The concept of “fair trade” is based upon the philosophy that products bought and sold are connected to the livelihoods of others. By certifying businesses as “fair trade,” everyone involved is making a choice to support responsible companies; empower farmers, workers, and fishermen; and protect the environment.
To learn more about the fair trade movement, we went to the source: Amy Blyth, Director, Program Development and Partnerships at Fair Trade USA, the largest third-party certifier for fair trade products in North America. Amy provides important insights as to what exactly fair trade is and how Fair Trade USA operates. The organization partners with over 800 brands, as well as 1.3 million farmers and workers in over 70 countries worldwide. You’ll find Fair Trade Certified products throughout your home representing many different commodities including coffee, tea, cocoa, sugar, spices, honey, produce, grains, wine and spirits, flowers, apparel and home goods, and body care.
In conversation with Convoy’s Head of Sustainability, Jennifer Wong, Amy defines what it means to be certified as “Fair Trade,” how the non-profit organization operates, opportunities it offers to implement change, ways to measure sustainability impacts, and what it will take for more companies to invest in sustainability. Her key takeaways are below.
- The basic principles of fair trade: For those to be certified as “fair trade,” first the farm, fishery, or factory must be certified under Fair Trade USA’s respective producer standards. Other criteria include wages and benefits, health and safety, and all of the things which ensure those workplaces provide decent working conditions, safe standards, provide legally required benefits, etc. (3:06)
- What participation in “Fair Trade USA” enables: Fair trade terms require buyers to pay a little bit more and that money goes into a separate bank account at these producer groups. These groups, in turn, elect a fair trade committee which is responsible for managing those funds and determining where the biggest needs in the community are and how they can use funds to address those needs. (4:15)
- Why brands would consider working with “Fair Trade” growers and manufacturers: As brands are considering building on sustainability programs, fair trade affiliations provide a number of added value benefits including responsible sourcing. Fair trade ensures the suppliers are meeting requirements around wages, health and safety, etc. For smaller companies and startups, Fair Trade USA becomes their social compliance watchdog. Fair Trade allows companies to extend their sustainability mission into their supply chain and the people making that product. (5:59)
- What “Fair Trade” means to the consumer: Two thirds of US consumers recognize the “Fair Trade USA” label — it’s a way for brands to celebrate those investments in sustainability and social impact with their customers and authentically say a third party has monitored their company to ensure their products are made authentically. It is also a way for consumers to ensure the products they are buying are made in a more ethical way. (7:50)
- How a company can justify the additional investment in sustainability: Brands manage the costs of being more sustainable and investing in fair trade compliance in different ways. They can increase the price or reduce margins — it all depends upon their ability as a company to manage the investment. Many brands see it as an added value to their products which is above and beyond the cost. It also derives from consumer preferences for a better product. Additionally, workers at “fair trade” certified organizations are happy and healthy, product quality is up, productivity is up, and there are intrinsic benefits which companies get from investing in fair trade that you don’t see on a bottom line, but really do build brand value and quality products. (9:02)
- Ways in which a company can measure sustainability efforts: Fair Trade USA utilizes an Impact Monitoring and Evaluation (M&E) Framework. It is a way to frame and explain and communicate what it is the program does and the outcomes we hope to see from the interventions we do. We assess what we are going to directly do and create outputs for medium-term and long-term outputs in communities, marketplace, and individuals. Based upon all of those different incomes, outcomes, etc., we assign indicators to them and determine if we are seeing the outputs we hoped to see and track the outcomes. (10:42)
- The three macro trends which are going to push more companies toward investing in sustainability and bringing it into the core of their business: 1) consumer awareness and interest in sustainability primarily among Millennials and Generation Z; 2) Investors who are showing a growing interest in investing in companies which recognize the value sustainability brings to a brand; and 3) governments which are slowly starting to implement regulations to move the needle on some of the larger systemic industry issues that need to be solved — issues which no one company can do on its own. (14:47)
Watch the video or read the transcription below.
Jennifer: I’m very excited to hear more about your role and Fair Trade USA. It’s one of the most recognizable icons out there. Can you tell me more about your roles and responsibilities as the director of program development and partnerships?
Amy: Sure. So, hi everyone, great to see you. I am the director of program development and partnerships at Fair Trade USA. Specifically, for our apparel and home goods factory program. So, it’s a really really long title but basically, I am responsible for growing and building our factory program here at Fair Trade USA. So Fair Trade USA is a nonprofit organization. We’re based in Oakland California. We are the largest third-party certifier of Fair Trade USA products in North America and many people will recognize the Fair Trade logo on their coffee, their sugar, their tea, their bananas.
Jennifer: The first thing that I think about, everything in my kitchen has a Fair Trade logo.
Amy: Exactly. But for [2:00] about the last 8 years we have been working on a manufactured goods or factory program. So now you can go find things like Fair Trade certified t-shirts, and jackets, and rugs, and lamps, and towels. So really bringing that Fair Trade certification out into other parts of your home like your bedroom, or your wardrobe, or your living room so its really really exciting things. We’re working with many different partners like Patagonia, prAna, Target, J Crew, Madewell, Williams Sonoma Inc., the whole portfolio of companies. So, Pottery Barn, West Elm, Pottery Barn Teen, Kids, so really really exciting partnerships that we have doing Fair Trade.
