THE credit crunch won't show the red light to the growth in green consumerism, the Manchester-based Co-operative Bank said today.

While some big businesses, including Marks & Spencer, have already began to cut back on their environmental marketing campaigns, the Co-op suggests that green legislation and ethical shopping habits will conspire to continue growth in the sector.

The bank's ninth annual report into green spending showed that, despite the first tremors of the downturn being felt towards the end of last year, the overall ethical market in the UK increased by 15 per cent, from £31bn in 2006 to £35.5bn in 2007.

Dick Parkhouse, managing director retail at the Co-operative Bank, said: "For some time now we have argued that only through legislation will we secure the necessary changes to deliver mass-market, low- carbon lifestyles.

"Government intervention is underpinning these markets, ensuring that they continue to grow. Of course, the state of the economy will impact on consumer spending, but this report shows that bold government action can stimulate markets, save consumers' money and protect the environment."

The report shows that last year, on average, every household in the UK spent £707 in line with their ethical values - up from £630 in 2006.