How to stay ethical in a globalised world

Pursuing ethical trade policies in a globalised world can pose certain challenges. In 1998 a group of companies, trade unions, and NGOs set up Ethical Trading Initiative (ETI) to address issues that cannot...

Pursuing ethical trade policies in a globalised world can pose certain challenges.

In 1998 a group of companies, trade unions, and NGOs set up Ethical Trading Initiative (ETI) to address issues that cannot be solved by individual companies working on their own. ETI is now an alliance of 80 collective organisations with a collective turnover of £179bn, reaching out to 10 million workers.

By focusing on ethical trade, businesses cover both the social and environmental dimensions of their value chains. This involves taking responsibility for improving the working conditions of the people who make the products they sell.

Companies with commitment to ethical trade adopt a code of labour practice that they expect all their suppliers to work towards. These codes address issues like wages, hours of work, health and safety and the right to join free trade unions. Co-operatives are already practising some of these principles.

ETI director Peter McAlister explained: “The co-operative model has a rich history, and its aims have much in common with those of ethical trade. While co-operative structures vary, they are all focused on equally sharing the benefits of enterprise.

“There is also a focus on everyone contributing to decisions that affect them, which is central to the labour rights movement.”

Many well-known brands are ETI members, including high street retailers, luxury fashion labels, supermarkets and a wide variety of suppliers. The Co-operative Group was among the first to join in 1998 and is one of the founding members of ETI. The John Lewis Partnership also became a member in 2011.

“For ETI, ethical trade means companies taking a series of recognised steps to uphold the rights of workers in their supply chains,” said Mr McAlister. “We have more than 80 company members working across a range of industries, and their structures include listed and unlisted companies, family-run businesses, SMEs and co-op.”

He added: “There are a number of factors that determine how far a company can progress its ethical trade work, including a clear strategy and senior-level buy-in, resource allocation, commercial leverage and its ability to work in partnership with others.”

He says these factors are not dependent on company structure, but rather on a business’s values and priorities. But retailers that do use a co-operative model are
well positioned to push the ethical trade agenda.

“It’s a model used by two of our members, the Co-operative and the John Lewis Partnership (covering Waitrose and John Lewis),” he said.

“Both companies actively participate in our programmes, as well as working within their own supply chains to uphold their commitments under the ETI Base Code of labour practice.”

ETI members have to integrate ethical trade into business decisions. They also agree to build supplier capacity and skills and identify problems in the supply chain. Tracing the origin of materials or products can be a challenge.

“Poor working conditions often result from a wide range of political, social and economic factors,” said Mr McAlister. “We believe that in order to truly bring about long-term, sustainable change to workers’ lives, these root causes of labour rights abuses need to be tackled.

“Some of these challenges are too widespread and complex for individual companies to tackle on their own. They may not have enough commercial leverage with a supplier, or may struggle to understand the labour rights environment within a country.

“That’s where ETI comes in. By becoming a member, companies can team up with like-minded companies, NGOs and trade unions, and work together to improve conditions for workers.”

The co-operative members of ETI

John Lewis

John Lewis’ responsible Sourcing Code of Practice sets out its expectations of suppliers around pay, working conditions, health and safety, child labour, forced labour, employee representation, employee treatment environment and animal welfare. The partnership sources products from many different countries while seeking to uphold internationally agreed standards of labour. With 350,000 product lines in shops and another 280,000 products online, the partnership sources from thousands of suppliers from across the world.

John Lewis is working with a number of NGOs to deepen its understanding of material issues. One of these is the Rainforest Alliance, which is providing the retailer with expert advice on its timer sourcing policy. The partnership is also a member of Better Cotton Initiative, which aims to make global cotton production better for the people who produce it. To achieve this, John Lewis has set a target to source 50% of cotton from more sustainable sources by the end of 2020/2021. Another successful initiative has been supporting cotton farmers in India. More than 1,500 farmers have been trained in how to reduce cost production and adopt environmentally sound crop management. The project is the result of a collaboration between John Lewis Partnership and Cotton Connect.

The Co-operative Group

At the Co-operative Group a monitoring programme helps to ensure fair treatment of workers in its supply chains around the world. In 2014 approved third party bodied have carried out 460 supplier site audits to monitor compliance with the Group’s Sound Sourcing Code of Conduct while 16 supplier events were also carried out in five countries, amounting to over 3,300 hours of supplier training and engagement. The Group is also the only major retailer to have a Human Rights and Trade Policy, which sets out the exceptional circumstances in which it will curtail trade with a particular state or settlement. The policy was developed following a call from its members.

• Read more: Ethical trade is not new to co-operatives … it’s been a century-long practice

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