Beyond Fairtrade

This post also appeared as a guest blogpost on the SustainAbility website - here

A World Without Labels

Imagine a company which always paid its workers a fair wage, only sourced materials from sustainable sources, created minimal environmental impact and operated a system of offsets so as to be 100% carbon neutral.

How would this company convince you as an ethical shopper to buy its products?

Well, the way the market place currently works is that it would cover its packaging with third party labels - a fair-trade logo would cover the wages, an Forestry Stewardship Council or Rainforest Alliance label might cover the sustainability angle and a black footprint with a big fat 0% in it would support its carbon credentials.

But there seems to be something wrong if a company that is behaving in the most ethical way possible has to rely on others to make that known. By devolving responsibility to third parties, it is tacitly admitting to not being able to convince customers of all the good things it is doing alone. And at the same time, the company is missing an opportunity to associate its ethical behaviour with its own label. Why is that?

The simple answer that is often trotted out is that business can’t be trusted. The argument goes like this - business is inherently evil and will lie and cheat in any way possible to distract us from all the bad things it does in the pursuit of maximum profits, which is why we need third parties to continually scrutinise on our behalf as consumers.

But this now seems rather an old fashioned view of things.

First, let’s give credit where it’s due. Organisations such as Fairtrade and the Rainforest Alliance have been great standard bearers for the ethical consumer movement. They have brought many issues concerning social justice and environmental impact to the fore and for that, they should be applauded. But have they now served their purpose?

Let’s take an example. For a number of years Cadbury’s have supported a community project in Ghana called the Cocoa Partnership. Through education and micro-financing, Cadbury’s help farmers to increase their yields, improve their communities and generally live happier more prosperous lives. It costs them around £4.5m per year and they’ve signed up for 10 years. Doesn’t that sound great? Well, yes and that’s because it is. But had you ever heard of it before now? Probably not.

Compare that with Cadbury’s decision to ‘go Fairtrade’ in 2009. The motives of the Fairtrade movement are similar to those of the Cocoa Partnership. The mechanism is different. When Fairtrade get companies such as Cadbury’s to sign up, they must commit to a minimum price guarantee plus a little bit on the top called the ‘social premium’. This mechanism was designed when global commodity prices were low but now looks rather dated. The problem is that the minimum price guarantees for ingredients such as cocoa and sugar have been redundant for years because market prices have soared and they look likely to stay that way for the long term. So the overall cost to companies like Cadbury’s is only the social premium, which works out at less than one quarter of one cent per bar - considerably less than their commitment to the Cocoa Partnership. Cadbury’s use both mechanisms to commit investment to cocoa farming in Ghana, but because customers rarely look into the sums involved and prefer instead just to look for the labels, they risk missing the really good stuff. I bet you’d never heard about the Cocoa Partnership before now, whereas you thought you knew all about Fairtrade.

Herein lies a major problem for companies such as Cadbury’s, which are trying to act responsibly and deservedly take credit for doing so. Big chunky projects that can create truly sustainable progress in the developing world continue to go unnoticed because the marketplace is telling consumers to focus instead on the third party labels that aren’t nearly as effective in delivering change.

So what is the solution? The onus must fall on the big brands to take control of the agenda. There are now many many businesses engaging in truly innovative and creative programmes to bring about positive change within their supply chains. OK, they may not quite have reached the levels of the imaginary company I described earlier, but they are doing things that we need to know about.

Brands are very good at communicating with us when they’re offering a new product or an improved service and wouldn’t dream of relying on third parties to do that for them. So why not employ the same talents to telling us about the sustainable, ethical and great environmental stuff they’re doing too?

It’s a big step for most brands to open their doors and say ‘look, we were doing this badly before but now we’re doing it a whole lot better.’ But the time is right for them to do exactly that. It’s time that brands started showing consumers that they stand not just for monetary value but also for social and environmental value too and they shouldn’t need anyone else to do it for them.