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Do Ethics Matter to Consumers?
Thursday, April 14, 2016 6:25 AM

Doug Foister, Vice President of Research, Cornerstone Credit Union League

The short answer is yes, ethics do matter to consumers. In fact, according to new research from Mintel, 56 percent of American consumers stop buying from companies they believe are unethical, 35 percent stop buying from brands they perceive as unethical even if there are no substitutes available, and 26 percent stop purchasing even if they think the competitor offers lower quality. Furthermore, 63 percent of consumers feel that ethical issues are becoming more important.

These findings bode well for credit unions, whose reputations for genuinely caring for the financial well-being of their members are based in fact and not just smart branding.

Here are some additional revealing statistics. Some 34 percent of consumers (and this certainly applies to consumers of financial services) tell others when they perceive a brand to be making ethical actions or actions that are honest, fair, and responsible. Another 29 percent take to social media to share their support of ethical companies.

But here’s the reality check: consumers also tend to be somewhat cynical, with half of Americans believing that marketing products as “ethical” is just a way for companies to manipulate consumers (52 percent) and that many companies behave ethically in one area while behaving unethically in another (49 percent).

What actually determines ethics in the eyes of consumers? The most commonly considered factor is employee treatment (48 percent), followed by where products are made (34 percent), environmental friendliness (33 percent), and outreach in local communities (22 percent). Of special relevance to credit unions is that a company’s size stands to help or hurt its ethical image due consumer notions about the relationship between size and ethical behavior.

All of these research findings can have powerful implications for credit unions. As not-for-profit financial cooperatives whose history is replete with honest accounts of people helping people, we are in a unique position to model financial ethics to a public that increasingly longs for this.