Trading off the fairtrade banner?

Big companies are jumping on the ethical bandwagon, but is it just a marketing ploy, asks Paul Cullen, Consumer Affairs Correspondent.

Ethical shopping is big business these days. Once seen as the hobby-horse of the sandal-wearing crustie, it has now gone mainstream, with big food companies and retailers falling over themselves to join the movement. In the UK, sales of ethical goods - such as fairtrade, free-range and organic - exceed €45 billion a year, and research shows that shoppers now care more about ethical issues than price or quality.

In Ireland, consumption of organic food is expanding by up to 40 per cent a year, while sales of fairtrade goods have more than doubled in the past two years.

Kraft, the world's second-largest food company, has predicted that within a decade, 60-80 per cent of the market for coffee will be covered by products with some kind of fairtrade certification; other products originating in the developing world are likely to follow the same trend.

All of this is welcome news for Fairtrade Ireland (FI), whose fairtrade fortnight promotion starts next week. From small beginnings selling coffee in charity shops in 1996, FI has expanded steadily and now embraces 50 different products, with annual growth of 30-40 per cent.

Once a niche range of products costing significantly more than their competitors, fairtrade is now more affordable and more widely available in the main retail channels. This isn't just about economies of scale; what retailers realised was that selling fairtrade could be used as a marketing tool to promote the general image of the supermarket. The sweet-smelling fragrance exuded by just a few ethically-produced goods could waft over the entire product line. If that meant losing a few cents on a bag of coffee, well, it might just be worth it.

Peter Gaynor of Fairtrade Ireland acknowledges that some companies with just a few FI products are using fairtrade heavily in their marketing.

"I'm sure some companies get involved cynically. We try to stop over-claiming, but if they get positive feedback from customers for doing the right thing, we don't have a problem with that."

Fairtrade does what it says on the tin, by guaranteeing to the consumer that a product is prepared under ethical conditions. "But it's not a guarantee of the entire company's ethical practices, nor can it be," says Colin Roche of Oxfam Ireland.

Gaynor points out that the local producer in the developing world benefits, regardless of where the Irish shopper buys fairtrade. Of course, retailers have also realised that conscientious shoppers are prepared to pay a premium for fairtrade products - indeed, they may expect it. What was once regarded as noble but not particularly nice is often now marketed as a premium-brand product. The problem is that just 10 per cent of the premium paid for fairtrade coffee in a coffee bar trickles down to the producer, according to one estimate.

But as the market for ethical produce has grown, so too has the number of bodies offering to certify goods that are sustainably produced. McDonald's, for example, says all the coffee it sells in Ireland comes from "eco-friendly farms certified for environmental and social sustainability". Auditing of the farms is being done by Rainforest Alliance, a US environmental group, and a Dutch non-profit body, Utz Kapeh.

Critics say this kind of certification is a form of "fairtrade lite". The difference between Fairtrade and other forms of ethical certification, says Gaynor, is that while all sign up to conditions on child labour, environmental standards and the like, only Fairtrade products provide a guaranteed slice of income for the producer. In addition, companies pay no licensing fee to use the Rainforest Alliance logo, while Fairtrade charges a 2 per cent fee to cover costs (FI is also grant-aided by Irish Aid).

A 2005 report compared the Fairtrade and Rainforest Alliance certification scheme and concluded that, under the latter scheme, coffee producers received 21 per cent less for their crop than under Fairtrade. The net effect for companies is that it is cheaper to source product from Rainforest Alliance farms than Fairtrade.

The shortcomings of some certification schemes was shown up last December when a report by British charity War on Want revealed that Bangladeshi workers making cheap clothes for Tesco, Primark and Asda in the UK were earning as little as 8c an hour for working in sweatshop conditions for up to 96 hours a week. This was in spite of the fact that all three companies are members of the Ethical Trading Initiative (ETI), whose code of conduct requires employers to pay a living wage and not to force staff to work long hours.

While the companies denied the allegations, the report was only the latest in a series to allege mistreatment of workers in supplier companies in Bangladesh. Critics charge that many of the companies treat the commitments in the ETI as an aspiration rather than a reality.

Responding to the criticism, ETI director Dan Rees denied the initiative was a shield that companies could hide behind.

"We encourage our members to make public the commitments they make and what they are doing to meet them - this raises consumer expectations and we need more of it. Poor conditions in global supply chains make it easy to criticise voluntary initiatives, and we are the first to say that more corporate commitment and effort is needed, but independent research shows ETI member companies are making some impact."

This month, jeans company Levi Strauss resigned from the ETI after being suspended for failing to guarantee their suppliers would pay workers a living wage. Levi said the concept of a living wage wasn't properly defined.

As ethical shopping grows in popularity, its detractors have been coming out in force. For the purists, conscientious consumption was always an oxymoron.

"Shopping ethically is important, but it has very real limitations. There are no magic bullets, and if we don't face up to this, our planet's going to bite the dust in a hail of environmentally friendly fire," an editorial in New Internationalist magazine recently declared.

This type of critic also squirms to see the likes of Nestlé and Starbucks adopting the fairtrade banner and making good money out of it. Even worse for them, big business is buying up its slice of ethical trade, as in Cadbury Schweppes's purchase of Green & Black's chocolate and L'Oreal's acquisition of the Body Shop.

These trends prompt the question: "Who's changing who?" Is fairtrade helping to soften the business practices of big corporations in the developing world or is this just "greenwash" - an attempt to give companies a more eco-friendly image, whatever the reality?

"People can't expect too much from fairtrade. It is a valuable way to support workers overseas, but it isn't a solution to the issue of trade justice," says Roche. "The ways in which companies do their business have to change. Ultimately the big decisions are made at cabinet tables and in boardrooms. Fairtrade is no substitute for political change."

On the other side of the spectrum, economists are also questioning the rationale behind fairtrade and organic produce. The Economist magazine recently argued that the fairtrade system "gives rich consumers an inflated impression of their largesse and makes alleviating poverty seem too easy".

By propping up prices in areas were there is over-production, fairtrade encourages farmers to produce even more, thereby further reducing prices, it claimed. "No amount of fairtrade coffee will eliminate poverty, and all the organic asparagus in the world will not save the planet. Some of the stuff sold under an ethical label may even leave the world in a worse state and its poor farmers poorer than they otherwise would be."

Fairtrade Fortnight runs from Mon, Feb 26 to Sun, Mar 11. For details see www.fairtrade.ie

Every little helps Top tips for ethical shoppers

Choose Fairtrade Ireland products; look for the green and blue logo on food packets

Only shop in a supermarket whose ethical practices you believe in

Bring a carrier bag and re-use it

Use local shops as much as you can

Walk or cycle to the shops where possible

Buy locally produced goods where possible