Promoting Fair Trade principles

Does your business promote Fair Trade principles?

EXCELLENT Answers

No EXCELLENT answers have been published for this question.

GOOD Answers

No GOOD answers have been published for this question.

OKAY Answers

No OKAY answers have been published for this question.

POOR Answers

No POOR answers have been published for this question.

Fair Trade is an alternative approach to conventional trade and is based on a partnership between producers and consumers.

With the advent of the globalisation of trade and the concentrated power of corporations with large market share, the various benefits of trade have not been equitably shared. In recent decades, the benefits of trade have tended to become skewed in favour of the rich and powerful, and to the detriment of farmers and workers at the start of supply chains, especially those located in the global south.

When a product carries a Fair Trade certified mark it means the producers and traders have met Fair Trade standards as stipulated by the certifying body. While the handful of leading certifying organisations all set different standards, they all ensure that when farmers sell on Fair Trade terms, they receive a better deal and improved terms of trade. This allows them the opportunity to improve their lives and plan for their future. By buying Fair Trade certified products in the course of their day to day shopping, consumers support a system designed to pay producers a fair price.

There are five core principles of fair trade, as set out by the World Fair Trade Organization and Fairtrade Labelling Organizations International. These principles are key to Fair Trade’s developmental objectives. They are as follows:

  1. Market access for marginalised producers - ensuring no producers are excluded from the mainstream
  2. Sustainable and equitable trading relationships - The economic basis of transactions within Fair Trade relationships takes account of all costs of production, both direct and indirect, including the safeguarding of natural resources and meeting future investment needs
  3. Capacity building & empowerment - assisting producer organisations to understand more about market conditions and trends and to develop knowledge, skills and resources
  4. Consumer awareness raising & advocacy - connecting producers with consumers and for informing consumers of the need for social justice and the opportunities for change
  5. Fair Trade as a “social contract” - commitment to a long-term trading partnership with producers based on dialogue, transparency and respect

More information on these principles, and about Fair Trade can be found in the Charter of Fair Trade Principles.

In 1988, the first Fair Trade label, Max Havelaar, was launched by Dutch development agency Solidaridad and saw Fair Trade coffee from Mexico sold into Dutch supermarkets. Ever since, Fair Trade standards have evolved and been developed to address the imbalance of power in trading relationships. It also has come gradually to include some broader ethical concepts, such as fair remuneration, fair working conditions and adherence to basic sanitary and safety norms.

Traidcraft has suggested that Fair Trade differs from standard trade because it:

  • focuses on trading with poor and marginalised producer groups, generally in the developing world, helping them to develop skills and sustainable livelihoods through a trading relationship
  • pays fair prices that cover the full cost of production and facilitates a living wage, allowing producers to move beyond sustenance farming and enabling farmers the possibility of investing into their businesses
  • provides financial benefits such as prepayment or credit when needed to allow orders to be fulfilled and payment of premiums to be used to provide further benefits to producer communities
  • encourages the fair treatment of all workers, ensuring good conditions in the workplace and throughout the supply chain
  • aims to build up long-term relationships, rather than looking for short-term commercial advantage

Fair Trade certification is available for a range of products. The Fairtrade International website now lists 17: bananas, cocoa, coffee, cotton, flowers, sugar, tea, composite products (e.g. products made from more than one ingredient such as a chocolate bar made from cocoa, cocoa butter, sugar, etc.), carbon credits, fresh fruit, gold, honey, juices, rice, spices and herbs, sports balls, and wine.

This question seeks to ascertain business support for these goods and, in addition, how Fair Trade principles may be promoted in general, beyond markets for these 17 product types alone.

Fair Trade is not without its critiques. Some argue, for example:

  • the smallest producers are unable to benefit from Fair Trade as only larger organisations can bear the costs of certification and carrying the label
  • Fair Trade certification bodies are unable to always ensure full compliance with their standards
  • retailers may mark up prices on Fair Trade certified products beyond any genuine additional costs without sharing the proceeds of such 'premium' prices with producers
  • using Fair Trade products from developing nations may conflict with other beneficial practices such as sourcing locally or taking environmental performance into consideration
  • some companies continue with “business as usual” while dipping their toe in the Fair Trade water, i.e. they cloak themselves with the ethical mantle of “being a Fair Trade business” despite the Fair Trade certified options they offer only constituting a tiny fraction of their entire product ranges

Despite such criticisms, the Fair Trade movement has gained wide acceptance, encompassing many NGOs and development agencies, and high levels of consumer recognition, in many countries around the world.

The success of the Fairtrade Mark and other Fair Trade certifications has led to a wider acceptance of the value and importance of Fair Trade in business. Arguably, Fair Trade is much more than an alternative form of trade given, e.g., the principles and standards of international certification marks are increasingly recognised to be a useful way to deal with many operational risks, particularly down the supply chain. As a result, by initiating an open dialogue with suppliers and working more closely with producers, possibly in collaboration with NGOs and civil society organisations, businesses can align the promotion of Fair Trade principles with their pursuit of sustainability goals and compliance targets.

All definitions included in this glossary are from the 28 June 2011 Fair Trade Glossary - A joint publication of the World Fair Trade Organisation, by Fairtrade International and FLO-CERT.

Fair Trade

The term ‘Fair Trade’ defines a trading partnership, based on dialogue, transparency and respect, which seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in developing countries.