Jennifer: What does it take for these companies to get certified via Fair Trade?
Amy: Sure. So, the principles of Fair Trade are the same across all of our different product categories. So in order for a product to carry the label and be Fair Trade certified, first, the farm factory or fishery, we actually do Fair Trade certified seafood now as well, must be certified under our respective, what we call, producer standard. So, we have an agriculture standard, a factory standard, and a fishery standard. So the producer standards cover all of the different criteria around wages and benefits, health and safety, all of those things that ensure that those workplaces are decent working conditions for the workers, that they’re safe, that they’re being paid all of their legally required benefits. So once the groups get certified under their respective standards, [4:00] any buyer can buy their products from those groups from what we call Fair Trade terms. We have a trade standard that entails all of these requirements. So those are all the brands that you know and all the traders in the middle. And the Fair Trade terms require that the buyers, in addition to the cost of the product, pay a little bit more and that money goes into a separate bank account at these producers’ groups. The groups, the workers and the farmers, democratically elect a Fair Trade committee and that Fair Trade committee is responsible for managing that fund and so they’ll work with their peers. They do what we call a needs assessment, they’ll do surveys with the peers, they’ll do focus groups to determine what are the biggest needs in our community and how can we use these additional funds that we’re receiving from our buyers from every product that we sell as Fair Trade to address those needs. So, in some of our factories for example, in Pakistan we have a health clinic that is actually located on the factory but financed with Fair Trade premium. We have two doctors and a nurse. They’re seeing all of the families in the communities, over 20 thousand people are being serviced by the clinic because they determined that their biggest need was access to healthcare. The closest clinic prior was about 2 hours drive. And so, you’d take the whole day off to take someone to the clinic, so this just makes healthcare much more accessible. We have so many stories like that of communities taking this money and doing things to improve their livelihoods.
Jennifer: As brands are considering building on their sustainability programs, looking for some sort of third-party certification, why do they choose to work with Fair Trade typically?
Amy: Yeah, so [6:00] there’s lots of different certifications out there and many of them focus on different elements so that’s why sometimes on a product you’ll see a couple, one will be really focused on environment or focus on the social element. Fair Trade provides three major values for businesses. The first being responsible sources. So, what I mentioned around that standard and the audit certification that goes around, ensuring that the suppliers are meeting these requirements around wages, benefits, health and safety, and that these workplaces are decent places for these folks to work. We do audits annually at all of our producer groups to ensure that they’re meeting those standards. Any issues that may arise are remediated through our certification program. Some big companies actually already have teams that do this, so we would be considered an additional support to them. Maybe we’ll take over the compliance piece for those factories and they can focus on other areas. But for a lot of our smaller companies and startup companies, we are their social compliance program and we are the groups that are ensuring that oversight in their supply chain. The second value is really around what we call social impact or shared value. So, a lot of times you’ll see companies doing philanthropic projects for community investments in the areas where their employees are or where their customers are, which makes a lot of sense and is really really great. And Fair Trade allows them to extend that work into their supply chain and to the people who are making their products. Again, by every product that they buy on Fair Trade terms, they’re paying that additional money, it’s almost like a dividend for workers that allows them to also have additional benefits in their communities and really drive their own development. And the third value is that consumer facing label. So, two-thirds of US consumers recognize the label. They see it in their supermarket, have it in their kitchens as you mentioned, and so it’s a way for a [8:00] brand to be able to celebrate those investments in sustainability and in social impact with their customers. And be able to authentically say that a third-party, Fair Trade, went in, monitored our factories and is ensuring that these programs are being implemented successfully and we want you guys to know that these products are made in a more ethical and meaningful way, and we hope that you guys want them. So those are the three real values that the Fair Trade certification brings for brands.
Jennifer: A core part of this program is that companies are now dedicating some funds, almost like that dividend, to go to the workers in their supply chain. So that is a little bit of a cost that they’re paying for to be able to provide this. How do businesses see the, kind of, results or the business value on the economic or financial side to be able to justify spending in this way on sustainability.
Amy: Yeah. So, we have a lot of brands who manage the cost in different ways. Some of them will increase pricing to reflect it. Some of them will reduce margins to take in that cost. It really depends on their ability as a brand to manage that and what they choose to do. But what I would say is I think from a brand perspective, a lot of brands find it to be added value to their products that is above and beyond the cost. And a lot of that comes from consumer preferences and how they’re changing. But just the fact that it’s a better product. One of our brand partners, Patagonia, their CEO, Yvon Chouinard, has said to us when we’ve been there, down in Ventura, they said, “You know, Fair Trade products are just better products. They’re made with the workers who [10:00] are happy or healthy, quality is up, productivity is up,” and so there’s a lot of intrinsic benefits that brands get from investing in programs like Fair Trade and other sustainability initiatives that you don’t necessarily see on the bottom line, but really do build brand value or quality value products.
