Ethical Consumerism

The ethical consumer is no longer an anomaly. Ethical attitudes are fast becoming a significant part of the public agenda and energy suppliers who want to capitalise on this trend and simultaneously increase their renewable capacity need to ensure that the ideal strategies for acquiring the green customer are in place.



Report Highlights
The market for ethical goods and services is thriving with a 14% growth year on year across Europe.

Income and gender have little influence on ethical tendencies whereas cultural difference as more pronounced

There is a discrepancy between ethical values and actual ethical purchases
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CHAPTER 1 EXECUTIVE SUMMARY 3
Datamonitor takes a conservative, low growth scenario where the uptake of green energy will increase modestly from 2003 to 2008 3
Recommendations for EU Countries 6
CHAPTER 2 INTRODUCTION 16
Ethical consumerism is a growing market with a significant amount of as yet untapped potential 16
The New Consumer Insight survey covers 7 key European markets and the US and is supported by case profiles 17
CHAPTER 3 ASSESSING THE OPPORTUNITY FOR ETHICAL PRODUCTS 20
With the support of the EU, ethical consumerism is growing with the Dutch and Swedish leading the way 20
50% of Dutch and Swedish consumers support 5 or more ethical causes such as recycling and charitable donations 20
The UK market for ethical goods and service has grown year-on-year by 15% since 1999 23
Datamonitor takes a conservative, low growth scenario where the uptake of green energy will increase modestly from 2003 to 2008 24
Although green tariff penetration will not exceed 3% by 2008, customer perception of green energy indicates untapped potential 25
Raising customer awareness of sustainable products and services is a key part of the EU’s environmental agenda 27
Energy providers have legal obligations to provide electricity from renewable sources 28
CHAPTER 4 UNDERSTANDING CONSUMER ATTITUDES TO ETHICAL PRODUCTS 30
Ethical goods and services have a high price elasticity but culture and location dictate attitudes more than gender or income 30
Gender and income has little or no impact on degree of value placed on ethical consumerism 30
Ethical consumers do not discriminate between industries and display similar attitudes towards energy as they do financial services 33
Theoretical uptake regarding ethical goods and services are not always translated into actual purchases 34
Service consciousness has a strong positive correlation buying ethical goods and services 36
In terms of a green tariff, above average earners display more distinct opinions by either taking or not considering it at all 37
Consumers in the Netherlands and Spain are the least willing to consider green energy, those in Sweden are the most 39
Consumers are more inclined to take a green tariff from their energy supplier than home services 40
Highly price sensitive and highly price conscious consumers are more likely to consider a green energy tariff 43
CHAPTER 5 COUNTRY OVERVIEWS AND CASE STUDIES 45
EU concern and US legislation has seen a flourish of green energy companies and tariffs emerge across Europe and US 45
The Spanish government offers incentives to encourage suppliers to increase their capacity from renewable sources 47
Iberdrola has high renewable targets but only 20,800 SME and residential customers were on a green tariff by the end 2004 48
The Italian government’s own white paper highlights steps to increase the nation’s photovoltaic and biofuel capacity 50
Enel GreenPower, a leader in its field, encourages small businesses and even residential customers to invest in renewable technology 51
In the US there are many state and federal incentives for businesses and residential customers to switch to green 53
Green Mountain has 600,000 green customers in the US and is consistently acquiring new clients year-on-year 54
In France, 7.6% of EDF’s energy was sourced from renewable sources, the majority of which was hydropower in 2004 55
EDF’s main sources of renewables are wind power and hydro-power with the intention to invest ten fold in green by 2008 56
Germany’s government is committed to a long-term increase in renewable energy capacity whether nuclear is phased out or not 58
RWE, like most of the major suppliers, offers green energy, 87% of which comes from hydropower 60
The UK is a long way from reaching its renewables target and green initiatives must be boosted by government incentives 62
The popularity of Scottish and Southern’s green tariff is boosted by its alliance with the RSPB’s trusted brand 63
Due to its location and topography, hydropower accounts for 46% of power produced in Sweden 64
Government directives urge Vattenfall to reduce its carbon emissions and invest in renewables 65
The Dutch energy market opened up green before grey, but continued uptake of renewables is threatened by subsidy cuts 67
Essent has over 850,000 green customers in October 2005 giving it more than a 28% share of the green energy market 69
CHAPTER 6 RECOMMENDATIONS 71
Recommendations for France, Germany, Italy, Spain and Sweden 71
CHAPTER 7 APPENDIX 73
Datamonitor classifies respondents as high, low or moderately price conscious 73
Datamonitor classifies respondents as high, low or moderately service conscious 74
A scoring system based on market indicators, public consensus and governmental attitudes to evaluate each market’s relationship to green energy 75
The degree of renewable installed capacity indicates a country’s willingness to embrace green energy 77
Future readings 77
Report writing team 78
How to contact experts in your industry 79
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Table 1: The renewable capacity for 2002 and 2005 (forecasted) for European markets is a key indicator of a country’s relationship to green energy 77




