ETHICAL TRADE AND AGRICULTURAL STANDARDS – GETTING PEOPLE TO TALK
Mick Blowfield and Keith Jones
Natural Resources and Ethical Trade Programme
Natural Resources Institute
University of Greenwich
Central Avenue
Chatham Maritime
Kent ME4 4TB, UK
m.e.blowfield@greenwich.ac.uk
tel 01634 880088
fax 01634 883706
Ethical Trade – the words alone are enough to engender howls of derision or shrieks of optimistic fervour. But what is ethical trade and what are the implications for agricultural standards? Is it possible that values other than profit can be introduced into the value chain?
Humanity’s uneasy relationship with trade, based on a sense of unfairness in how value is accrued but an unwillingness to forego its benefits, makes attractive any attempt to introduce an ethical dimension into trading relations. Some companies, both in the North and the South, would argue that they have always employed ethical values in their operations, and that international development has ignored the positive contribution trade can make. However, it is increasingly accepted that trade is seen as more than an engine for economic growth; that it can deliver societal and environmental value added as well.
There are many reasons for this change, and not enough space here to explore them in detail. In general terms, companies have the motivation and increasingly the means for looking beyond the financial bottom-line to also delivering societal and environmental added value – what management theorists call the triple bottom-line.
Welford was one of the early users of the term ethical trade who, together with Wheeler at The Body Shop, used it to describe a step towards sustainability; a "more holistic and ethical approach to doing business" that values both societal and environmental impact, and restructures North-South relations.
Few current forms of ethical trade challenge North-South relations, but there is a strong realisation that it is not enough for a single company to adopt ethical practices; rather, these practices must be employed by suppliers, especially in developing countries. Moreover, it is often insufficient for those in the value chain to say they are employing such practices; they must be able to prove that this is the case.
Consequently, ethical trade today refers to the adoption of societally and environmental responsible strategies within the value chain, the monitoring and verification of these strategies, and the reporting of societal and environmental performance to key stakeholders.
In many cases the strategies are determined by the need to comply with pre-determined standards, typically consisting of principles, criteria and indicators against which the operations of a company, its sub-contractors and suppliers are audited through first, second or third party verification. Not surprisingly in such a new field there is a plethora of standards, and a tendency to divide a company’s ethical responsibility into discrete areas (e.g. a multiple retailer may have separate standards for timber, animal welfare, organic agriculture produce, worker welfare and human rights, integrated crop management, and environmental protection). There may be justifiable institutional reasons for these divisions, but they can make a company’s overall ethical strategy confusing.
A further cause for confusion is that the term ‘ethical trade’ (or more accurately ‘ethical trading’) is used, particularly in the UK, to describe a particular approach to monitoring worker welfare and human rights. This in turn has led to debate about how ethical trading is different from ‘fair-trade’ and other initiatives concerned with the societal benefits of trade. This narrowing of the debate is not helpful when companies (both mainstream and alternative trading organisations) are wrestling with a range of societal and environmental issues. There are significant differences between the initiatives that fall under the ethical trade umbrella, but there are also many similarities, and furthermore they can all be seen as different ways of approaching the ultimate goal of realising the societal, environmental and financial dimensions of sustainability through trade.
Thus, the scope of ethical trade is the management of the value chain according to principles of societal, environmental and financial responsibility. It is a generic term applicable to a variety of initiatives which apply sets of social and/or environmental values to aspects of the production and marketing process. These values can cover a) human rights, b) worker welfare, c) producer livelihoods, d) sustainable production methods, e) animal welfare, and f) biodiversity. Some or all of these issues are addressed in fair-trade schemes, the in-house codes of practice of corporations, organic agriculture, environmental codes, forest and fisheries certification, and in the nascent ethical sourcing initiatives of major Western retailers and brand-owners. In some instances, it can result in the labelling of products for consumers or other buyers (e.g. the fair-trade label, the Forest Stewardship Council, the Marine Stewardship Council), but this is not always the case, and there is certainly no guarantee that goods produced under ethical trade standards will attract premium prices.
This paper focuses on ethical sourcing for reasons of space and that a) the adoption of ethical strategies by major retailers and brand-owners is likely to have the greatest impact both in the North and the South, and b) ethical sourcing is often learning from and adapting the experiences of other initiatives.
