Is the ethical consumer a myth?

Can informed, motivated ethical consumers act as human rights 'regulators'?

What design assumptions underpin models for regulating business human rights risk through mandated reporting?

Last week Australia's house of representatives debated the Modern Slavery Bill 2018, which would require larger Australia firms to report annually on steps taken to ensure their operations and supply chains are not tainted by human trafficking and forced labour.

The government's model would not include statutory consequences or penalties for non-compliance (non-reporting). Based as it is on s. 54 of the UK's 2015 Modern Slavery Act, the model is premised on the idea that businesses that do not report 'will be penalised by the market and consumers and severely tarnish their reputations' (Minister's 2nd reading speech, Sept. 2018).

The model is defensible in principle and regulatory theory, as I've blogged (etc.) elsewhere.

Yet as the Senate's August report noted (Recommendation 3.97), we need to 'test the proposition that reputational risk is a sufficient motivator' for widespread and meaningful reporting, and for continuous improvement in related internal due diligence practices.

A research agenda exists here since it is not obvious that consumers are likely to be effective at policing compliance with human rights performance by corporations. (Investors, insurers and other market actors may play this role more effectively, but that's not the issue in this post).

In addition to the fact that not all industry sectors face reputational risk in the same degrees or ways, we know from existing scholarship that it is not obvious (i.e. the empirical evidence is thin) that consumers will behave more ethically if they only have more information about the provenance and socio-enviro conditions under which things are extracted or made.

That is, the ethical consumer may be a 'myth' (e.g. Devinney et al 2010; Carrington et al 2010). There is an attitude-behaviour gap (Boulstridge and Carrigan 2000): even consumers who say, when surveyed, that ethical considerations matter to them do not necessarily change their consumption behaviours. Nor do they become activist consumers holding firms to account.

If so, we need to explore regulatory models premised on the idea that an informed, motivated mass consumer public will effectively hold corporate actors to account on statutory disclosure of human rights risk.

Jo

See too this previous post on modern slavery, on consumers as regulators (influencing behaviour of commercial actors): here.