What is Ethical Branding? Considerations, Benefits

What is Ethical Branding?

Ethical branding involves acting morally, acknowledging its social and environmental responsibility by being accountable for its actions and creating value for its customers and stakeholders through these initiatives. Ethical branding helps firms to set the right values, mission and vision right from the beginning for positively contributing to society. An ethical brand is linked directly to the product and the business activities involved with the brand.

Ethics as a term has been taken from the Greek word “Ethos,” which refers to ‘character’ and from the Latin word ‘mores’ which means ‘customs’.

They combine to define the character, guiding beliefs, standards and more that guide individuals, groups or organisations in the following manner:

• Being morally correct
• Not harming people, animals and the environment
• Contributing to the good of the society and public responsibly, positively and in a sustainable way

Every brand must engage in ethical practices since ethical branding helps the organisation to demonstrate its core brand values which help with making a positive difference in society. It helps with showing to customers.

For example, Dr. Bronner is known as the top-selling organic liquid soap brand in the US. It was founded by Emmanual Bronner. Its brand ethical concept prevails in its “Cosmic Principles” which consist of all the major standards of ethical branding.

These principles support causes like drug policy reform, sustainability, income equality, regenerative organic agriculture and animal advocacy.

According to the principle of the UN Global Impact, “ethical brand values should focus on meeting fundamental responsibilities in the areas of human rights, environment, labour and anti-corruption.” The values and principles help with creating effective brand strategies that shape the brand personality, brand voice and message that has an impact on the activities involved with branding.

Hence, the important characteristics of an ethical brand are:

• Act morally
• Have consideration for economic, social and environmental responsibilities
• Display integrity, honesty, accountability and a commitment to doing the right thing ‰‰
• Create and develop an added value for the firm, customers and the stakeholders

---

Ethical Brands

Ethical brands contribute positively to society and they carry with them various strategies, values and activities that are perceived to be morally right and ethical.

Organisations that genuinely follow and encourage ethical practices have the following advantages:

• Maintain and build on their image
• Attract new customers and investors
• Increase their productivity
• Improve customer and employee loyalty
• Minimise business risks

The main objective of branding is to be able to differentiate itself from competitors and be able to stand out in the crowd. The purpose of creating ethical brands is for the customers to know that apart from offering the product and services and the market campaigns, the brands also contribute to the greater cause of society.

The practices followed by ethical brands are:

• Following fair trade policies to support local producers
  
  
• Selecting suppliers that follow ethical production procedures
  
  
• Minimising transport to reduce environmental pollution
  
  
• Optimising the use of materials for minimising waste
  
  
• Be part of the industry collaboration
  
  
• Integrating supply chain sustainability criteria into the procurement process
  
  
• Encouraging gender equity and offer reasonable compensation
  
  
• Providing a good working environment with supporting zero tolerance for corruption, disrespect, dishonesty and harassment
  
  
• Supporting charity and offering job opportunities in underdeveloped areas

Some examples of ethical brands are:

• Starbucks: Starbucks is one of the most popular global coffee shops which is committed to sustainably sourced coffee. They optimise their sourcing by using a system called C.A.F.E (Coffee and Farmer Equity Practice). They follow ethical practices for each step of the coffee-making process. They generate billions of dollars worldwide by working with 180,000 farmers.
  
  
• Levis: It is an ethical and sustainable clothing brand based in California and is well known for its denim wear worldwide. The brand boast of eco-friendly and sustainable practices of recyclable denim and ethically sourced cotton, creating innovative methods for reducing water use and they focus on giving back to its workers and the society.

---

Ethical Branding Considerations

The perception of a brand is influenced as being good or bad, ethical or unethical by its values, strategies and actions of the organisation behind it. Ethics sets moral norms for the behaviour of an individual and it helps define the individual or organisation’s moral and ethical obligations toward the society and its environment. It is the brand value that becomes important with moral principles that are determined by the people while making ethical decisions into consideration. Ethical branding works on the philosophy that defines what is right and wrong for maintaining the right balance.