Ethical trade is not intended to apply just to countries in the South, but there is an assumption, not least amongst Western consumers, that ethical trade will have a positive impact in developing countries. Fair-trade has objectives that would be shared by many international development organisations. Responsible resource management initiatives also have objectives that are familiar to such organisations. International development agencies are also starting to support the ethical sourcing initiatives involving mainstream importers, brand-owners and retailers, implying that these too contribute towards development.
For some, the objective of initiatives such as the Ethical Trading Initiative, the Apparel Industry Partnership and the Council on Economic Priorities Accreditation Agency’s international social accountability standard, SA8000, to ensure the implementation of core labour standards, is in itself a fundamental requirement for alleviating poverty, not only in developing countries but world-wide because the replacement of high-wage labour with cheap labour erodes the consumer base and poses a threat to global economic stability. Others have different but equally high expectations of ethical trade in its various forms, seeing it as a necessary step on the road towards sustainability.
These are still early days to judge whether ethical trade in its various forms can contribute towards these larger development goals, and studies of impact to date have concentrated on the micro-level. What is already apparent is that ethical trade is bringing together stakeholders, many of whom had not hitherto engaged directly in the debate about what sort of development outcomes are desirable or realisable. Under ETI and the Apparel Industry Partnership, the private sector is sitting down with NGOs, government and trade unions; and similar cross-sectoral representation is found in the development of SA8000 and the Forest Stewardship Council standard. These partnerships do not always run smoothly, and trade unions have withdrawn from the Apparel Industry Partnership, while the Forest Stewardship Council has been criticised for unduly slow progress as a consequence of its partnership approach. British Members of Parliament have complained that the involvement of ‘government’ has been the involvement of civil servants without adequate briefing of elected representatives, and some governments in the South see ethical trade as a non-tariff barrier. Nonetheless, the creation of these partnerships between organisations most of whom already had an interest in international development but rarely worked together, is an early achievement of ethical trade.
The horticulture industry has been amongst the most active in developing ethical trade strategies, and the development of ethical sourcing standards. Indeed, along with apparel manufacturing (which has focused largely on worker welfare and human rights), the commercial mainstream has used horticulture as a test bed for future involvement in more complex value chains. Nonetheless, any attempt to assess the impact of ethical sourcing by the commercial mainstream faces the twin problems that most examples are work in progress, and that confidentiality agreements apply to most pilots. Indeed, at present the demand for information about ethical sourcing far outstrips its availability.
Ethical sourcing in horticulture is largely delivered through codes of practice which individually or together allow performance to be monitored against the headings in Table 1. These codes of practice have been developed by multiple retailers, industry associations and independent bodies, and are variously being applied to the trade in non-organically produced fruit, fresh vegetables and cut flowers. Separate standards exist for organic agriculture.
This paper draws on the experience of the Natural Resources and Ethical Trade programme’s work with the African horticulture industry, started in early 1998, which, because of confidentiality and copyright issues surrounding many codes of practice, took as its starting point a hypothetical code of practice; one that drew on common elements of existing codes being used in the industry.
The work, which covers Zimbabwe, Ghana, Kenya and Uganda, began by asking the question, Do ethical codes of practice address the norms, values and priorities of stakeholders in these countries? If the current criteria adopted in codes are inadequate to address local needs and concerns, what additional criteria might be employed, and what actions are required beyond the scope of a code of practice?
Although NRET’s fieldwork covers both societal and environmental issues, for reasons of space this paper concentrates primarily on the former.
For some foreign exchange starved African economies, export horticulture taking advantage of geographical location and climatic conditions, has been an economic success story. The industry has flourished in Kenya, Zimbabwe, The Gambia and South Africa, and is now taking off in Uganda, Ghana, Zambia and Tanzania. Most of the production is from large commercial farms, with produce taken to pack houses for shipping by air or sea to European markets. However, there are significant numbers of smallholders producing fruit, vegetables and flowers for export.
In countries such as Ghana, Kenya and Zimbabwe, the majority of workers are casual with as few as ten percent of workers on some farms enjoying permanent status. These are recruited directly by the farms or through brokers. In many instances, these workers are ‘permanent casuals’; in other words, ones who have been on the same farm for several years, but because of seasonal lay-offs or the flouting of national labour laws have not been granted permanent status.
