Responsible business, Sustainable Development Goals and trading fairly

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By Professor Ian Thomson, Professor of Accounting and Sustainability, Lloyds Banking Group Centre for Responsible Business Centre Director
Department of Accounting, University of Birmingham

We need to recognise that our personal pleasure from an unfairly traded product, such as coffee or chocolate, results in increased poverty for many.

The value of trading fairly is often underestimated, the cost overestimated, and reputational risks of not doing it rarely mentioned or measured. But imagine if your business was ‘ethic-shamed’ for not using the most fair trade options. How resilient is your corporate social responsibility (CSR) strategy when it comes to ‘fairness-audits’ of your procurement practices?

How would you respond to criticism towards your use of non-fair trade products?

  • Would ignorance count as a robust enough defence?
  • How credible would a ‘costs too much’ defence be?
  • Could you survive juxtapositions between your CEO’s salary or dividend payments and pictures showing the existential misery of workers who are at the wrong end of the value chain?

Businesses have to recognise that global markets function through their ignorance towards social injustice and ecological destruction. However, purchasing fair trade products is one of the easiest ways to make a positive impact on those suffering from the inequities associated with global supply chains, but it is sometimes perceived as expensive or poor value for money. We need to recognise that our personal pleasure from an unfairly traded product, such as coffee or chocolate, results in increased poverty for many. Perpetuating avoidable inequity through unfair trade is both irresponsible and unsustainable.

A quick survey of UK supermarkets identified an average fair trade premium of 50p for a 250g packet of ground coffee. This average cost only equates to four minutes work at the UK minimum wage, two minutes work at UK average salary, or 0.6 minutes for the average CEO. If individuals switched to fair trade coffee for a year this would require only two extra hours at minimum wage, or just 18 minutes for a CEO. This small change can increase an impoverished coffee farmer’s average income by 40%. Imagine the improvements that this could make for their lives and the opportunities that would be created for their families and communities.

As well as this, if 100% of the UK switched to fair trade coffee an additional £1bn value could be created for coffee farmers across the globe; a small amount of extra work per year – which equates to less than the time that is spent on social media per day – could make a massive difference. These statistics don’t even cover premium fair trade coffee, which happens to be cheaper than many conventional premium coffee brands. Premium coffee drinkers can save their own money and improve the lives of many.

Fair trade products do much more than improving revenue distribution across value chains. Trading fairly can make a positive impact on 14 of the UN Sustainable Development Goals (SDGs) (below). The SDGs provide a framework to make the benefits of fair trade more visible and it is difficult to conceive of a single strategy that has such a comprehensive set of positive outcomes.

Fair trade is more than certified consumer brands. Fair trade is a different way of doing business and fair trade logic can be effectively applied in many situations, locally as well as globally. The application of fair trade thinking was observed in the case of a care provider that was forced to regularly employ agency staff. These agency workers were expensive, inappropriately qualified, received less than minimum wage, and were subjected to abuse of their employment rights with little or no training opportunities. Discussions with other care providers in the region revealed similar concerns but felt powerless to do anything individually.

Collectively, they created a fair trade alternative, a not-for-profit agency to enable staff sharing, agency working and collaborative training programmes. This model substantially reduced agency fees, provided greater certainty on working hours, improved working conditions and saw a substantive increase in salary. This is one example of how fair trade logic can create solutions based on collaboration, partnership, future capacity building, social justice, a consideration for human rights, and greater economic equity throughout the value chain.

Fair trade thinking has the potential to transform business relationships and society along a responsible trajectory, creating many win-win scenarios and real change.

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