Richard Anstead, Head of Product Management at the Fairtrade Foundation, UK So my name is Richard Anstead. I am Head of Product Management at the Fairtrade Foundation in the UK. We are a UK-based charity and it s our job here to promote both sales and awareness of fair trade amongst consumers and businesses all over the UK. We do this with some of our global partners. Which aspects of Fairtrade products strike the strongest ethical note with consumers? So Fairtrade Standards cover a whole range of products. We are probably most famous for things like coffee, tea, chocolate, and bananas. We are 20 years old in the UK this year. So they are the products that have the highest recall amongst consumers. Really we have been pushing for 20 years for people to use their purchasing power to help and support producers in the developing world both smallholder farmers and hard labour workers - by helping them sell their products under Fairtrade terms which basically cover three pillars of sustainability. So it ensures a guaranteed minimum price. So it s the economic pillar of sustainability. The social side. So looking at more inclusive business models for gender to make sure people aren t persecuted within their roles. So the social side, how they invest in their community and make their communities more sustainable. Then lastly is the environmental pillar. So standards that cover environmental stewardship, and farming practices within farming communities. So that s in a nutshell what Fairtrade does. So I think various farming products have succeeded and moved from a niche proposition into the mainstream for a number of reasons. So things like cocoa, very much I think has been something at the heart of Fairtrade for the last 20 years. I think a lot of businesses now are waking up to the fact that actually if they don t look after sustainable issues within their supply actually the product they are dependent on if you are a chocolate manufacturer you can t do without cocoa. It is impossible. They I guess come from a position sometimes caught around enlightened self-interest. So if they don t look after their cocoa communities in West Africa, in Cote d Ivoire and Ghana particularly where the majority of the world s cocoa comes from, tomorrow when they want to buy new cocoa there isn t going to be a supply. In Ghana we saw some stats a few years ago. I can t remember exactly where it was but the average age of the Ghanaian cocoa producer was something like about 42 and I think life expectancy was maybe 43 or 44. So basically young the next generation of farmers were saying There is no sustainable future for me in farming, I don t want to stay in - 1 -
this business, I ve seen what it s like for my parents, I m going to move into cities and into urbanization to look for a stable future. I think businesses who are tuned to where their product is coming from are closely connected with their supply chain. They see that obviously as a risk and invest now in doing that. So I think some of the reasons why products like cocoa have been successful is businesses have seen the need. I think consumers do as well. As a kind of great consumer demand we work very closely with people like CAFOD, which is the Catholic Church, Christian Aid, the Women s Institute, a lot of civil society. They have been pushing very much from a grassroots level to say well actually consumers can play a role in making trade fairer, can play a role in making supply chains more sustainable while exercising the power of their pound which is very powerful, most businesses will say the consumer is always right. If you are listening closely to consumers at the moment you will hear them saying they want businesses to behave ethically. They want them to look after their supply chain. They want to ensure fairer and better working conditions, better wages. So Fairtrade can play a role in meeting that consumer demand. To what degree is price a barrier to consumers in purchasing Fairtrade products? So obviously from the role that we play in promoting fair trade, we watch that quite closely. I ve been working for Fairtrade for nine years. In that time we have seen price become actually less of an issue. It used to be a quite high barrier, as did quality. People thought that either Fairtrade products were expensive or of not that great quality. As we have seen Fairtrade go from a niche proposition into the mainstream, it has actually offered consumers a far wider range so you can buy products now as Fairtrade that are exactly the same price as they were either before when they were conventionally traded or equivalent to the conventional market. So consumers don t necessarily need to pay a premium for that. There are some great quality products now, some mainstream products that we see and love. I think the biggest barrier now for consumers is around saying Well actually I m loyal to a particular brand and I want that brand to listen to me as an ethical consumer and offer me my favourite brand as fair trade. So I think price I mean it still is important. Currently we are through the last recession, but people are still looking after their money and conscious where it goes. I think people want to have value for their values. So just because they are looking out for their money doesn t mean they are throwing away the values, the ethics that are important to them as individuals. So I think price isn t the barrier that it used to be. I think ethical trade now is around 54 billion a year as a category. Fairtrade sales were up 14% last year to about 1.8 billion. So certainly we don t see a slowdown. We see continued double digit growth in sales of both ethical and Fairtrade products. So I think it s very much here to stay. I keep going into shops and finding products that I wasn t aware of. I should do, in my job, but it s bewildering. I mean you can buy anything now as Fairtrade. We launched Fairtrade gold recently, Fairtrade cotton. There is a whole heap of consumers who are buying into a kind of ethical lifestyle where they say it s not just about the coffee, it s about everything I consume. They want more choices rather than less. - 2 -
