Ethical Performance
inside intelligence for responsible business
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Rising to the challenge of the ethical consumer

December 2014

Ethical trading is now a well recognised part of the wider sustainable business agenda, but there’s still a long way to go. Miranda Ingram reports

Twenty years ago there were three Fairtrade products: Green & Blacks Maya Gold chocolate, Cafedirect coffee and Clipper tea.

Campaigns and media exposes were just starting to draw our attention to unacceptable working conditions in clothes, toy and consumables factories.

Since then, major retailers have spent millions on improving their products and supply chains to become more green, recycling-friendly, fair-trading, waste-conscious, socially-responsible and energy-conserving.

Consumers are spending more on environmentally sustainable products. For example, 2013 saw 51% of all eggs sold in the UK produced using free-range methods and demand for sustainably-caught caught fish and local food continues to grow.

In the UK, the world’s largest Fairtrade market and where public awareness of the mark remains high at 77%, consumers spent around £1.7billion on Fairtrade products. Global sales rose 15% during the same period.
Today, over 4,500 products including tea, coffee, cocoa, chocolate, bananas, sugar, cotton, gold jewellery, cut flowers, wine and cosmetics carry the Fairtrade mark.

However, Fairtrade’s birthday celebrations come in the wake of the Rana Plaza disaster in Bangladesh, at a time when there are more people in slavery than at any time in human history and as price wars between supermarkets are putting small suppliers out of business.

Two large retail groups have just finished inspecting nearly 1700 garment factories in Bangladesh. The largely European Bangladesh Accord on Fire and Building Safety has 189 corporate members including H&M and Carrefour and found more than 80,000 safety problems in the 1,106 factories inspected and safety hazards in all factories, “which was to be expected” according to chief safety inspector Brad Loewen.

Anti-slavery legislation
Meanwhile - astonishingly in the twenty first century - the UK Home Office has announced that large companies will soon be obliged to report on steps they have taken to ensure their supply chains are slavery-free. The measure, which is included in the modern antislavery bill going through parliament, will apply to all large companies regardless of their products or their nature.

“Twenty years ago, ethical trade as a concept and practice was in its infancy,” says director of the Ethical Trading Initiative (ETI), an alliance of companies, trade unions and NGOs tackling global labour issues, Peter McAllister.
“Ethical trade is now a well recognised part of the wider sustainable business agenda. We’ve seen some progress in addressing some of the most concerning labour rights issues, for instance there’s been a decline in the number of child labourers globally. But as the modern slavery bill shows, we still have a long way to go before workers around the world can enjoy conditions of freedom, security and equity.”

According to Karen Bradley, minister for modern slavery and organised crime, the transparency demanded by the bill will ‘give customers, campaigners and shareholders the information they need to hold all big businesses to account while also supporting companies to do the right thing.’

Certainly, retailers who are doing the right thing want to tell shoppers about it and to gain a commercial advantage by being ethical. More and more information is being offered on corporate websites and in-store communications.
But how easy is it, really, for the ethically-minded shopper to make the best food and gift choices this Christmas? With the amount of information on offer, ethical shopping can be as confusing as nutritional information on food packaging.
Customers like labels, particularly those that offer independent verification. But do we know exactly what the different schemes like Red Tractor, Marine Stewardship, Carbon Trust, Rainforest Alliance - even organic and free range - actually mean?

Moreover, are products flaunting an ethical label necessarily better than those without?

Earlier this year researcher Christopher Cramer at SOAS University of London found that Fairtrade wage workers at research sites in Ethiopia and Uganda are among the poorest and most destitute while labourers at some smallholder independent farms and large-scale, commercial coffee operations not associated with Fairtrade, are still “extremely poor” but on average are paid and treated better.

Researchers also discovered widespread child labour at many farms, including some associated with Fairtrade certifications.

This doesn’t mean that Fairtrade is a bad mark, of course, but that it doesn’t necessarily mean better, nor does it mean that other brands are necessarily worse.

Over the last 10 years, artisan coffee roasters such as Intelligentsia and CounterCulture in the USA, and Union in the UK, have pioneered Direct Trade, which involves agreeing prices directly with coffee growers rather than via cooperatives, as an alternative trading model. But Direct Trade does not offer a certification process so the term can be abused, leading to further confusion for customers.

In the UK, Marks and Spencer, the Co-op and Waitrose, as part of the John Lewis Partnership, are, rightly, trusted by their customers to be doing the right thing. Again, this doesn’t mean that other retailers aren’t.

The Ethical Trading Initiative (ETI) lists many popular brands, such as Debenhams, Boden, Jaeger, Next, among its 70 member companies, representing over 10 million workers worldwide. Member companies have committed to adopting the ETI Base Code of Labour Practice based on the standards of the International Labour Organisation and are expected to identify issues and improve their ethical trade performance, reporting annually on their progress. There is also a robust disciplinary procedure for companies which fail to honour this commitment.

Communicating progress
However, the ETI is not a certification scheme and does not disclose details of individual companies’ progress to the public, although consumers can check the membership list at . “We encourage consumers to contact a brand or retailer directly to find out if it is an ETI member,” says the ETI’s Esme Gibbins. “And we encourage member companies to communicate about their ETI membership, and what they are doing to improve the lives of workers in their supply chains. But members communicate this at a company level (for instance on their website), rather than on products or packaging.”

Not shy about naming and shaming is Oxfam’s Behind the Brands scheme which points the finger at the baddies by rating the world’s top 10 biggest food companies according to their commitment to workers, women, farmers, transparency, climate, water and land, and actively invites consumer pressure on the poor performers.
According to their latest report, in October this year, Nestlé and Unilever are topping the charts with a 70% good behaviour score, followed by Coca-Cola at 59%.

General Mills comes joint last with Associated British Foods plc but Mars, Kellogg’s and Danone are doing little better.
So there is plenty of information out there, but it is up to the ethical consumer to do the legwork if they want to be fully informed. And, as the Oxfam rankings demonstrate, there are many areas in which a corporation can be rated which is another obstacle in giving consumers the precise information they want.

While many consumers want to be a bit greener and do their best for animal welfare, underpaid workers and the environment, they make choices according to different criteria. Some want 100% Fairtrade or organic, others are concerned about climate change and want a reduced carbon footprint, while yet others to know that their food is produced humanely. Most probably just want to be able to shop cheaply without being “unethical”.

However, retailers, too, are working to different priorities, be it wages, water use or waste policies. As the Centre for Retail research points out, retailers would attain their ethical goals more cheaply if they worked together more and this would also reduce the number of labelling and verification schemes, making life easier for shoppers. But, as well as having different views about what needs to be achieved, retailers also want to get maximum kudos for their efforts, which may mean adopting different goals from their competitors.

Nevertheless, there is also a greater understanding that change needs to take place at multiple levels, at the same time, says ETI director Peter McAllister. “The Bangladesh Accord is a good example of what can happen when international brands and trade unions come together over an urgent workers’ rights issue.”

But looking ahead, he says, responsible businesses face challenges of a different nature. ‘There is a lack of trust in business in general, and wariness about claims that are not independently verified,’ - the “greenwash” effect.
“While consumer and media campaigns continue to play a catalysing role in shining the light on challenging issues, ultimately, commercial, political, civil society and trade union interests must combine forces if we’re to have any real chance of improving conditions for workers around the world.”

Global | Ethical Trading


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