How to be an ethical start-up

According to recent research, ethical and sustainability issues remain a key driver for almost a third of consumers, who claim to have stopped purchasing certain brands due to related concerns.

The conscientious pound is a valuable market, too, with conscientious consumer spending and finance in the UK estimated at £141.6bn – up 35% on 2021.

Increasingly, customers want principled, sustainably made products as they adjust their lifestyle and spending habits, but they also want organisations to have strong moral stances and values in place that they can support.

According to research by Deloitte, practices such as committing to conscientious working practices and respect for human rights form some of the practices consumers expect from businesses.

Many sustainable start-ups have launched to capitalise on this shift in consumer trends but all start-ups are well-placed to put values at the heart of their activities.

What is an ethical business?

An ethical business aims to minimise the negative impact it may have on the environment and society.

This can include impacts such as their carbon footprint and eliminating worker exploitation, such as ensuring their suppliers treat their workers fairly and pay a fair wage.

The key characteristics that principled businesses tend to have are:

• long-term, mission-driven plans
• strong core values
• a management team that leads by example
• inclusive hiring practices
• respect for customers and employees
• a focus on sustainability.

Benefits of running an ethical business

Being a conscientious business can deliver commercial benefits, including:

• A competitive advantage – principled businesses are increasingly favoured by customers with a recent study showing that 32% of UK consumers are seriously committed to living a more moral and sustainable lifestyle.
• Reducing ethical violations – that may damage a business’s reputation, impacting sales and revenues.
• Reducing costs – a commitment to sustainable practices such as recycling, less packaging, and better waste-management procedures may help reduce business costs.
• Helping with recruitment – values and policies can help start-ups attract and retain highly quality staff – 86% of Millennials said morals and values are a priority when deciding where to work.
• Attracting investment – start-ups with strong business morals may be more attractive to investors who are interested in investing their money in trustworthy companies that demonstrate integrity and a sense of respon­sibility.
• Avoiding legal issues – all start-ups must comply with applicable industry and business legislation, but businesses that operate conscientiously with regards to the environment, health and safety, employees, and the general public may be less likely to run into legal difficulties.

Five tips for running an ethical business

1. Define your core values at the very beginning

Start by creating a core value statement.

This is so investors, employees, and customers can better understand why your organisation takes specific actions and your end goals.

Defining your business ethics and values as part of a core mission statement will help inform all areas of your business operations including business strategy, supply chain management, recruitment, and employee code of conduct.

2. Have an ethical hiring process

A conscientious recruitment process involves hiring staff fairly, transparently, and on merit.

It puts diversity and inclusivity at the heart of the process, increasing the talent pool to include those from more diverse backgrounds, including different ethnicities, sexes, and disabled people.

Hiring techniques such as blind CVs, making reasonable adjustments for candidates, and writing inclusive job listings could help battle unethical biases and build a diverse team that embodies your start-up’s core values.

3. Lead by example

Actions speak louder than words, and in your start-up, it’s your actions that speak the loudest.

With leaders actively demonstrating the organisation’s core values, their importance trickles down to employees.

The true test of a moral business leader comes when having to make hard decisions, particularly when having to choose between an conscientious business option or a profitable one.

Leaders who are truly committed to their start-up’s mission may consciously choose the former, which can play a role in creating a principled business culture.

4. Create an ethical culture

When crafting the core values of your start-up, it is vital that they can be owned by everyone involved.

Making values a priority and setting standards for staff to abide will help create an moral business culture.

Employees who feel included and part of something larger, such as shaping your start-up’s core values, have higher levels of job satisfaction and productivity.

This is because they believe in the work they do and feel that what they have to say matters.

5. Make your supply chain ethical and sustainable

One of the ways that you can be a conscientious business is to provide ethical products.

Whether you are sourcing or manufacturing products, the primary objective is to do so in a way that doesn’t harm society or the environment.

For example, if you are running a coffee shop, you could consider sourcing fair trade coffee beans and using biodegradable cups.

Ethics and sustainability go hand-in-hand, so even in if your ethical start-up has a non-environmental mission at its core, it is still important to practise sustainability.

This can range from using a sustainable energy supplier for your workspace, to encouraging remote working to reduce CO2 emissions, to sourcing locally and using recyclable, sustainable packaging for products.

Read more on making your supply chain ethical and sustainable.