How have consumers responded to luxury Fairtrade products, such as gold? I think it s quite interesting as a luxury product. I think people often give it to their loved ones as a sign of endearment or affection if it s a wedding ring. So actually the values of where that product is sourced from are really important. You don t want to give somebody something that is luxury and a token of affection if actually the way it has been sourced and mined is unfair. We certify producers in South America, most recently in Tanzania and in Kenya. Some of the conditions for small, artisanal miners are horrendous, both from a social aspect, the way they are working, issues around land rights, issues around children in supply chains, but also environmentally. To separate the gold from the other minerals that are mined you have to use mercury because gold will stick to the mercury. Mercury is very poisonous and gets washed into water tables that the community are using to wash and bathe in. So there are some fairly horrendous supply chains. You wouldn t want to say to I bought my wife an eternity ring a couple of years ago. I didn t want to say This is your eternity ring and this is where it has come from if you are not actually confident it has come from somewhere you would want to kind of see. How does Fairtrade contribute to sustainable farming initiatives? So Fairtrade rather than sponsor particular activities. I guess our impact, the way we feel we contribute to sustainable farming, is to give the farmer the benefits of the Fairtrade Standards, so social, economic, and environmental. Empowering them to make the decisions that are most important to them. So some really great examples of farmers saying The most important thing for me in my local community is to invest into productivity or yield and there we see them looking at how they replant coffee bushes maybe or tea plants that are at the end of their productive life cycle. That is about replanting tea bushes and investing their premium into longer term supply. Sometimes they say Actually the most important thing for us is to put money into a school or accommodation for a teacher so we can attract a good teacher to our community because actually the future for the community is around long term education for future generations. So we see them doing that. And it might be something as simple as I have seen one case in Ethiopia where they were just saying we will provide a meal to everyone who comes to school each day because that is often the only meal the children will get. Especially at the later end of the season because they are waiting for the next income from selling their crop in a couple months time. So money is at short supply and it gives a child access to at least one meal a day. But it also brings up school attendance so they get the added benefit, or the prime benefit, of making children come to school. There are some activities that Fairtrade goes and invests in directly. So some of the interesting areas of development at the moment, we have just trained all of our smallholder farmers in Kenya around climate smart farming practices. So that is about how do they ensure that their tea growing is more resilient to climate change? We are seeing climate change impact on smallholders far, far more heavily than we see in other areas of people who have not contributed to climate change because they are not heavy carbon emitters but who are struggling to kind of adapt the way they farm. - 3 -
So we are helping to train them there with 600,000 of donor funding so actually they can be cleverer in how they farm, they can adopt new practices and then also run demonstration plots where they can invite neighbours to come along and see how it s done. So that kind of extends that best practice. We are also looking at developing standards of Fairtrade carbon credits and seeing whether that is a future development. One of the things they could do is look at diversifying their income. So as well as supplying Fairtrade coffee to the UK perhaps they could supply Fairtrade carbon credits as well. So there are a couple of examples of how we are really kind of pushing innovation and seeing how we can help farmers get a better deal. What has been the driving force in moving Fairtrade from a niche to a mainstream phenomenon? I think it is becoming much more mainstream. It has moved and a lot of people have played a role in this move. Very much from a niche proposition into a mainstream area. So four in ten bananas that are sold in the UK are now Fairtrade. About 30% of all roast and ground coffee is Fairtrade. As I said earlier that has kind of been driven by consumer demand but also driven by businesses who I think are becoming much more engaged in this area. You see people like Paul Polman as a really good example, the CEO of Unilever Really kind of pioneered with FMCGs, fast-moving moving consumer goods, have pioneered Unilever s sustainable living plan as a way of actually building longer term supply chains for them as a business. I think part of the challenge that a business faces is getting recognition from that. Not just from consumers, but from financial stakeholders. I know one of the challenges he has is trying to get the City, so institutional investors, to kind of recognize that investing in long term sustainability of his supply chains are as important for them as a business as opposed to just growing sales quarter to quarter. So interestingly in the last couple of years he has refused to report to the City as often as other businesses do because Unilever s kind of long term financial sustainability should be measured over years as opposed to months. So it s an interesting kind of business ethics point of view. And the people like Ian Cheshire at Kingfisher developed something called Net Positive, which is that the Kingfisher Group should have to contribute positive aspects to their sustainability. So it s not just about being neutral, but actually saying we are going to give more back than we take away. So two really good business leaders who I think are ahead of the curve in this area. How closely does the Fairtrade Foundation work with businesses? We work very directly a whole range of businesses in the UK. We have about 500 business partners. So pioneers. People who have been I guess at the coal face for the last well longer than we have been. People like Cafedirect, Divine Chocolate - Traidcraft who have been pioneering an alternative way of doing business for 20 or 30 years. There are still really I think a lot of cases where innovation comes from, where people are trying different business models because they have been set up to do things differently. Then we work at the other end of the scale with the likes of Nestlé, Unilever, with Ben and Jerry s, with Mars; its Maltesers brand is Fairtrade certified. It is working with them at a very kind of mainstream area saying actually Fairtrade and big businesses can make big impact based on their volume as well as some of these - 4 -