Labour legislation, typically introduced by socialist post-independence regimes, is often strong, covering for instance the right to freedom of association, minimum wages, overtime, and leave entitlements. However, this legislation often applies only to permanent workers; not to casual workers or workers on most smallholder farms. Furthermore, union representation is in practice limited largely to permanent workers. Some farms have worker-management committees in addition to union branches, and not all commercial farms have union branches. Where freedom of association is enshrined in law, it is difficult to assess to what extent the non-existence of union representation on a farm is the result of workers feeling the often under-resourced unions are ineffective, and to what extent it is because of implied or inferred threats from management.
Wages for farm labour are normally higher than the legal minimum wage, but due to high inflation may often be below what is required to meet workers’ basic needs. For instance, a casual labourer in Ghana in 1994 needed to work 24 days in a month to meet the government-defined basic needs package, but by 1998 it would have taken the equivalent of 40 days to acquire the same package. In Zimbabwe, the combined income of a husband and wife working on a commercial farm based on actual basic wages in 1998 only met 76% of basic needs.
As a result of the low basic wage and also the demands of the industry to harvest, package and export according to schedules determined by the European market, overtime is common. Overtime is normally paid at the legally-defined rate, although some farms are seeking to eliminate overtime by introducing a consolidated wage higher than the basic wage, or by increasing piece-rate working.
Long hours also present workers with transport problems, especially those that are not given on-farm accommodation. Some farms provide worker transport, but many depend on public transport which may stop running before workers finish at night. Even where companies provide transport, this may lead to workers waiting for long periods after their shift for company vehicles to depart.
Wages on smallholder farms are competitive and sometimes better than commercial farms, although family labour is often not financially remunerated, and the well-documented tendency for smallholders to exploit their own and other family members’ labour applies to export horticulture production. Often, the waged labour employed by smallholders is drawn from kinship and other social networks, and working on a relative’s or neighbour’s farm might be part of an informal apprenticeship prior to setting up one’s own farm. However, not all workers are treated equally, and in Ghana, for example, there are significant differences between the treatment of workers from local communities and migrant workers.
Government services tend to be poor in the horticulture production areas, with poor standards of health care and education. Some commercial farms and export operations compensate for this by providing their own facilities or contributing to workers’ costs. Sick leave is provided to permanent workers on production of a doctor’s certificate, although many workers prefer to use traditional healers who do not provide sick notes. In some areas, there is high HIV prevalence, and a growing number of child heads of household who require work to support younger siblings.
There are health risks associated with working on the farms. It is often in the interests of export companies, bound by European food safety requirements, to reduce health risks to workers. The use of chemicals is normally tightly controlled, there is potable water in pack-houses and efforts to avoid risks to workers in pack-houses and fields. Nonetheless, problems exist. Protective clothing, although often supplied, may not be worn because it is uncomfortable in tropical climates. Spraying is not always regulated, and on some farms there are inadequate post-spraying re-entry regimes or workers have to use poorly designed equipment. There is some indication that exposure to chemicals is more prevalent on small commercial and smallholder farms where there is insufficient knowledge of agronomic best practice and difficulties in acquiring the relatively small quantities of chemicals actually required. Knowledge of alternative agronomic practices, that can avoid excessive use and hence exposure to agrochemicals, is woefully lacking in many farms, large and small.
Women’s participation in horticulture varies from country to country. In Ghana women form the minority of the workforce, while in Zimbabwe they form the majority, especially amongst casual workers. For women, long hours and lengthy travel times to and from the farms have implications for their reproductive responsibilities. Low wage levels and the fact that maternity pay is insufficient or for casual workers non-existent means that women often return to work soon after child birth, often taking their children with them to the fields as there are rarely crèche facilities.
Women are also less likely to receive company accommodation because they are casual workers. Where they do, it may be because their husband is a permanent worker, but in such instances the wife is often expected to work on the farm, particularly during peak periods. The need for accommodation varies, depending on the number of migrants in the workforce, and the availability and cost of accommodation locally. Where it is provided, the best examples have sufficient stand pipes, toilet and cooking facilities, are free from vermin and pests, are not prone to fires, and are large enough for the worker’s family.
Child labour is commonly forbidden under national law, although the legal definition of a child may be different from that given in ILO conventions (15 years). However, some farms do employ children. For instance, some smallholders rely on children family members to supplement their labour pool, while children themselves may actively seek employment where they cannot attend school or have financial responsibilities (e.g. orphans).
