By Natasha Telles

The Globalisation concept and the associated idea of a global marketplace has wrought many changes in the commercial arena over the past decade. One note-worthy measure was the formation of the Fair trade ethical trading initiative, to ensure producers experience fair working conditions and rewards for their labour throughout the world. Driven by the global campaign entitled 'Make Poverty History", such initiatives have helped promote the values of sustainability and responsibility among suppliers in the food industry.

The concept of ethically traded goods refers to those goods produced under socially, environmentally, and economically responsible conditions. These conditions include criteria such as; sustainable livelihoods for food producers, fair wages, fair trade, prohibition of forced or child labour, environmental conservation, promotion of biodiversity, etc.

The demand for ethical trading first arose in the 1990's, when the food industry began to become increasingly consolidated. This trend continues in 2008, and has resulted in the emergence of a handful of food ingredient giants controlling the global market. Several of these companies source their raw materials from developing regions such as Asia and South America. In 1998, the Ethical Trading Initiative (ETI) was established as an alliance between retailers, trade unions and non-governmental organisations. Globally, the ETI aims to promote respect and fair treatment for the rights of poor workers in factories and on farms. The awareness of ETI's campaign has increased the pressure on major manufacturers to ensure decent working conditions for their employees throughout the supply chain.

The intensification of ethical pressure since 2000 has encouraged a large number of companies following this trend to incorporate various ethical sourcing policies, to address the growing public concern over labour supply-chain issues. Social and environmental concerns now top the list of corporate investment criteria in addressing supply chain labour conditions. For instance, the Indian-based Tata Tea Limited has received commendations for their ethical initiatives, which involves sustainable "worker-shareholder" models, free housing, health care and community development facilities. Additionally, Tata also run tree-planting and endangered-wildlife programmes, in combination with alternative ventures in the field of renewable energy plantations.

With concerns growing over economic concerns in the third world, some western consumers have become more socially responsible with regard to the goods they purchase. Traditionally infamous for its free market sourcing policies, the scenario within the food industry is set to change with the rise of the Fair trade movement. Currently, the food industry is populated by thousands of small suppliers in addition to the backwardly integrated large conglomerates. The presence of such small suppliers allows for ambiguous sourcing ethics. However companies are now realising that the combination of 'business' and 'ethics' can create a positive brand image, and more importantly, allow traceability within the supply chain. The stability of the supply chain is one of the key driving factors in implementing ethical sourcing. Consumer demand for ethical foods has risen dramatically between 2004 and 2008, and as a result, various Food industry participants have joined the Fair trade band wagon. A study by the UK's Co-operative Bank in 2006 estimated that 'ethical' food spending, including organic, fair trade and free range purchases, was in the region of £4.1 billion.

Chart 1 depicts Fair Trade and its consequences on a global level in 2008.

Below are examples of some of key market players involved in the ethical consumerism trend.

In February 2008, sugar giant Tate & Lyle announced its decision to convert its entire retail sugar range to fair-trade. This switch accounts for the largest fair-trade transfer ever made within the United Kingdom. The company claims that this decision comes on the back of customers increasing their demands for ethically-sourced products. When they buy Fair trade produce, consumers are assured that the farmers, growers and their communities in the developing world are being fairly dealt with. Tate & Lyle has been working with the UK-based Fair-trade Foundation since 2006, to ensure that their suppliers meet fair-trade standards.

Cadbury Schweppes is another organisation focussing intensely on Ethical Sourcing Standards. In 2006, the company developed a specialist auditing support team to help build auditing and assessment capacity in local markets. Such a process will help perpetuate a better understanding of the local markets. Cadbury aims to maintain the focus of integrity around its brands, industry labour standards and also fair prices for goods and services. Sustainability and environmental responsibiltiy is also a key requirement. The company runs intensive supplier assessment processes, to help monitor and manage supplier performance. Through the aid of their ethical sourcing team, Cadbury Schweppes assesses suppliers based on a desk-based risk review, a site-based assessment, and verification which involves a supplier assessment programme.

Tesco is the UK's major supermarket chain and a founder member of the ETI. The company uses the ETI Base Code as its standard for all primary suppliers. This base code includes factors such as freely chosen employment, the right to collective bargaining, safe and hygienic working conditions and so on. In 2004, the chain began a three-year initiative to extend this policy to cover primary suppliers to all its businesses. The company was instrumental in also developing the Supplier Ethical Data Exchange (Sedex), a web-based system that encourages businesses to share data on labour standards at production sites. Additionally, Tesco employs programmes that involve extensive supplier and buyer training to ensure ethical compliance.

More and more supermarkets, including ASDA, Marks and Spencers, Sainsburys and Waitrose have also joined the ETI, to cater to growing consumer demands.

An increasing pressure from consumers has brought about a corporate revolution in the sector of Ethical food. However, there is general concern that this exodus towards ethical trading is more of a fad rather than a required code of practice. The ETI and other industry watch dogs are urging manufacturers to take this 'green washing' phenomenon seriously to ensure global fair-trade. The three main factors driving this sector are traceability, consumer demand and concern over global warming, and all three jointly call for sustainable commerce. The industry opinion is that whether the process is ethical trading or green washing, it is a step in the right direction. The involvement of the private sector is also a significantly positive move. For instance, in 2002, the World Wild Life Fund created the Roundtable Convention on Sustainable Palm Oil in association with major players, which included Sainsbury's and Unilever. This convention has been solely responsible for implementing measures against the loss of rainforest, increasing biodiversity and settling land rights disputes and labour rights. Ethical trading and Fair Trade are therefore a growing occurrence, and are becoming an increasing necessity within the food industry. Fair trade is here to stay and is a call for food manufacturers to either shape up or ship out.