pioneers who can make big impact because of the way they do things completely or in a more radical disruptive sense. So we work across a wide range. Why do you think Fairtrade has taken off in the UK (its biggest market) and lagged in other parts of the world? So Fairtrade is a global movement. Fairtrade marks are available in about 24 different countries. We have just started a labour initiative like ourselves to promote Fairtrade sales in Kenya last year, and in India where there is very much an emerging middle class of people who are closely connected to the value and the origin of their product because they are in markets where actually in India there is a very wide gap between the richest and the poorest. People are often quite well connected to where their products are coming from. But the UK still is by far the largest market for sales which last year were at 1.8 billion. I think a lot of the success in the UK has been the grassroots movements to campaigners in the UK saying this is what is important to them and then taking that voice to businesses and saying actually it s important that you as a business act on behalf of your consumers. We are interested and we want to know that our products are being sourced fairly. That wages and labour and working conditions for workers are good and maintained at a level that show respect to the people in the supply chain. These are issues that I think businesses have looked to and responded to. I think that s why it s successful in the UK. I think it s had different levels of success in different markets. I think in the US it s such a big market that actually the sales there are still large because it s such a large population. The best market I think per capita, so when you look at the amount individuals spend on Fairtrade product, the largest is something like Switzerland. So there is a range of successes. I think the challenge for all of us is being able to ensure that consumers and businesses are both speaking to us about where they can curate a viable business case for the business to invest in these things. I think a lot of innovation around sustainability and ethics comes from UK businesses as well. So we have been fortunate here to have a kind of consumer who cares and businesses who are ready to respond. I think there is a buzz word around sustainability at the moment, around disruptive thinking. I think businesses here have recognized the need to disrupt the normal way of working and look at this new paradigm maybe far earlier than other businesses are. We are quite outward looking as a nation which maybe you don t see elsewhere. But globally Fairtrade sales are still growing. I think by about 20% last year so there were markets like Germany, Australia, and New Zealand that are still seeing good growth. Where do you see the biggest challenges emerging for Fairtrade and business ethics more generally? I guess some of the biggest challenges for Fairtrade as a label is that businesses now want to move fast and want to move in quite bespoke ways. So I think when we are looking at the future we have to look at what does it mean to be beyond labouring or what does it mean to say your buying has Fairtrade but then you are also then investing in other areas, which I think is a welcome challenge. Fairtrade Standards are - 5 -
a good starter, but that is not in itself where businesses and where farmers and workers need it. So I think our challenges or opportunities is to look at how you go to Fairtrade and then go beyond that. So I think that is a revenue ripe area for business ethics to look at. I think also consumers need to understand the area a bit more. If you talk about sustainability I think that can be interpreted so many ways. In some challenges there is only so much being bombarded to consumers that they end up saying Well actually I can t switch off from the area because there is too much coming at me. I think all of us have to be clearer with what we are taking to consumers and how we are describing and how you make, in the age of real transparency and people interrogate and see data on the internet far more readily, we ve got to be able to tell our story - both businesses and certifiers or charities like Fairtrade in a far simpler way for people to engage with. I think that s where it s exciting when you think about business ethics and the way it is being taught in business schools. It s actually when I left university 20 years ago - business ethics and sustainability, they didn t exist as topics to talk about. My business school didn t teach me anything about business ethics. It was about the bottom line, it was about accounting. It was a more traditional discipline. I think as more business leaders come in with a business ethics point of view then it s going to become far easier to take consumers on that journey because it isn t going to be a business discipline that is stapled on to what you do. It isn t going to be Oh I do my business here and then I have a CSR report. It s actually going to be business leaders who are coming in saying Well, why wouldn t our business be sustainable? If it isn t sustainable then we are not in a business that is here for a long term. So I think over the next decade there will be some challenges fundamentally as it becomes much more mainstream. Why is it important for business students to have an understanding of business ethics? I think it s very important. For all the reasons we have talked about this being a long term business model for businesses. People haven t realized that actually the bottom line needs to be managed in a more long term perspective than just how much money you have made this year. As we have seen, cocoa businesses wake up to the fact their long term security of supply doesn t exist and actually other people will realize there is a hidden cost for the water, the social impact, for the carbon, that isn t accounted for in any current mainstream business evaluation. So I think it s important because businesses need to account for that. They need to understand the impact they are having. They need to be able to do that for their own long term security and they need to be able to do that if their board have to face interrogation from their consumers. They want consumers to stay loyal to them. They have to show you how they are accounting for these in their business operations. Whatever roles people go into within a business, there may not be sustainability roles per say, but that has to be something that is crafted into each of their careers. We are seeing the same with mainstream supermarkets at the moment. Increasingly buyers who traditionally measured on business targets such as margin and profitability are also then measured on their ability to contribute towards the business sustainability. - 6 -