Figure 1: Consumers are more likely to be ethical in theory than in practice 4
Figure 2: Sweden, the Netherlands and Spain offer the most attractive environment for the development of green energy 5
Figure 3: The NCI survey covers 7 European markets and the US 18
Figure 4: This report is aimed at those seeking a greater insight into the potential uptake of renewable energy in Europe and the US 19
Figure 5: The Dutch and the Swedish are setting the precedent in terms of ethical living whilst the UK, Spain and Italy are exhibiting significant growth 22
Figure 6: The value of the ethical consumer market has grown by 45% between 1999 and 2004 in the UK 23
Figure 7: The uptake for green energy is forecast to grow,albeit at a modest rate 25
Figure 8: More than 4 times as many customers think they are subscribed to a green energy tariff than actually are 26
Figure 9: European Energy labels have been introduced to help raise consumer awareness of energy efficiency 27
Figure 10: Germany and the UK are lagging behind in terms of meeting the renewable energy targets set by the EC 29
Figure 11: Consumers are inclined to agree with the idea of buying ethical goods and services in general regardless of income or gender 32
Figure 12: Almost three quarters of consumers would be willing to pay a premium for ethical finance 33
Figure 13: Only 20% of consumers would not consider a green energy tariff 33
Figure 14: Consumers are more likely to be ethical in theory than in practice 35
Figure 15: Service conscious consumers purchase a greater amount of ethical goods and services 36
Figure 16: Consumers earning an above average income are less apathetic regarding green issues; either they already have a green tariff or would not consider one at all 37
Figure 17: Swedish consumers are most willing to consider taking a green energy tariff whilst in the Netherlands where a green market opened before grey market, the opposite is true 39
Figure 18: The likelihood of taking a green energy tariff from an energy supplier is greater than that of taking home services 42
Figure 19: A high regard for customer service is often coupled with a greater concern for the environment 43
Figure 20: Sweden, the Netherlands and Spain offer the most attractive environment for the development of green energy 46
Figure 21: The Spanish government plans to offer a series of tax incentives and subsidies to suppliers in an effort to boost renewable capacity in line with their commitment to Kyoto 48
Figure 22: Congress allotted $329,965,000m towards the development and maintenance of renewable energy in 2005 53
Figure 23: The Primary Energy sources of EDF 56
Figure 24: Germany is the European leader in wind power accounting for 9% of electricity generated this way 58
Figure 25: 87% of RWE’s renewable electricity production comes from hydropower 60
Figure 26: Only 3% of the UK’s energy came from renewables in 2002 62
Figure 27: Hydropower is a significant source of energy in Sweden 65
Figure 28: The Dutch market is on track to reach its renewables obligation 68
Figure 29: Incentives for consumers offered by the government have been steadily declining since 2002 69
Figure 30: 53% of respondents (2,654) were rated moderately price conscious 73
Figure 31: 80% of consumers are moderately or highly service conscious 74
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