Environmental Issues and Fair Trade (AQA A Level Business) : Revision Note

How environmental issues affect costs and demand

• Environmental issues include climate goals, waste rules, extreme weather and nature protection

  • These factors shape how firms source, produce and deliver their products

  • They can raise costs through taxes, compliance or damage, but also create new demand for green products and services

• Some businesses use their environmental credentials in their marketing materials

  • For some it is a key element of their unique selling proposition (USP)

    • Lush Cosmetics sells UK‑made, cruelty‑free bath products and solid soaps and shampoos that are sold “naked” (plastic‑free)

Key environmental issues

1. Climate‑change targets and the move to net zero

   • UK law requires greenhouse‑gas emissions to fall to net zero by 2050

2. Waste, plastics and the push towards a circular‑economy

   • The government imposes tax on non-recycled packaging

3. Extreme weather linked to climate change

   • Serious storms cause £millions in damage, closing factories and shops in flood zones

   • The July 2022 heatwave cost the economy an estimated £260–300 million through lost productivity

4. Fast‑growing renewable energy sector

   • Renewable energy (e.g. wind, solar) makes up more than half of the UK's total power demand

Environmental issues, costs and demand

The impact of fair trade on costs and demand

• Fair Trade is a trading system that guarantees farmers in poorer countries a minimum price plus a small premium for community projects

  • The Fairtrade organisation checks that working conditions meet agreed standards

  • Products that pass the audit carry the FairTrade mark

Examples of FairTrade products

The impact of Fairtrade on business costs

The impact of Fairtrade on demand

• Fairtrade accreditation has a range of impacts on demand for some products

  • Ethical shoppers boost sales

    • Fairtrade Fortnight 2024 lifted confectionery sales 41 % and hot‑drink sales 12 % versus the previous fortnight

  • Increased shelf space for Fairtrade products

    • When a supermarket or other retailer promises to stock more Fair Trade goods, it gives those products more room in stores

    • With extra shelf space, shoppers see Fair Trade items more easily and sales often rise

    • For example, The Co‑op’s pledge to make all of its own‑brand chocolate Fair Trade means every chocolate bar slot in its stores now holds a Fair Trade product instead of only a few

  • Price‑sensitive customers may switch to cheaper brands

    • Some shoppers may avoid Fairtrade lines if they cost more than non‑certified or other ethical rivals

    • For example, several discount grocers stock Rainforest Alliance tea instead of Fairtrade, as it is less expensive to source, so can be sold at a lower price

  • Broader product choice

    • Over 5,000 Fairtrade‑certified items are sold in UK stores, from flowers to cotton sports balls, giving consumers ethical options in many product areas