For example, nail polish brand Essie made history by naming Queer Eye star Jonathon Van Ness (known affectionately as JVN) as its first male ambassador.

The factors to consider while creating and branding an ethical product are:

• Sustainability: The impact of the production of the product, its production and packaging on the environment. It is essential for people to feel assured regarding the product that they are purchasing is sustainable and ethically produced.
  
  
• Sourcing: The impact of the sourcing decisions that affect society and the people.
  
  
• Production: The cost of production and effective ways for optimising wastage.
  
  
• Transparency: It is necessary to be transparent about the product or service by providing key information about its safety and effective use.
  
  
• Maximise benefits and minimise risks: The marketing strategy for ethical branding should benefit the people and should not cause harm and be cost-effective for creating a lasting impact.

Hence, ethical branding focuses on bringing positive social changes by creating products that do not harm the environment or people and are morally correct. Ethical brands must be environmentally conscious by protecting the environment by eliminating waste for environmental safety so that it does not destroy nature or any of its elements.

This helps the customers to make ethical choices while buying the brand from organisations that are socially and environmentally conscious. Therefore, organisations need to check on their quality and security measures for making sure that the product is not harmful to the customers or the environment. It is necessary for communicating with the customers regularly and taking their feedback and gaining their trust by delivering what is promised.

Brand Values

Brand values are an important part of the business that defines strong core values which are effectively communicated to the employees, stakeholders and customers. The core brand values of the organisation are the beliefs that they stand for. It serves as a framework that guides their brand story, actions, behaviours and decision-making process.

For example, Apple brand value. Its “Think Different” campaign high- lighted that Apple is focused on making the best, most creative products in the world while keeping technology simple for the masses.

The brand values are the standards that the firm follows and upholds in pursuing its mission and vision. Brand values help with connecting with the employees and the potential customers, attracting new customers, improving brand experiences, building brand loyalty, improving operational efficiencies and helps with developing a competitive advantage.

In the words of Seth Godin, “A brand’s value is merely the sum total of how much extra people will pay or how often they choose the expectations, memories, stories and relationships of one brand over the alternatives.

Hence, brand values should be:

• Memorable and have an impact
• Unique that reflects the culture and identity of the firm
• Actionable
• Clearly defined
• Meaningful and resonate with the customers
• Consistent, strong and timeless

Sourcing

Sourcing in ethical branding refers to the process ensuring that the products and services are sourced through sustainable and socially responsible processes. Sourcing is aligned with the corporate and business strategies for selecting, specifying and processing contracts with suppliers and vendors. All of these activities are interconnected and can influence one another with any changes in the business strategy.

Ethical sourcing includes the process of paying fair wages to the work- force involved with the production of the products, ensuring that they are treated with dignity and rights. They should be provided with a clean, safe and hygienic environment to work and that is socially and economically feasible. Adopting social and ethical methods of sourcing and practicing morally fair relationships with their suppliers helps with building the trust of the consumers.

Organisations focus on strategic sourcing of ethically sourced materials and the production of goods made from sustainable options such as renewable, organic or recycled materials, which help create a loyal customer base. It increases the brand value of the product and services for customers who understand the importance of ethical business practices.

It ensures that the supply chain suppliers and vendors are making use of ethical practices and are working ethically and sustainably adhering to the following principles:

• Maintaining and promoting their employees’ human rights
• Not using child labour
• Ensuring safe and hygienic working conditions for their people
• Paying a fair wage to their employees
• Working to minimise the environmental impact of their operations

Business organisations all over the world are moving towards strategically sound ethical and sustainable sourcing within their supply chain management.

Ethical sourcing results in:

• Customer satisfaction
• Mitigation of risks
• Satisfaction of the employees
• Lower operational costs

For example, Few brands have shifted to sustainable practices, ingredients and packaging. Labels like Pahadi Local, L’Occitane, Forest Essentials, , Tata Harper, Soapworks India, Davines, and Aveda are all great options with wonderful skincare, hair care, and wellness products.