For reasons given earlier, a hypothetical code of practice was used in the African fieldwork. Different codes vary in terms of detail and scope, but social codes applying to horticulture make common reference to the United Nations Convention on the Rights of the Child, the Universal Declaration of Human Rights, and the core ILO conventions which cover forced and bonded labour (Conventions 29 and 105), freedom of association (87), rights to collective bargaining (98), equal remuneration for male and female workers (100), forced and bonded labour (29 and 105), discrimination (111), and the minimum age of workers (138). In addition, although not covered by the above conventions, the codes of practice all make some reference to a minimum or living wage.
Table 2 at the end of this paper gives the aggregate priorities that workers on commercial farms and in pack-houses would hope to see in a code of practice for ethical sourcing. It needs to be noted that in any attempt to quantify workers’ values and priorities, contested rights (those that workers would like to see in place, but which have not yet been realised) tend to be given greater weight than accepted rights (those that are already being enjoyed), with the result that the contested right to transport, for example, may seem to have greater value than the accepted right not to be used as forced labour.
The table shows that with certain caveats, a code of practice could address many of the issues that are priorities for workers. Whether the issues are actually dealt with depends on the individual code of practice and the extent to which it elaborates upon or extends beyond the ILO core conventions. Issues that are common in many codes of practice such as adequate levels of pay and overtime are also high priorities for workers. But there are also issues common in codes that are a low priority or not mentioned at all. This is not always because an issue is an accepted right or irrelevant; it may reflect peer pressure and attitudes. For instance, discrimination linked to ethnicity is a well-documented feature of life in many parts of Africa, and
Table 2: Issues identified by workers on commercial farms and pack-houses, their degree of priority, and their coverage in existing codes of practice
|
Issue |
Degree of priority to workers |
Coverage in UN & ILO core conventions |
Coverage by codes |
|
Adequate pay |
High |
No * |
Common |
|
Medical care for workers |
High |
Yes |
Occasional |
|
Transport |
High |
No |
Occasional |
|
Medical care for worker and family |
High |
No |
Rare |
|
Representation to management |
High |
Yes |
Common |
|
Overtime pay |
High |
No * |
Common |
|
Permanent status |
High |
No |
Occasional |
|
Accommodation |
Medium |
No |
Occasional |
|
Bonus/incentives |
Medium |
No |
Never |
|
Maternity leave & nursing |
Medium |
Yes + + |
Rare |
|
Equal pay |
Medium |
Yes |
Common |
|
Annual leave |
Medium |
No |
Occasional |
|
Potable water |
Medium |
No + + + |
Common |
|
Company transparency |
Medium |
No |
Rare |
|
Protective clothing |
Medium |
No + + + |
Common |
|
Worker compensation for injury etc. |
Medium |
No + + |
Common |
|
Paid sick leave |
Medium |
No + + |
Common |
|
Social security |
Low |
No + + |
Common |
|
Training |
Low |
No |
Occasional |
|
Adequate sanitation |
Low |
No + + + |
Rare |
|
Child labour |
Low |
Yes |
Common |
|
Soft loans/credit |
Low |
No |
Never |
|
Non-discrimination |
Low |
Yes |
Common |
*
Wages are not covered by ILO conventions as it is argued that freedom of association and the right collective bargaining will of themselves bring fair wages.+
+ Not addressed in core conventions, but mentioned in other ILO standards.+
+ + Not covered by core conventions, but covered by ILO Conventions 155, 159 and 164 depending on interpretation.might be expected to arise amongst the ethnically mixed stakeholder groups found on many farms. This is an issue that is covered by ILO core conventions, and common in many codes of practice, but it is rarely explicitly raised by workers or management, perhaps because it is too difficult to address or perhaps because workers are uncomfortable pursuing this topic with researchers and other stakeholders.
The issue of discrimination in pay on account of gender was raised more openly, but current wording of codes makes it difficult to prevent. Many tasks are gender specific, and women’s tasks tend to be lower paid than men’s. Female workers feel that they should be paid more, but tend to express this as receiving adequate pay rather than equal pay, perhaps sharing an awareness expressed by management on some farms that to offer equal pay would be unacceptable to male colleagues.
Workers tend to talk about overtime in terms of the rate it is calculated at and not in terms of the total hours worked. Most codes of practice place limits on the number of hours of overtime, but when workers receive an inadequate basic wage it is not surprising that they press for the right to work more hours, and to receive bonuses or incentive payments – matters that are rarely covered by codes of practice because to do so could be construed as encouraging a low basic wage.
