How To Become An Ethical Business


With many discerning customers looking to change their buying habits, ethical, sustainable and eco-friendly products and business practices have never been more popular or more important. Ethical trading, animal and worker welfare, and caring for the environment are issues that are not only important for consumers and investors, but they can also be a way for your business to become more profitable and gain more loyal customers. But how do you become a more ethical business and begin to reap the rewards, not just for your company but for the world we live in?

What is an Ethical Business?

An ethical business is a business that operates while keeping the consequences of its actions in mind – whether those actions affect the environment, humanity as a whole, staff members, or animals. The final product or service, the way it’s manufactured, and how it is delivered all factor into the effect your business is having on the planet.

Factors to Consider for Your Ethical Business

Here are a few ways you may be able to make your business more ethical:

Choosing Where Your Product is Made

If you outsource the manufacturing of your product to a factory overseas, such as China, where manufacturing is cheaper, bear in mind that employment and environmental regulations are less comprehensive but you will have requirements to follow. For example, you will need to ensure you are not exploiting workers and that they have rights in line with international labour standards.

If your product is made in Britain – or even on your doorstep – this could appeal to customers who believe it’s important to buy local and support nearby businesses.

Alternatively, you could partner with a co-op or community in a developing country that is dedicated to creating fair employment opportunities and helping get people out of poverty.

Creating Sustainable Products

How are your products created, what do you make them with, and how are they distributed? Can you use recyclable alternatives to plastic, for example? Or could you use recycled or reclaimed materials, which could also keep your costs down?

If you’re a food company, consider sourcing organic or local food whose origins you are able to track, so you and your customers know where your produce is coming from. Organic food may be more expensive to source, but customers are also willing to pay more for it.

Reducing Your Carbon Footprint

If you use transportation in your business, are you able to use electric or hybrid vehicles? If you have a warehouse or other premises, are they well-insulated to reduce energy and heat loss? Not only could that help the planet, but it will save you money and keep employees warm, too.

Will Running an Ethical Business Work For You?

Unfortunately, there is a downside to running an ethical business, and you may find it in your profit margin. You may need to sacrifice profit in order to implement ethical measures – for example, manufacturing in some countries will cost more than others, and the initial layout for eco-friendly equipment and transportation could set you back.

However, it could still be worth it in the long run. Many customers appreciate businesses who have core ethical values and stick to them, and being eco-friendly could be a great selling point that sets you apart from your competitors. If you already have cashflow issues or are just getting started, it may not seem realistic for you yet. But if being an ethical business leads to gaining loyal customers, you could find that you – and the planet – reap the rewards.

Support for Ethical Businesses

Though there isn’t funding available for ethical traders in the way that charities can receive funding, there are organisations out there to help you. The Ethical Company Organisation gives companies an Ethical Accreditation and runs the Good Shopping Guide. Plus, The Fairtrade Foundation promotes ethical businesses, while Eco-Age works with businesses to help them improve their sustainability.

If you are looking to create a new sustainable business, take a look at our company formation services.

* All timescales are dependent on how busy Companies House/HMRC are and if their system is operating normally.

* All prices are plus VAT 

* See terms and conditions regarding release of codes