Production

Ethics in production is a part of business ethics that ensures that the activities involved with the production of goods are not damaging consumers or society. It requires following a certain code of conduct or standards to ensure ethics are complied with during production.

For example, Happy Roots, Organic Tattva, The Nature’s Way, and Conscious Food are famous for their healthy and organic products that are grown and sourced responsibly.

Business ethics involved with the process of production helps the organisation with:

• Building credibility
• Improving decision making
• Offering a basic framework
• Fulfilling basic human needs
• Creating harmony among the employees
• Being profitable in the long run
• Minimising business risks
• Increasing their productivity
• Improving customer and employee loyalty
• Maintaining and building image
• Attracting new customers and investors
• Protecting the society

Every business enterprise must follow the ethical standard for their production processes and they must be clean and fair in their dealings with adhering to the ethical standards and code of conduct. The activities should be carried out through fair practices that will benefit the employees, consumers, society and the organisation.

It involves designing the product and its creation by using and maintaining sustainable standards and the process involved in making these has a positive impact on society. It involves using the least amount of resources and harmful in the production process and improving the efficiency of production for manufacturing a given product.

Utilising sustainable processes and materials has significant benefits for businesses as it provides a positive work environment that increases productivity with minimum impact on the environment.

Packaging

Sustainable packaging is useful, safe and cost-effective and meets the health expectations of the people and the conservation of the environment. Organisations need to be responsible for using environmentally friendly materials and building trust with their customers. Many business organisations today are adopting green packaging as an activity that is performed in a manner where there is a negative ecological impact and is also beneficial to the environment.

For example, the apparel Patagonia is a leader and an innovator in brand transparency. It has implemented the Footprint Chronicles project to tell customers how it sources raw materials, where the cotton is grown, and how products are stocked at its warehouse.

The environmental concern positively influences the attitude toward green packaging among consumers by meeting the needs of organisations without compromising on the needs of future generations. The increasing consumer awareness of environmental sustainability has initiated the need for green packaging which is a major concern for retailers and consumers. Green packaging has been a challenging task for both the retailer and the consumers since packaging not only protects the product but is also meant to be environmentally friendly with the reduction of packaging waste.

Organisations have changed their strategies to meet the requirement of green packaging by facilitating changes to satisfy the consumer needs and eliminating the use of non-renewable resources and mini- mum impact on the environment. Sustainable sources can be adopted by creating effective biodegradable and recyclable packaging and using alternative energy sources during the process of production and transportation.

The renewable and recycled materials that are used for green packaging are:

• Biodegradable plastics
• Using plant-based plastics
• Recycled products
• Alternative sources of energy
• Recycled polyethylene bags for consumers made from recycled waste
• Recycled moulded packaging for food products

Packaging waste as plastic is dumped almost everywhere causing adverse effects to the ecosystem. Packaging waste degrades the environment and is also harmful to the animals as the packaging waste dumped can be eaten by animals which can lead to their death. The waste that is dumped in the ocean also harms the aquatic creatures living in the sea and contaminates the water and degrades the ecosystems.

Sustainable packaging is useful, safe and cost-effective and meets the health expectations of the people and the conservation of the environment. Green packaging is done with materials that are manufactured using natural resources and are affordable, have technological advantages and are also environmentally friendly contributing to the quality of life.

Communication

Ethical communication is responsible for the thought process, deci- sion-making and the development of relationships between people and communities across various cultures, channels and media. Marketing communication is used by the organisation to leverage its products by providing a sustainable competitive advantage. Organisations make use of integrated marketing communication for ensuring and creating long-term relationships with potential and current customers. For example, in mutual funds ads, they communicate that the mutual funds are subject to market risks.

