MAY NOT BE WHAT IT SEEMS

At Indochine  Natural where we strive to produce all-natural ethical products under Fair Trade (WFTO) conditions, we often wonder if the average consumer is aware of an interesting trend in recent years....a number of iconic green and natural product companies have been bought out by large multinationals. For example, Clorox (they manufacture bleach and other chemical products) purchased the privately owned Burt’s Bees (handmade natural soap etc). Then there was the purchase of Body Shop by L'oreal, and other examples include the sale of Rachel's Organic and Tom's of Maine which was purchased by Colgate-Palmolive for $100 million. All of these started as small companies selling natural products, much the same as our company Indochine Natural.

The BIG question of course is whether these companies can keep their ethical principles after being absorbed into corporations not sharing the same set of values?

It seems the answer is NO!!! The Ethical Consumer magazine in the USA rates companies and their products on their ethical credentials. They have dropped Body Shop's rating from 11 (out of 20) to 2.5 since the sell-out. Tom's of Maine has fallen from 16 to just 5 because of Colgate-Palmolive's poor reputation.

These purchases are a big win these large multinationals because they are buying a ready-made package of values and history of trust.

Many consumers don't know who owns their favourite brands ethical brands, and others just don't care.

Should we be concerned? The profits that Colgate earns from Tom's of Maine, or that Clorox earns from Burt’s Bees, are being poured directly into companies with reputations for ecologically unsound products and practices. If this is of concern, then the answer is obviously yes.

Business Ethics and Natural Products

 

We wonder if the average consumer is aware of an interesting trend in recent years...a number of iconic green and natural product companies have been bought out by large multinationals. For example, Clorox (they manufacture bleach and other chemical products) purchased the privately owned Burt’s Bees (handmade natural soap etc). Then there was the purchase of Body Shop by L'oreal, and other examples include the sale of Rachel's Organic and Tom's of Maine which was purchased by Colgate-Palmolive for $100 million. All of these started as small companies selling natural products.

The BIG question of course is whether these companies can keep their ethical principles after being absorbed into corporations not sharing the same set of values?

It seems the answer is NO!!! The Ethical Consumer magazine in the USA rates companies and their products on their ethical credentials. They have dropped Body Shop's rating from 11 (out of 20) to 2.5 since the sell-out. Tom's of Maine has fallen from 16 to just 5 because of Colgate-Palmolive's poor reputation.

These purchases are a big win these large multinationals because they are buying a ready-made package of values and history of trust.

Many consumers don't know who owns their favourite brands ethical brands, and others just don't care.

Should we be concerned? The profits that Colgate earns from Tom's of Maine, or that Clorox earns from Burt’s Bees, are being poured directly into companies with reputations for ecologically unsound products and practices. If this is of concern, then the answer is obviously yes.

Indochine Natural operates on clear ethical business principles and is a member of the World Fair Trade Organization (WFTO). Our ethical business principles can be found HERE.