We’ve all heard the phrase “vote with your wallet,” but what does it really mean? In essence, voting with your wallet means being conscious of the brands and products you buy, with respect to your social and ethical values. In this article, we’re going to explore the impact a consumer can have when they choose to buy or avoid a product based on their ethical concerns.
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Impacts of Voting with Your Wallet
“Vote with Your Wallet?” Meaning: How Do You Vote with Your Wallet?
When you purchase a product, you are essentially agreeing with the company’s values, ethics, and mode of operation. You invest in the future of these companies by continuing to buy their products. Even if your personal values don’t fully align with how the organization operates, you still give them power by purchasing their products with your hard-earned money.
When you decide that a company’s ethics far outweigh the value you receive, you stop buying their products altogether. In other words, you are divesting from the company. You might switch to another brand, or decide that this particular product is unethical no matter what brand it is. When you consciously choose what companies to purchase from based on your moral values, your buying habits become a form of activism. You are taking a stand as to what companies you believe should and shouldn’t be allowed to do business. This is what it means to vote with your wallet.
Your buying habits may not hold weight individually, but when you spread the word and influence others in your peer group, the ideas gain momentum. Over time, a mass swing in buying habits will force companies to adapt to the changes in market demand, lest they suffer a financial loss.
Consumer sovereignty is the power of the consumers to decide what gets produced. Simply put, it’s the law of supply and demand, where the demand decides the supply. Even though it’s easy to discount the power of one consumer straying toward or away from a given product, the action of one person can have a snowball effect, as a single consumer can have an influence on the actions of their peer groups. Over time, a change in buying habits can take hold throughout entire social structures. This can compound over the long term as companies see the impact on their revenue streams. If corporations don’t adjust to changing markets, they can take heavy financial losses.
In the 1990s, Blockbuster was the go-to video rental store in the country. The proliferation of VCRs and home-video gave the company a perfect niche as an alternative to a night out at a movie theatre. But the company had an Achilles heel; late fees. Blockbuster charged consumers a fee for every day that a video went unreturned after the due date. While this accounted for a sizeable chunk of the company’s revenue, it was a source of customer frustration. Mounting frustration with late fees, along with the rise of more convenient services like Netflix and Redbox, began to take a toll on the company’s revenue. Blockbuster passed on buying Netflix, which ended up becoming its death blow. The company later attempted to implement online streaming, but it was too late. By the late-2000’s, consumers were already on the Netflix bandwagon. Blockbuster filed for bankruptcy in 2010.
A cultural change often accompanies large swings in buying habits. A heightened awareness of plastic pollution can steer people away from single-use plastics. Even if the initial amount of consumers who stop buying plastic products is small, the cultural effect can be enough to sway others to follow suit. Companies that use plastic packaging may then respond by reducing the amount of plastic they use, or by offering products packaged with more sustainable materials.
Why Vote with Your Wallet?
In many cases, consumers are compelled to vote with their wallets because certain products may adhere to, or violate, their ethical values. Whereas political elections are decisions made from the top-down, the decisions you make as to what you spend your money on are decisions made from the bottom-up. Choosing what to spend your money is a daily choice that should align with the kind of world you want to see.
Consumers may avoid brands for a variety of reasons, including:
- Human rights
- Exploitation of children
- Animal welfare
- Environmental concerns
- Sociopolitical values of the brand
Human Rights & Animal Welfare
Human rights violations are rampant throughout much of the developing world. These abuses may even exist in higher-income countries. Many corporations may source raw materials or labor from places where workers are severely overworked and underpaid. Their lives may be put in danger for the sake of a product. When these cases are brought to light, consumers may choose to not buy these brands.
In 2001, Nestle was found to be using slave labor to harvest their chocolate in Africa, where children were forced to work in horrible conditions for little to no pay. Even though the company was made to sign an agreement to end child exploitation, Nestle made no real effort to combat the practice. It went on for over a decade before a full FLA audit was conducted. To this day, many are skeptical that any meaningful action was ever taken.
Animals may also be harmed in the making of certain products. Manufacturers of meat, eggs, fish, and cosmetics may keep animals in cramped and unsanitary conditions, or rely on animal testing to analyze the long-term effects of their products. When animal welfare groups obtain information about animal abuse, they launch campaigns against the brand in an attempt to raise awareness and keep consumers from buying their products.
It’s also the case that companies that treat their workers ethically will advertise their products as such. The hope is to attract the conscious consumer toward buying their products while simultaneously drawing them away from similar products with unethical origins.
Environmentalism has become a significant driver of ethical consumerism. While most products have some level of negative environmental impact, some are more harmful than others. When large companies are found to be in gross violation of environmental standards, angry consumers may stop purchasing the product. Companies often attempt to advertise themselves as being sustainable or environmentally friendly to pull in the eco-conscious consumer. The practice of “greenwashing,” where a company falsely claims positive environmental actions, can undermine the efforts of consumers to buy sustainable products if they don’t recognize this marketing tactic.
In 2015, Volkswagen was caught tampering with the emissions data on their diesel vehicles by the EPA. The cars were rigged to release the desired amount of NOx while under testing, but reverted to their normal operating conditions during real-world driving. This resulted in Volkswagen’s vehicles emitting over 40 times the amount allowed by regulatory agencies. The revelation came after an aggressive marketing campaign touting the low emissions of VW’s cars, a textbook example of greenwashing. The scandal led to consumers losing trust in Volkswagen, and diesel cars altogether.