There are many kinds of advertising policies that consist of self-regulatory codes of marketing and advertising ethics and many advertisements that are prohibited by law. For a business organisation to be successful, it is necessary to have an ethical approach to conducting business that also creates a positive image of the enterprise.

Every business should follow certain basic principles and a code of conduct. These principles should set the tone for business so that the consumers can get the right information and proper communication regarding their products. The codes of advertising ethics are decided by the self-regulatory panels that base their decisions based on these ethical principles.

The International Chamber of Commerce (ICC) determines the most influential codes that are followed by advertising bodies in more than thirty countries. The ethical policies followed by marketing communications consist of ICC Codes that are based on the core principles of legality, decency, honesty and truthfulness.

According to ICC, “all marketing communications should be prepared with a due sense of social and professional responsibility and should conform to the principles of fair competition, as generally accepted in business. No communication should be such as to impair public confidence in marketing.”

These further collaborate with the following:

• Business enterprises should frame their marketing communications in a manner that should not exploit the customer and abuse them due to their lack of experience or knowledge. They should communicate the importance to the customers that are likely to affect their decisions at such a time that the consumers can take them into their consideration.
  
  
• Marketing communications by the enterprises should respect the dignity of human beings and not incite or render any form of discrimination, based on race, religion, age, national origin, gender, sexual orientation or disability.
  
  
• Business enterprises should not play on fear or exploit the suffer- ing or misfortune of the people with their marketing communications.
  
  
• Marketing communications by the enterprises should not incite or condone violent, unlawful or antisocial behaviour.
  
  
• Marketing communication by organisations should not play on superstitions or encourage harmful or dangerous practices.

Inclusivity

Organisations make use of inclusive marketing for connecting with a larger audience of potential consumers to highlight the important unique selling propositions (USP) and experiences for making profitable sales. It is a form of communication strategy that is used for communicating with a diverse group of people from different social groups and backgrounds.

It targets people through a common language that accounts for differences in gender, income, cultural and ethnic backgrounds, religious orientation and more who form an integral part of the total communication. It is a form of content writing that is used as a marketing strategy for the brands or products for connecting with a larger audience. Organisations that focus on following ethical goals and sustainable practices at the forefront of their mission can form more meaningful relationships with their customers.

Diversity is a business approach that helps with enhancing business performance by driving innovations by following ethical management. On the other hand, inclusive marketing creates content that reflects the diverse communities that are connected with the brand. It means that through inclusivity of ethical content writing the organisation promotes different role models and diverse audiences leading towards a positive social change through thoughtful and respectful content. Hence, it is essential for the organisation an ethical system in place that monitors fairness and best practices.

For example, Burger King: Impossible Whopper aims to draw in vegetarian, vegan, and non-beef-eating consumers who may have never sought them out previously.

---

Benefits of Ethical Branding

Ethical branding is based on moral values and beliefs that govern the behaviour and action of people and the organisation as a whole. It is a process of governing the business activities through a set of standards that are made to differentiate between right and wrong in terms of different business practices and policies. There are many unethical practices and issues such as bribery, monopoly, trading, discrimination, child labour and so many other issues that need to be handled effectively with these standards.

Ethical branding is necessary for encouraging ethical practices that help the organisation with:

• Maintaining and building on their image
• Attracting new customers and investors
• Increasing their productivity Improving customer and employee loyalty
• Minimising business risks

Working with fair practices benefits the employees, consumers, society and the organisation in the following manner:

• Satisfies basic human needs: People prefer to be associated with an organisation that follows ethical standards, command respect and are socially responsible. Ethical brands have committed customers with emotional attachment to the brands.
  
  
• Builds credibility: Ethical branding involves an organisation that follows moral values and has good corporate governance and social responsibility initiatives, is well respected in society. Creates harmony: The companies which follow an ethical culture are well respected by their employees and it brings the people together and binds the employees and the decision-makers on a common harmonious platform.
  
