The terrible truth about ethical business

A well spent afternoon today, discussing issues concerning the production of organic cotton, and the practicalities of running an ethical business.

Such meetings leave me feeling exhausted, partly in a good way, as I am glad to be able to put effort into things which make a difference. But also there is a negative side, as conversation often takes a turn for the depressing when one examines the reality of ethical business.

There is a real question over whether many of the ethical brands we see out there are really sustainable.

Some of the biggest name brands have severe difficulties making the books balance, and are reliant on the deep pockets of supportive investors, who are concerned more with doing some good, than getting financial return.

If you have, like me, spent a lot of time talking to retailers and consumers of ethical clothing, you would hear a lot of negative information about some of the biggest ‘name brands’ in the industry. And yet those brands continue to be seen as the best.

Why? Well in part it is because of journalists, (I know, I’m guilty) who return to the same old people everytime they want to site an ethical trader. Inevitably, they are going to be the people who have spent a lot of money getting their name known.

And that is the second part – money. One of the brands I refer to in the preceding paragraphs is run by someone whose partner is a big time banker – (not a euphemism) which makes riding out those pesky sales problems a lot easier.

Another of the biggest brands, and this time I can name them – Howies ( great clothes, great catalogue, great brand, great blog etc) – had to sell out to Timberland in order to sustain the growth they needed to acheive.

In business its grow or shrink, and if you shrink, you aint gonna last. They needed to grow, and the only way they felt they could do so was to effectively sell out. As it goes I dont blame them, after all, the founders had remortgaged their home a number of times, etc etc, and it isnt like they arent doing their bit.

I know of other brands, who I cant name for reasons of commercial sensitivity, who appear very succesful, but are in fact struggling hugely, and only able to survive because of constant baling out.

I hear many other tales from people who say that they are only just surviving, unable to even think about starting to pay back the original investments, others are doing less well.

Occasionally I hear about people who are doing better, because they have found a way of making it work, and generally that has to do with staying small, meeting local needs.

So it appears that the terrible truth about ethical business is that when independent ethical brands try to take on the competition, they collapse under the strain.

The ones which do have what it takes to succeed in the big wide world – Howies, Green and Blacks, etc, are snapped up by bigger, less ethical companies. Notable exception of course – Patagonia, which took its own unique route, chronicled in Yvon Chouinard’s excellent book which you can see in my side bar.
Staying small, a business may survive, and perhaps flourish in the right market – but in clothing there is a problem, meeting the minimums. You must order a minimum quantity of product which would perhaps be 400 garments per colour.

So say you wanted to do a tee-shirt range, which you would manufacture yourself, and you wanted four different colours, you would need to order 1600 garments. A tall order for a brand new outfit. Especially since the price you pay per unit at minimum order level is much higher than you would on a big order, so your profit is immediately lower.
Some small brands buy blanks off companies like SAF or others which offer much lower minimum order quantities, but at much higher unit prices, plus you need to relabel and so on. So you’re caught between a rock and a hard place.

Of course the finishing of an ethical garment, (if you are using safer dyes or less harmful printing) is also more expensive, and often more prone to problems, than conventional harmful processes. The small ethical brands lose out again.

And that isnt all, if you were to go to a big retailer – I notice Next and New Look are among the high street brands using organic cotton now, and were to ask their buying department ( Ihavent tried this yet – so I may be wrong, but I bet I am not) where the cotton they use comes from, they wont know. Why? Because they simply buy it through an agent, who buys it from somebody else, and etc and so on, until at the bottom of the chain somewhere you get to the farmer.

What I am saying is that the accountability of this sort of product is always suspect, because unless you can trace your cotton from seed to shelf (this can be done, and some are doing it) then you cant really have a truly ethical supply chain.

Clear audit trails are key in ethical business, and as far as I know, the big chains cant provide that in most cases. The smaller ones sometimes can, but not always.

This my friends, is the terrible truth about ethical business.

What is the conclusion of this long and rambling spiel? When you have to buy stuff, keep buying ethical products. Buy local as much as possible, buy second hand as much as possible. Support the smaller pioneering ethical enterprises, with more customers they might be able to break a decent profit one day. Dont be fooled by the hype, your best way of finding good ethical product is by word of mouth, and a bit of research.

And if, like I was today, you are in Ammanford any time soon, stop by Damien and Michelle’s Organic Pantry, which is a good example of how a small, ethical, local business can do well – and serve a community. Their shop is cool, their veg boxes are excellent, and their teeshirts are really good too. I only popped in for a couple of minutes, but it was worth it. They are nice people.

4 thoughts on “The terrible truth about ethical business

  1. I just wanted to say – while I share many of your concerns (I work in the sector, promoting the farm end), there is a big push from our side to get big brands to adopt a traceability system. There are already brands out there who use it and can trace everything. Our goal is for everyone to use it. That said, my personal preference is to shop from small brands, and independent outlets:-)

  2. Hi Simon, thanks for that, yeah I’m aware of what you guys are doing, and its good stuff. As you say, some companies can trace from seed to shelf, but in my experience not many. I look forward to seeing that grow under the good auspices of organic exchange etc. If your conferences weren’t so blinkin expensive, I’d be coming to them, I have a number of friends who do – but I’m too poor 😦 Cheers!

  3. yes, it’s a tricky thing, an ethical business.
    perhaps a ‘business’ by definition can never be truly ethical…?!

    i am a big fan of traidcraft/tearcraft (and am a trader for them both)… but i was appalled at a meeting to discover how much money traidcraft had invested in designing its new logo. It would probably be a v small sum in todays business world, but it seemed daft to me… and even insulting… if i am supporting them financially, i want them to spend their money on the poor! but there we have it – to give to the poor, they have to ‘develop their brand’ and whatnot… c’est la vie.

  4. We should be in the UK next year are looking at our mebership/conference costs…and will also be touring the UK witrh colleagues in September or October…maybe we can drop in?

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