Start your own ethical business – it could make a world of difference
The Guardian, by Donna Ferguson
When John Bird launched the Big Issue in 1991, he had no idea how to make money ethically – or how successful his magazine would turn out to be.
“I wanted to create a sustainable alternative to begging, crime and prostitution for people stuck on the streets,” he says. “But I was not a saintly person. I’d go out, get drunk and roll into the office late and stinking. I employed people who, like me, had a history of drugs, crime and violence, and some of them ripped us off. I blundered from one mistake to another.”
Within a year his backer, the Body Shop co-founder Gordon Roddick, had told him the magazine must break even or it would be shut down. “All these people who worked in advertising had told us they would buy loads of our ads – and they lied. So I decided to change the business model.”
He doubled the price of the magazine and cut his costs by reducing the size and quality of the paper it was printed on. He also made 10 people redundant. “We were top-heavy with homeless people who then didn’t turn up, would fight with each other or were too depressed to work. I realised I needed to mix up our homeless employees with professional people who had a good heart and could help us to build a sustainable business.”
Fast forward 26 years and the Big Issue is the most widely circulated street newspaper in the world with more than 200m copies sold. To date it has helped at least 92,000 homeless people earn more than £115m.
f you have always dreamed of starting up an ethical business that, like the Big Issue, challenges perceptions and changes lives for the better, research indicates now may be a good time to do it. At £38bn, the UK’s ethical goods market has quadrupled in size since 2000, with sales rising by 8.5% a year. A third of consumers now choose to buy from brands they believe are doing social or environmental good, according to a recent study of 20,000 adults by Unilever that mapped participants’ claims against their actual purchase decisions.
Research published this week by Triodos Bank – to mark the start of Good Money Week, which kicks off on Sunday and runs until 14 October – found that two-thirds of investors would like their money to support profitable companies which make a positive contribution to society and the environment.
The advertising guru David Jones, author of Who Cares Wins: Why Good Business is Better Business, says the big drivers of the change in consumer attitudes are millennials, whom he calls “the most socially responsible generation that has ever existed”. Millennials are twice as likely as the overall investor population to invest in companies with social or environmental goals, according to Morgan Stanley, and nearly three-quarters are willing to spend more on a product if it comes from a sustainable brand, compared with two-thirds of the general population.
But making money ethically is no mean feat – as Bird knows only too well: “It’s easy to run a business that is honourable, ethical and unsustainable, but what’s the point of that?
“What we tried to do with the Big Issue was be as sustainable as possible. We knew people were relying on us for their livelihood … I made enormous mistakes, but I learned from them. Before you set up an ethical business you need to ask yourself: is this a business or a charity? Are you going to be both ethical and effective? Are you selling something people will buy?”
The Cafédirect chief executive, John Steel, says the key to running a successful ethical business is to recognise that it can be a force for good rather than a selfish deliverer of money for the few. “Usually, ethical businesses are less financially driven and value finance less than other businesses. But financial sustainability is paramount,” he says.
Colm Curran, director of the ethical English chocolate producer Seed and Bean, says recruiting people with the right attitude is a priority. “Your values need to be part of the culture and everyone, not just senior management, needs to buy into them. You have to stay true to your brand, which means doing a lot more work complying with regulations and vetting your supply chain. That costs time, effort and money, but it creates brand loyalty.”
Is it possible to be a landlord and make money ethically? Sarah Fishpool thinks so. She owns three buy-to-let properties and founded the Ethical Landlords Association in response to the growing housing crisis. “I found myself questioning whether I was doing the right thing in renting out my properties.”
She set up the association to promote an ethical approach to the rental sector by encouraging landlords to offer renters more security through longer tenancies and notice periods for good tenants. She is particularly against revenge evictions: “Tenants should not be given notice unless it’s for a sound reason like rent arrears, antisocial behaviour or a breach of the tenancy agreement.”
Members must sign up to the association’s charter. So far only 30 landlords have joined, but she is hoping more will do so over the next year. “There’s a perception that landlords are only out for themselves,” she says. “But many are ethical and compassionate people who recognise that a relationship of trust and mutual respect is of value to them and their tenants.”
Fishpool says landlords who treat tenants ethically will be rewarded with renters who pay on time and look after properties well. “I think the rental sector is needed. But landlords should respect the fact that their properties are their tenants’ homes and they have the right to feel happy and secure there.”
Organisations set up to promote ethical entrepreneurship include Power to Change, a charitable trust that supports and develops community businesses in England, and Big Issue Invest, a fund that social enterprises can apply to for finance. Bird says it is one of his proudest achievements, although he had never intended to blaze a trail for other social enterprises: “I was always out to destroy capitalism, not repair it.”
Now 71, Bird recently joined the House of Lords and is attempting to dismantle the root causes of poverty from within. “My aim is to be the itchy arse of the establishment and prevent the next generation of Big Issue vendors from ever existing.
“As far I’m concerned I’ve only moved an inch down the road over the past 26 years. I’ve not even got started yet.”
Sunday 8 October marks the start of Good Money Week, an annual campaign to raise awareness about the benefits of making ethical investments.
“For me it is important to live sustainably and support the right kind of business,” says Sophie Whyte, a 37-year-old senior research fellow at the University of Sheffield.
She has put her savings into ethical Isas at Triodos Bank. “I’m saving to buy a nicer house,” she says.
As an avid rock climber, the natural world is very important to her. “It’s important to put your money in the right place, I think, because money drives change. My personal concerns are environmental – I cycle, and take the train to Europe when possible rather than flying – so I wanted my savings and investments to reflect that.”
Whyte has put most of her savings in a low-risk, ethical cash Isa earning 0.9%, and has more than doubled the £8,000 in her ethical stocks and shares Isa since 2013.
“I chose Triodos because I wanted an ethical bank that has an ethical approach,” she says.
“I found the process of choosing an ethical investment fund quite simple once I had made that decision.”
When Ruth Anslow and her sister Amy came up with the idea of opening their own ethical community supermarket, hiSbe, in Brighton, they soon realised they needed help to make it happen.
“First we wrote a set of values for our business. Then we set up a website, Twitter account and blog, and used that to connect with people,” says Ruth. She researched the market for ethical food stores and asked owners of similar businesses for feedback on their business model. “There’s a spirit of generosity among ethical businesses. We’re not in competition – we’re all on the same page.”
After building up a following for the brand online, they realised crowdfunding would be a good way to launch the business. “We offered people vouchers they could only use in a store that didn’t yet exist and raised £30,000. Then we leveraged that support to win over other investors by demonstrating there was a customer base ready and waiting.”
The campaign also attracted the attention of John Bird’s old partner Roddick, who began mentoring the pair.
HiSbe, which stands for “how it should be”, opened its doors four years ago and now employs 11 people. Last year it turned over £1.2m, but instead of allocating a large proportion of that money to marketing or shareholders, Anslow pays her staff a proper living wage and passes more of the money she makes back along the supply chain to local farmers and suppliers.
Yet the prices they charge customers are affordable and comparable with big supermarkets, she says, even though they have higher costs and offer higher quality ethical produce. As a result, hiSbe made only a small – but significant – profit of £35,000 last year. “I used to earn a big salary in my last job and that didn’t make me happy. What makes me happy is being connected to a purpose and my community and having an impact. I want to die knowing I helped transform the food industry … and quite honestly, not a lot else matters to me.”