  
• Improves decision-making: Ethical branding has the advantage of organisations making decisions based on ethical values and norms. The decision-making process involves the various social, economic and ethical aspects needed for marketing the products.
  
  
• Customer loyalty: Ethical brands have the benefits of high levels of loyalty from their customers and it enhances customer retention.
  
  
• Profitable in the long run: Organisations that are guided by ethics and values during their ethical branding are more successful with better productivity and they gain effectively in the long run.
  
  
• Protects the society: Ethics involved with branding of products plays an important role in safeguarding and protecting society. The enterprises that are ethically sound can manage their people and situations better.

Moral and ethical principles are a set of standards that are followed by organisations across the world and are universal for everyone. They define the right and wrong behaviour that should be followed by everyone.

Customer Loyalty

Customers look forward to brands and organisations that have ethical values and brands that act responsibly, with integrity, accountability, honesty and respect. Ethical brands enhance positive word-of-mouth and the commitment of the customers to their perceived quality.

Loyal customers are not swayed or influenced by pricing or availability of the products and they remain loyal to a specific brand. They are willing to pay more as long as they get the same quality product or services they love. Loyal customers help the business to grow faster and spend more time and money with the brands to which they are loyal and word-of-mouth marketing is the most important and powerful tool of marketing.

For example, Nike through its ads strive to remind mothers-to-be and women in general, that even amid stereotypes of being “delicate” or “soft”, they are strong, enduring athletes. This helps in enhancing customer loyalty to a specific brand as ethics helps in creating a bond with the customers.

Ethical brands help with boosting customer loyalty, customer retention and improved financial performance resulting in the growth of the company.

Hence, the brands that engage in ethical behaviour have the following advantages:

• Customers with greater commitment and emotional attachment to the brands
• Customers trust which boosts customer’s perception of quality service
• Customers prefer to be treated well which results in empathy and satisfaction
• Ethical brands benefit from a high level of customer loyalty and customer retention ‰‰
• Customers share positive word-of-mouth about the company and its brand

Brand Extension

A brand helps with differentiating the products of the company from the others in the market through its recognisable name, logo, design, colour and message. Brands are long-term commitments toward a unique set of values, that are embedded into products and services which help the organisation differentiate itself in the market.

Branding is an effective tool that helps the company improve its image and reputation and build customer loyalty. The brand extension strategy is an important decision that is being used by several organisations which has resulted in success and failures since brand extensions come with risks as well as opportunities. The strategy of brand extension creates many benefits for the companies by minimising costs, increasing promotional efficiency, better access to distribution channels and reducing the customer’s risk of purchasing the products or services.

For example, ITC’s brand Aashirvaad Atta has enormous brand equity because of its household name. With this grip in the market, the organisation has extended the brand into categories such as salt, organic foods, spices, etc. The strategy of brand extension adds value to the brand image by strategically positioning the new products and creating new market boundaries. A successful brand helps an organisation to launch products in new categories more easily and provide benefits to customers.

Many organisations use brand extensions to influence consumers’ brand choices. There are ethical issues faced by the company when people question their brand integrity and issues concerning product safety. Organisations must have an ethical framework for creating their marketing strategies that align with their mission, vision and the core values of the organisation.

Brand Association

Ethical brands are morally correct and they contribute to society in a positive, responsible and sustainable way. The customers are associated emotionally and mentally with the brand and the association could be positive or negative that influencing the purchase decision of the people. Brands that have project ethical values create positive associations and brands that do not display ethical values create negative associations.

Brand associations help with differentiating the products from the competitors and create a positive image that makes people want to buy the products. Ethical brands include strategies and actions that can be perceived as morally right and ethical and it creates a positive association for the consumers to relate with. This positive association of the brand is its significant characteristics that add to its personality and it is what comes to the mind of the customers regarding the brands.

Ethical brands create brand associations based on their ethical values, identity and other variables that have a role to play in determining the choice of the consumer to purchase one brand over another.

