Last month, I started a series called “The Heartbeat of Fair Trade” to expose the real workings of a fair trade organisation. A vast majority of people in the UK have heard of fair trade but really how many understand the 10 aspects of it? Certainly from my own experience people tend to focus on one or two principles such as “fair price” or “child labour”. Fair trade is much more than that. In fact writing this article itself shows our commitment to the second principle of fair trade; transparency and accountability.
Principle Two: Transparency and Accountability
The WFTO say this: “The organization is transparent in its management and commercial relations. It is accountable to all its stakeholders and respects the sensitivity and confidentiality of commercial information supplied. The organization finds appropriate, participatory ways to involve employees, members and producers in its decision-making processes. It ensures that relevant information is provided to all its trading partners. The communication channels are good and open at all levels of the supply chain”. Source: http://wfto.com/fair-trade/10-principles-fair-trade
As a fair trade organisation, Little Trove has clear policies, employee handbooks, operations manuals and staff meetings where staff are fully informed of management procedures. Being a small company, staff are constantly involved in the decision making on products, design and anything else that affects their work and our business.
In relation to our producers, we communicate clearly with them, setting down expectations, keeping in regular contact, keeping lines of communication clear so that any problems or challenges can be overcome together, visiting groups on the ground to show them other products we promote, keeping them informed of our marketing plan to promote their goods (such as which trade shows) and answering any questions they have.
We also encourage all our producers to be transparent and accountable too. We ask all of them to provide us with information and photographs regarding their workers, working conditions, wages, any events or training they hold for employees, any environmentally-friendly initiatives they carry out as well as any employee participation initiatives or profit sharing they do. We cannot expect that all producer groups are aware of all aspects of fair trade or that they are 100% compliant with all principles. By being transparent about what’s expected, we aim to move the producer groups towards greater transparency too.
Fair Trade Principle 2: Transparency & Accountability
I feel the greatest transparency that fair trade organisations offer is the free provision of supplier information. By this I mean providing information on their producer groups and relevant photographs to any stakeholder or customer. Many companies, like us, provide “producer stories” on the back of labels, on packaging, in our brochures and even on point of sale posters.
Sceptics might say this is all about clever marketing. Clever marketing to get customers to buy more. Sure, it has that purpose. Connecting buyer with the producer story makes buying the product more compelling. But the amount of time I spend collecting this information, designing labels, making posters, answering customers’ questions about producers, producing blogs or emails about the producers outweighs any financial return. More than half our customers are not fair trade shops. They aren’t expecting or wanting all this information. They buy the product because it’s nice and the mere fact that a fair trade wholesaler is selling them is enough for them. So why go to all this trouble? Because it keeps us transparent and accountable.
Being transparent and accountable is not the usual way of doing business in Asia or Africa. There is secrecy at all levels. You will find that many Asian and African countries are highly corrupt. They have mega rich politicians and businessmen. Outside their affluent neighbourhoods, you’ll find the dirt poor. The wealth isn’t evenly distributed. What’s worse is that there isn’t even the appetite to distribute it evenly. The rich get richer and don’t seem bothered about the poor in their countries.
Transparency International produces a “Corruption Perception Index” that attempts to classify 183 countries according to levels of corruption. Looking at the countries Little Trove works in: India ranks 95th, Indonesia 100th, South Africa 64th and Burundi 172nd! (Source: http://www.transparency.org/cpi2011/results)
Transparency International also report:
“More than 40 percent of employees at board and senior manager level said that sales or cost numbers had been manipulated by their company. This included reporting revenue early to meet short-term financial targets, under-reporting costs to meet budget targets, and requiring customers to buy unnecessary stock to meet sales targets.”
“Over 12 months, one in four people paid a bribe when they came into contact with one of nine institutions and services, from health to education to tax authorities.”
Bribery and corruption is a common problem. Fair trade organisations that work in that environment are going against the grain by staying on the straight and narrow. Being transparent reduces levels of corruption. I will certainly not pay any bribes. I was once asked by an Indonesian producer whether I wanted 3 invoices; one for customs under-declaring the goods, one for the insurers over-declaring the goods and a third for us to use correctly listing the products. My answer was quite simple: No!
Founder, Little Trove