Fair Trade organisation

A ‘Fair Trade organisation’, also called an alternative trade organisation (ATO), has Fair Trade as part of its mission and at the core of its objectives and activities. Fair Trade organisations follow the Fair Trade principles. They are actively engaged in supporting producers, trading, raising awareness of Fair Trade issues and advocating the integration of Fair Trade principles into all international trade practices.

Fairtrade

‘Fairtrade’ refers to all or any part of the activities of FLO eV, FLO-CERT, Fairtrade producer networks, national Fairtrade organisations and Fairtrade marketing organisations. Fairtrade is used to denote the product certification system operated by Fairtrade International (FLO).

Fair Trade movement

The ‘Fair Trade movement’ is the combined efforts of Fair Trade organisations, campaigners and businesses to promote and activate the Fair Trade principles of empowering producers, making trade more fair, and sustainable livelihoods.

Fairtrade organisations

‘Fairtrade organisations’ refer to FLO eV, FLO-CERT, Fairtrade producer networks, national Fairtrade organisations, associate members and Fairtrade marketing organisations that comprise and support the Fairtrade system.

Fair Trade principles

The ‘Fair Trade principles’ (as referenced in the Rationale) were developed by FLO and WFTO (2008) as a common understanding of the basic principles of fair trading. They are defined within the ‘Charter of Fair Trade Principles’ and are approved by the Board of FLO and the General Assembly of WFTO. To find out more visit the partners pages on www.fairtrade.net or www.wfto.com.

WFTO

The World Fair Trade Organisation (‘WFTO’) is a global network of Fair Trade organisations and WFTO associates representing the supply chain from producer to retailer.

Fairtrade International

‘Fairtrade International’ / Fairtrade Labelling Organisations International eV (FLO) is a multi-stakeholder, non-profit organisation focusing on the empowerment of producers and workers in developing countries through trade. FLO provides leadership, tools and services needed to connect producers and consumers, promote fairer trading conditions and work towards sustainable livelihoods. Fairtrade Labelling Organisations International eV is the legally registered name for ‘Fairtrade International’.

Answering YES

All Businesses MUST

Describe how they promote Fair Trade principles in their supply chains or workplaces whenever it is possible to do so

Explain whether or not Fair Trade principles are incorporated into business strategy and, if so, how

Describe if and how the implementation of Fair Trade principles are monitored, developed and reviewed

All Businesses MAY

State any philosophy or values that guide their Fair Trade policies throughout their supply chains

List their products which are certified Fair Trade

Set out the proportion of products they sell which are Fair Trade certified in relation to those which are not

State any mark-up they place on the price of their Fair Trade certified products which is not passed on entirely to producers

Explain how they are helping to promote or increase accessibility to the Fair Trade market (i.e. encouraging long-term partnerships and shorter supply-chains)

Answering NO

All Businesses MUST

Explain why they do not or cannot answer YES to this question, listing the business reasons, any mitigating circumstances, specific criticisms or other reasons that apply

All Businesses MAY

Mention future intentions regarding this issue

List the Fair Trade principles they do promote, if any

DON'T KNOW is not a permissible answer to this question

NOT APPLICABLE is not a permissible answer to this question

Version 1

To receive a score of 'Excellent'

Fair Trade principles are of strategic importance and are central to the company ethos

Examples of policy and practice which may support the EXCELLENT statement:

e.g. 1 strong statement on principles of Fair Trade, including philosophy and values
e.g. 2 staff and other stakeholders are fully engaged and involved in the promotion of Fair Trade
e.g. 3 demonstrates that Fair Trade principles are well understood and promoted throughout the supply chain
e.g. 4 developing new Fair Trade products or markets
e.g. 5 promoting collaboration and maintaining close relations with and between suppliers
e.g. 6 cites various practical ways in which Fair Trade has been promoted
e.g. 7 disclosure of certification processes is transparent, including the financial aspects
e.g. 8 100% Fair Trade as a producer or brand within the 17 defined certifiable categories
e.g. 9 always sources Fair Trade certified consumables (e.g. tea, coffee and sugar) for staff and visitors

To receive a score of 'Good'

Fair Trade principles are significant to the business and manifest in various practices across the organisation

Examples of policy and practice which may support the GOOD statement:

e.g. 1 statement of principles, philosophy, or values regarding Fair Trade
e.g. 2 communicates its promotion of Fair Trade to staff and other stakeholders
e.g. 3 promotes Fair Trade principles throughout the supply chain
e.g. 4 promoting collaboration with suppliers
e.g. 5 provides examples of how it has promoted Fair Trade principles
e.g. 6 high proportion of its products, within the 17 defined certifiable categories, certified Fair Trade
e.g. 7 policy to source Fair Trade certified consumables (e.g. tea, coffee and sugar) for staff and visitors

To receive a score of 'Okay'

The business promotes Fair Trade principles in an ad hoc basis OR business has no real practical ways of promoting Fair Trade principles

Examples of policy and practice which may support the OKAY statement:

e.g. 1 use Fair Trade products when possible to do so (tea, coffee, etc)
e.g. 2 company statement on Fair Trade published
e.g. 3 adequately explains why it is unable to promote or support Fair Trade

To receive a score of 'Poor'

The business fails to promote Fair Trade principles in any meaningful way despite various opportunities to do so

Examples of policy and practice which may support the POOR statement:

e.g. 1 unaware of the issue and no apparent actions
e.g. 2 no statement of future intent to improve