Some issues mentioned in codes of practice are raised by workers but from a different perspective. The issues of freedom of association and collective bargaining which are common in codes, tend to be expressed by workers in terms of effective representation to management and the need for transparency by companies so that workers have a better understanding of what is a realistic demand. Most codes demand only that unions be allowed, not that they be effective, and it is the latter that is the main concern of workers. Child labour is of concern to some workers, but not in the way intended by ILO conventions. Rather than wishing to see it prohibited, some workers would like to see more opportunities for their children, in part because of low levels of family income or lack of educational opportunities, but also recognising that for children who need to work on-farm employment is better than many other opportunities available such as in the informal sector or the sex industry.
Finally, there are those issues raised by workers which are only occasionally mentioned in codes of practice, and not at all in ILO core conventions. These include medical care, transport and permanent status of workers. A major weakness of many codes is that they are ambiguous about the treatment of casual workers who, as mentioned previously, make up the majority of the labour force. Where labour laws and practices are unsupportive of casual labour, codes often do little to improve this situation. This particularly disadvantages women workers who are less likely to have permanent status, and thus even where codes provide maternity leave and medical care, women are unlikely to benefit from these provisions.
Smallholders are an important element of the export horticulture industry, supplying exporters either directly or through co-operatives, farmers’ associations and various types of brokers. In terms of the ethical value chain, smallholders need to be viewed both as suppliers that have certain ethical expectations of their buyers, and employers who have certain ethical obligations towards their workforce and the environment. Although, the development of ethical trade in agricultural produce offers great potential for improved opportunities for income generation by resource poor groups in developing countries, the critera and standards developed for ethical trade have tended to be driven by Western ideals and thus may not represent the perspectives and needs of resources poor groups involved in agriculture; even worse they may exclude these groups, denying them the opportunity of one means of increasing income and sustaining and improving livelihoods. Indeed, there is evidence that as for other marginal producers such as homeworkers in the apparel industry, ethical sourcing could threaten smallholders’ livelihoods. There is insufficient space to explore this in more detail here, but further information is available in Blowfield 1999c.
Managers accept that discussion about codes of practice has helped focus their attention on issues that have not always been dealt with rigorously and systematically in the past. This is seen as a positive development as it can lead to cost savings (e.g. less use of chemicals), higher yields and better management-worker relations.
Some worker issues raised through the research were ones that management was well aware of (e.g. remuneration, casual labour and the payment of smallholders), but which few companies have been able to address satisfactorily, often citing external factors that limit management’s ability to take acceptable action (see below). Some issues, however, were new to management. These were not primarily ones covered in the codes of practice; rather they were issues that workers felt strongly about but which had not successfully been presented to management in the past. In some cases frustration at failing to make these issues known may have led to industrial action around issues that management and others could understand, such as pay. This tendency (which is presently based on anecdotal evidence) will not be resolved by codes of practice, and indeed may be reinforced by them if codes continue to deal with an international core set of criteria and do not embrace local priorities.
In some instances, management accept that it would not be problematic to address workers’ issues. Some of the practical problems with access to potable water and sanitation are relatively simple to correct, and may also benefit the company (e.g. making portable toilet facilities available near fields will reduce the likelihood of workers contaminating the crops). However, management emphasises that it is not operating free from constraints. For instance, companies have to comply first and foremost with national legislation, and if ethical priorities of stakeholders conflict with legislation, they have no choice but to follow the law. Thus, while workers may be in favour of employing children during school holidays to do light work, national legislation often states that it is illegal to employ anyone under a certain age. If national legislation does not allow for workers to be under 15 years of age, national law and ILO conventions are compatible.
More complicated is the case of wages. A typical code of practice for worker conditions will have criteria similar to "The company shall ensure that wages paid for a standard working week shall meet at least legal or industry minimum standards and shall always be sufficient to meet basic needs of personnel and to provide some discretionary income." As mentioned earlier, in many countries the legal minimum is less than a living wage, but to pay more may prove impractical because of national legislation. In Zimbabwe, for instance, the minimum wage is set annually by the government, not as a fixed amount but as a percentile increase on a worker’s current wage. Therefore, if workers on Farm A and Farm B all receive a dollar a day at the beginning of the year, but Farm A decides to increase wages to $1.50 during the year (e.g. due to high inflation), if the next government settlement is 50%, Farm A will have to pay $2.25 the following year, while Farm B will only have to pay $1.50.