For example, Mama Earth is natural, Tesla is electric, ZARA is fashionable etc. The sincerity of the brand is the dimension of brand personality following ethical practices which is committed to the consumers and the community. The traits associated with brand sincerity are being down-to-earth, genuine, honest, trustful, cheerful and accountable.

Ethical brand values are an important set of guiding principles that determine the brand’s identity, message and personality. They give shape to every aspect of business and help with determining how the business is perceived by the people and defines how the business is conducted. The brand principles guide the behaviour, actions and decision-making process of the people towards the product and services.

Satisfied Workplace

Employees have a significant role to play in the organisation and they contribute to the achievement of the goals and objectives of the organisation in their way since each employee has a role in the workplace. Workplace ethics created boundaries for ethical dimensions of organisations and company activities.

Workplace ethical standards are the principles, code of conduct and practices that guide the business people in their day-to-day business decisions. These are governed by the process of ethical reasoning related to specific business activities and situations. The members are given a set of standards to follow and operate which are influenced by the prevailing economic and social situations.

In the words of Andrew Selepak, an educator at the University of Florida “The ethical standards of a company are top-down and bottom-up and the employer sets the example.” Hence the organisation must establish what its values are concern the society. It brings clarity amongst the employees on what is expected of them and it ensures transparency at every level defining the hierarchies at the workplace and each employee is clear about his position in the organisation.

It creates a satisfying workplace when there is transparency at every level defining the hierarchies at the workplace and each employee is clear about his position in the organisation. The employees use the code of conduct which is a form of guide and reference for the workforce to help them with their work and decision making. It depends on the business leaders and management for developing and following the code of ethics which sets a standard of ethical conduct for other employees to follow.

The management sets an example by implementing the rules for behaviour which sends a message of universal compliance to every employee. Not following the code of conduct can result in result in the termination of jobs for the employees.

A satisfied workplace leads to a positive ambiance the workplace by ensuring effective communication amongst the employees. They develop a feeling of loyalty towards the organisation and they tend to stick to the organisation for a longer time and contribute effectively. Organisations even reward an employee who displays ethical behaviour through promotions, financial bonuses or rewards for good stewardship.

For example, Adobe was named the No. 1 company with the happiest employees in 2021, as per a new report from the company review site Comparably. Its ethical practices includes creating healthy, collaborative and innovative work environments, reducing operational costs and increasing productivity through thoughtful resource conservation and waste reduction, driving profit responsibly etc.

Corporate Reputation

Corporate reputation is the public opinion concerning the corporate, its products, services and treatment of its employees. It is the perception of the people and society regarding the operations of the company which could be positive or negative and can change over some time. For example, Unilever has been building a clear, compelling brand position with its Sustainable Living Plan. The company must manage its reputation among consumers and the society for reflecting its business accurately.

For this, it is essential to have an organisational culture that emphasises ethical behaviour and creates the basis for standards of behaviour that become part of the code of ethics. The tone set by demonstrating ethical leadership by the managers determines how employees respond to ethical challenges.

A corporate that includes a work culture surrounded by moral values is well respected in society. They speak of proper social responsibility initiatives along with a good corporate culture. This belief is accepted all over the world irrespective of the organisation or business. An organisation driven by values is preferred by its employees also and they help to bind the employees and the management of the organisation on a common harmonious platform.

It helps the corporate with creating a positive impact through its various activities and its effect on society and the environment. It entails a corporate social responsibility that governs the various activities involved with human rights, labour, safety and health, environmental preservation and ethical management. It entails corporate behaviour and governance and brings about transparency in important social, environmental and business domains.

The behavioural aspects of the corporate culture create an impact on the stakeholders and the end-users. Therefore, it is important that they do business responsibly and be transparent about their actions in the community and take care of social issues that are relevant to their business. A corporate that follows moral values and ethics tends to gain in the long run. They are well respected in the industry for their valuable ethical norms and policies.