Since environmentalism is such a broad topic, many consumers may focus on a few significant issues when deciding to shop sustainably. Plastic pollution is a major concern, so many may opt not to buy foods with plastic packaging. Others may wish to focus on offsetting greenhouse gas emissions by riding a bike instead of purchasing a car. Because living an eco-friendly lifestyle is a highly intersectional issue, the buying habits of environmentally conscious consumers can vary.
Companies may often take a stand for or against particular issues by making political donations, putting out statements about controversial topics, hiring or firing controversial employees, or refusing to do business in certain countries. This can sway consumers toward or away from their brand.
The way corporations handle internal scandals can also affect their customer base. For example, refusal or incompetence in holding employees accountable in sexual harassment cases can drastically change public opinion.
Ice cream maker Ben & Jerry’s is known for its progressive stance on social issues. The company even employs an Activism Manager. But the people at Ben & Jerry’s have been at it for decades, since speaking out against the Reagan Administration and child hunger in the 80s. Today, the company is an outspoken supporter of Black Lives Matter, releasing intense statements after the high-profile deaths of Michael Brown and George Floyd. While the company had received some flack for its outspoken views, their stance is also a significant driver of brand loyalty.
Impacts of Voting with Your Wallet
When companies aren’t held accountable for their actions, consumers may take matters into their own hands as a way to demand justice. Social campaigns are launched against the offending company to demand accountability when governmental agencies fail to do so. There are several actions consumers can take against companies who commit ethical violations, including:
- Social media campaigns
- Protests and demonstrations
Boycotts are a refusal to buy from companies or organizations that commit acts deemed morally wrong. The goal is to force the company to suffer a financial loss to the effect where they must correct their actions. A large-scale boycott can hit companies hard if successfully orchestrated. Even if the economic losses aren’t severe, the bad publicity can be enough to force the company to change course. Boycotts are generally short-lived. When carried out for prolonged periods, they became part of the general practice of ethical consumerism.
Social media campaigns often accompany or serve as a precursor to a boycott. Consumers use social media to spread awareness of the company’s actions in an attempt to sway other consumers away from their products. This can lead to a boycott or a change in buying habits among the primary demographics of the brand.
When a corporation commits a severe enough action, consumers might even protest the company. These protests usually target a company’s headquarters, factories, and even the homes of its executives. These demonstrations aim to cause a significant enough disruption to force actions by both consumers and the government against the company, as well as to demand accountability from corporate executives themselves.
Transparency, Accountability, & Labeling
In order to be an ethical consumer, it’s necessary to have transparency. This allows consumers to fully evaluate the impact of their purchase. Early proponents of corporate transparency were consumer trade groups who lobbied for the labeling of foods. Today, independent organizations exist that verify the standards of brands that advertise themselves as being ethical. This is most often seen in the food industry, though clothing and cosmetics may also carry these labels. Common product labels include:
Still, large companies may not be fully transparent about their operations, especially in sectors where government regulations are lax. Whistleblowers and investigative journalists may then take on the role of uncovering the truth of a company’s practices.
Companies and organizations that are fully transparent are valuable to consumers. They allow their customers to trace the entirety of a product’s lifecycle so that critics can analyze and identify any potential moral conflicts. These companies are more likely to work with consumers to find a viable solution when ethical issues are found in their supply chain.
Ethical Audits to Promote Transparency
Since large corporations can’t be trusted to provide transparency in their supply chain, several independent organizations have sprouted up to evaluate any ethical claims made by brands marketed to conscious consumers. These are called ethical audits, and they look deep into a company’s practices and supply chain to verify the authenticity of its claims. Fairtrade International, the Non-GMO Project, and the USDA all perform ethical audits before allowing a product to be marked with their labels.
Brand Values & Loyalty
Companies spend a lot of time and money cultivating trust from their consumers. They may use advertisements, marketing strategies, and even make charitable donations in an attempt to sway public opinion in their favor. Corporations with a loyal customer base have a strong buffer against bad PR. It’s difficult to launch a boycott against a company that has spent several decades building a positive rapport with its consumers. Patagonia, a company that has spent over thirty years building a reputation based around equity and sustainability, was recently found to have suppliers that systematically engaged in animal cruelty. Yet, they’ve retained their image as a sustainable company.
Companies may also build trust by explicitly advertising their ethical practices. Social entrepreneurs may promote the positive effects of their products in an attempt to build brand loyalty with the conscious consumer. Common strategies include:
- Comparing the environmental impact of their products to the competitor
- Donating a portion of their profit or revenue to charities
- Sponsoring organizations that help people, animals, and/or the environment
- Advertising their products as fair trade
- Releasing public statements for or against a particular issue
Being an ethical consumer is one way to make a statement about your moral values. We vote for elected representatives who align most with our ideals, so why not vote for the corporations who best share our ideals as well?
- When we choose to buy a product, we are, in essence, voting for the prospect of that company to continue existing in the future.
- When a company’s operations are shown to be unethical, conscious consumers will refuse to by their products.
- Human rights, animal cruelty, and environmentalism are all valid reasons to stop buying certain brands.
- Companies that violate ethical norms face boycotts, social campaigns, and even protests if they don’t change their ways.
- Consumers can spot more ethical brands by their labels, many of which are certified and audited by third-party organizations.