Is the credit crunch killing green shopping?

If you believe The Guardian, the credit crunch has killed ethical consumerism. Buying Fairtrade, shopping for organic and investing in energy-saving products? They're, like, so 2007. At least that's what you'd believe from the newspaper's story on a new eco shopping report by PricewaterhouseCoopers. But read the actual report and the latest figures for ethical consumption and you see a different story, as I've found out.

So, is green shopping dying or thriving in the credit crunch? Let's look at that PWC report first.

It opens with the statement "are consumers buying sustainability? Yes, and in increasing numbers", going on to cite growing 'sustainable sales' in the 4,000 shoppers it surveyed. Among those 4,000, Fairtrade food sales are up from 20 per cent in 2005 to 50 per cent now, and organic and Fairtrade clothes are up from seven per cent to 17 per cent in the same period. In the future, it speculates that as the cost of carbon is factored in, eco products might match 'normal' products on price.

Why was the report portrayed as the death of eco shopping? Well, the report notes that 48 per cent of consumers won't or can't pay a price premium on sustainable products. And PWC's Mark Hudson says, "the credit crunch will act as a bump in the road and slow down the rate of customers switching to green products."

A recent poll by Virgin Money, however, suggests otherwise. Eighty per cent of the 1,000 people in its survey said the credit crunch wouldn't affect them buying eco products, despite those products adding an average of £12 a month to monthly food bills.

Who's right? Let's take a look at the latest sales figures for eco and ethical products. The Soil Association says sales of all organic products in the UK were worth £2 billion in 2007 -- up 22 per cent on 2006. It says the growth for 2008 is looking more like ten per cent. So organic sales are slowing -- but double-digit growth is still impressive.

There may also be emotional reasons why people won't ditch organic. "The organic market fell apart in the 1990s [but] now organic is embedded in people's beliefs, so they may be more reluctant to surrender it," Matt Reed of the Countryside and Community Research Institute told the Grocer magazine.

Fairtrade, meanwhile, saw its UK sales up from £300m in 2006 to £493m in 2007. And worldwide, Fairtrade sales were up 47 per cent in 2007. Sadly there are no up-to-date figures for 2008, so it's tricky to say if the credit crunch has started to bite Fairtrade this year.

To get an idea of total sales for the ethical shopping market, I'd usually look to the Co-operative Bank's Ethical Consumerism Report, which put ethical spending at £32.3bn in 2006.

The figures for this year, however, won't be available 'til 2009, so arguing the toss on the credit crunch's impact is a no-go. A Co-op Group spokesperson did tell me that, anecdotally, "there doesn't seem to be any slow-up on Fairtrade; the Co-op Bank hasn't felt the crunch and there doesn't seem to be any impact on ethical consumerism."

The verdict, then? The jury's clearly out on the sales numbers and the public's opinion. I edit a site that covers green products, so I have a vested interest in ethical consumerism doing well. But whatever way you look at it, ethical consumerism certainly doesn't appear to be dying in the credit crunch -- the big question will be whether it thrives or it just survives.

What do you think? Will you keep buying eco products even if there's a full-blown recession? Or have you already started cutting back on green purchases because of the crunch?

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