In addition to national legislation, management cite factors such as cultural pressures (e.g. from men to pay women workers less), unstable currencies and high inflation rates as factors that limit the changes companies can make to improve workers’ conditions. Management also feel that key steps taken to improve conditions are not acknowledged by existing codes of practice. For instance, the level of public infrastructure and services (transport, health and education) in a country such as Ghana is much lower than in European countries, so that the availability of public transport, health facilities and schools cannot be taken for granted. There is nothing in core labour standards and many codes of practice to encourage management to provide such facilities to their workers from their own resources.
Exporters and farm-owners also emphasise that the actions and policies of other stakeholders in export horticulture also have a key influence on worker welfare and environmental performance, and these stakeholders also need to take responsibility in promoting ethical trade. These include:
Overseas buyers need to understand that their purchasing policies have a direct impact on social and environmental performance of exporters. For instance, the European market price for pineapple and mange tout has been stagnant or declining for the last few years, while at the same time production costs for exporters and producers have risen. Moreover, the quality standards imposed by buyers, especially cosmetic standards, are considered by exporters to be very strict, leading to a high proportion of rejects, and this has both negative social and environmental implications. Late payment, with some importers in European wholesale markets delaying payment for six months or more, is also an issue that exporters want to see addressed.
Government policy affecting export industries varies from country to country. In Ghana it is relatively easy to buy inputs from around the world, but in Zimbabwe foreign earnings have to be repatriated and imports are subject to high tariffs, affecting for instance what chemicals are available and at what price. These policies also greatly affect the interest rates companies can borrow at, and the freight options open to exporters.
High interest rates and difficulty in getting loans for investment in social infrastructure (e.g. building houses or schools for workers and their families), are real constraints faced by exporters. Exporters and growers feel that in the context of ethical trade, financial institutions need to take some responsibility by being more supportive, both in terms of lower interest rates to encourage general investments, and in terms of providing credit for social investments.
These are also stakeholders who need to take some responsibility in promoting ethical practices in the industry. For instance, strict standards on worker health and safety and the environment need to be supported by high standard chemicals and equipment, properly packaged and available in quantities that encourage safe and proper application. Should chemical companies be responsible for providing a service of proper disposal of pesticide containers?
Exporters feel that airlines are key stakeholders in the export horticulture industry. Air freighting is the largest single cost borne by many exporters, who in countries with limited air service feel very much at the mercy of the airlines. Exporters claim that they are not in a strong position to negotiate freight rates with the airlines, and just as workers are sometimes afraid to complain to management for fear of the repercussions, exporters are afraid to complain to airlines for fear that their produce will be mishandled or left off the next flight.
Three things emerge from these worker and management perspectives. First, that current codes of practice do not address all of the norms, values and priorities that need to be addressed under an ethical sourcing strategy. Second, that even where key issues are addressed within codes of practice, companies are not always able to put in place improvements because of the actions and behaviour of other stakeholders. Third, current codes of practice, although sometimes intended for implementation throughout the value chain, are largely being enforced only at the place of production (in the case of horticulture, the farm and the pack-house).
Some would argue that the key issue to address is getting the codes right. But even if codes did not have limitations (which they undoubtedly do), they would have little positive lasting effect if broader stakeholder issues were not also tackled. While there will always be disagreements about the extent a producer can blame others for delays in introducing improvements, there is clear evidence that the even the best intentioned producer is constrained by the actions of others. Thus, each producer works within an ethical space that is determined by the producer’s own intent, the ethical requirements of customers, national policy and legislation, international policy and regulations, and the behaviour of other stakeholders.
Expanding the ethical space will lead to greater societal and environmental added value, but the producer alone cannot achieve this. The use of codes of practice (particularly if there is continual improvement of the codes) encourages producers to maximise the ethical space insofar as this is within their control. But equally codes of practice or other instruments are required to encourage better ethical performance throughout the value chain, and extending this to what have hitherto been seen as secondary stakeholders such as banks and governments.
This in turn requires a partnership approach to developing ethical value chains. To an extent this is becoming evident in the development of codes of practice. These often began as mechanistic instruments encouraging enforcement rather than education, but increasingly the emphasis is on partnership, involving industry, civil society and sometimes government in the development of principles and criteria. There are still codes of practice where this is not the case, including both in-house codes of particular retailers and brand-owners, and international codes managed by a single organisation. But internationally and nationally there are strong indications that this is changing, and codes are being managed by multi-stakeholder bodies.