Jennifer: Early in your career, at Fair Trade specifically, you launched the programs first impact, monitoring, and evaluation framework. Could you share more about what that means and how your partners take advantage of that?
Amy: Sure. So when we think about impact, monitoring, and evaluation we first think at Fair Trade about our theory of change and so we actually came out with a revised version recently, and its posted on our website, but it’s a way for us to frame and explain and communicate what it is our program does and what outcomes we hope to see, and impacts we expect to see, from the interventions that we do. So, in a theory of change you first think around inputs and outputs, and then go to outcomes. So you think about what is it that we at Fair Trade USA are directly going to do that is going to drive direct outputs, that then we hope create medium term and long term outcomes in communities and for marketplace, and for individuals. And so, we first defined that and say, what are we doing, what do we hope to see? And then from there with all those different inputs, outputs, and outcomes, you put indicators to them so that you can actually track, are we actually doing those inputs effectively that we think we are doing, or we say we’re doing? Are we actually seeing the outputs from that that we hoped to see [12:00] or expected to see from our ecosystem, and then start to track those outcomes. So some perfect examples are from an inputs perspective, we input our time, we input our resources, we input audits, certifications, and then what we hope to see in outputs is brands signing up to the program, brands paying premium, certified suppliers that actually meet those requirements. And then from the outcomes perspective, we want to see those premiums being invested in communities and producers reporting back increased financial resilience by participating in the Fair Trade committee, they report an outcome being increased engagement in the factory or increased empowerment to discuss their needs and grievances with their managers. And so, we can track those outcomes via survey, via interviews and collate that data and say, are we actually moving the needle on these things that we expect to see from our interventions at Fair Trade.
Jennifer: That sounds like a framework that every company could use to measure the progress of their sustainability programs as well.
Amy: Yeah. And the great thing about working with organizations like Fair Trade or other service providers is we come with these frameworks but then we actually share the data out with our companies. And so to answer your question a little bit around how the brands use it, we share that data across and we work also with our major partners on, in areas where possible, what are they trying to achieve based on their strategy and how can we help them meet those goals. So, one of our branding partners is Athleta, for example, and they have some goals around women’s empowerment and impacting women’s lives. They’re motto is the power of chi and their whole ethos is empowering the women that wear their clothes and are working out, [14:00] and, you know, being the best women they can be. Mothers, you know, CEOs, etc. But Fair Trade and other programs that they do allow them to bring that spirit and that impact into their supply chain. So, we do a lot of work with them on monitoring and evaluation, particularly around those areas I mentioned. Around empowerment indicators that we have and then also women on Fair Trade committees and the experience that women are having in Fair Trade.
Jennifer: As you kind of look into the future at the sustainability programs of so many common programs that we all know day to day, what do you think its going to take for more companies to make larger investments in sustainability in the future?
Amy: Yeah. That’s a great question. I think there are three macrotrends that are really going to push more and more companies towards really, really investing in sustainability and bringing it into the core of their business. Two of which are already on their way, there’s movement happening and one that I hope there’s more of a shift in. So, the first one is consumer awareness and consumer interest in sustainability. I would almost just say generational interest. So millennials and particularly Gen C that come after them, I’m a millennial, show so many surveys and so many studies that not only do they state that they want to buy products that are made in a more sustainable and ethical way, but that they actually are purchasing them. In addition to the fact that they are looking for employment where they feel like they’re, their place of work is creating purpose and that their work is driving purpose, not only in the company but in the community at large. [16:00] And so that is really starting to drive consumer preferences and employment and talent preferences is really starting to drive companies to make some of these investments. So that would be the first trend and that one is on its way. The second one is investors. So Black Rock has come out stating that they are more interested in hearing about companies’ ESG, or environmental social and governance performance, not only just their financial performance to make better investments into, vote against board members and things that are not aligned with those principles or risk mitigation. Last week UBS came out and said that they are now for their high worth individuals, promoting sustainability portfolios and products over conventional. So, we’re seeing a huge shift in investor mentality around the value that sustainability brings to a brand and the risks it can mitigate, the stronger it can make companies to withstand things like pandemics and economic downturns. And the third one is governance. This one, in some places we are seeing some improvement and in some places I hope to see governments putting more interest and input into regulations that will move the needle on some of these larger systemic industry issues that need to get solved that no one company can do by itself. When I was in grad school, we talked about an example where some manufacturing companies would actually have two supplier lines, two supply chain lines, making similar products or the same product and the only difference between the two was one was going to the European market and one was going to the US market. [18:00] And to the European market, they needed to be separate lines because the European market had higher restrictions on chemicals, dangerous chemicals and things that could be in the products. And while that is an example that I heard in grad school and I don’t have firsthand experience with, I have been in a lot of factories around the world and I can tell you that a lot of products are made differently for different customers, based on the customer requirements, and they can be made with more environmental inputs. Its just a matter of what does the customer want, what does their government want, what does their consumer want. So, you really need those three to be in line in order for companies to kind of come along on the journey and then it will be really turnkey and kind of obvious for companies.
Jennifer: I love that. Well that was a perfect closing. Three great takeaways at the very end. Thank you again so much for joining us.
Amy: Thank you so much for having me.