However, there is less indication of this partnership approach being adopted away from the actual development and management of codes of practice. Indeed, moves towards partnership may be seen as a way of diluting codes of practice, and NGOs and trade unions have sometimes viewed advocacy of a partnership-based, more educative approach as signs of weakness.
The emergence of ethical trade, and particularly ethical sourcing involving the commercial mainstream, creates an opportunity to transform the value chain between Southern producers and Northern consumers into a values chain that improves the quality of life in developing countries. At present, there is too little information to assess whether the implementation of codes, that are currently the main instruments of ethical sourcing, has a positive impact on workers and the environment.
However, the information available shows some of the limitations of codes in capturing certain temporally and locationally specific impacts of business. For instance, codes of practice address what is happening within a company and not how its operation was established (e.g. issues of land acquisition); they address what happens at the locus of production and not the impact it has on others such as those in neighbouring communities or in the families of its workers.
Advocates of codes of practice are eager to point out that codes were never intended to be a cure for all of society’s problems, and in private at least may express concern that discussion of limitations detracts from the real benefits, and distracts from the practical needs of making codes affordable and effective instruments for ensuring base standards of social and environmental performance are delivered. The African horticulture industry is an example of a business-civil society partnership attempting to make what advances it can through the use of codes. On certain issues such as the reduction in the use of chemicals, worker pay and work-place conditions, codes even in their early days address social and environmental concerns, and moreover are leading to changes in business practice.
But perhaps the most tangible achievement to date is not that companies are meeting coded criteria; rather that the codes are proving to be a catalyst for bringing together people and organisations that, insofar as there has been any contact at all, have tended to have had confrontational relationships in the past. The dialogue that has developed is not just one between business, government and civil society organisations, but equally important is between individual businesses that in trading terms are competitors, but recognise a common interest in establishing higher social and environmental standards.
The example of the African horticulture industry shows that such partnerships are crucial because the reasons for certain business practices that have a negative social or environmental impact are not simply the desire to cut corners to make a larger profit. Company capacity to implement change depends on the ethical space within which it has to operate, and this space is in part prescribed by the actions of other stakeholders. The partnerships evolving through ethical trade are showing that there are many issues where stakeholders can take action that would increase the ethical space. This recognition is new, and it is still not accepted by all involved in ethical trade that action is needed beyond the locus of production. However, if partnerships evolve that influence the actions of a broader range of stakeholders and thereby improve the ethical space, this may be one of the most significant achievements of ethical trade in the long term.
As these partnerships develop new agendas, one of the topics being discussed most frequently is the way stakeholders can influence codes of practice themselves. The research on the African horticulture industry confirms the view that codes of practice do not address all of the priority issues for workers and smallholders. The question that advocates of ethical trade are increasingly being pressed to answer is to what extent and how the norms, values and priorities of Southern stakeholders are to be accommodated. Some ethical trade supporters, particularly those in the North who have argued that ethical standards should be built on an internationally accepted set of core criteria, are reluctant to have core standards ‘diluted’ by local exceptions or differences, something that is further complicated by the fact that certain of these supporters now have an economic interest in managing or certifying the codes of practice. Other supporters are beginning to argue for greater participation by people in the South, not just in implementing codes but also in setting the criteria. However, this raises the question of how one country is to be compared with another if each has its own national code.
The research on African horticulture suggests that codes which do not address the Southern participation issue will only deliver a minimum package of benefits, and will moreover engender a sense of hostility that may ultimately feed the argument that ethical trade is a non-tariff barrier. A more desirable scenario would be one where codes, using tools and a language with which business is already familiar, act as a catalyst that will bring a widening group of stakeholders together to identify and develop solutions for a larger, more complex range of issues than can be addressed through any code or set of codes. Ultimately involvement of all stakeholders is likely to result in improved benefits for all as solutions to problems will be based on the expertise and experience, as well as the needs, of all involved in the value chain. This scenario allows greater exploration of the way that business can contribute towards international development goals, and may also bring about a shift in the way Northern businesses trade with the South. Codes of practice alone may never be responsible for achieving the goals of ethical trade, but if they serve to bring about the partnerships necessary for those goals, they will have been a crucial if perhaps temporary catalyst for transforming the value chain into a values chain.
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