The US retailer Victoria’s Secret sells fantasy with its line of slinky thongs. It’s not just sex the brand is promoting, but also the belief that consumers can do good by buying products made in socially responsible workplaces in the emerging world.
But then last December, Bloomberg News ran a scathing exposé purporting to show that Bonn-based Fairtrade International (FLO),the world’s largest labeller of ethical goods, had failed dismally in its oversight of a project in west Africa that supplies Limited Brands-owned Victoria’s Secret. “Paying lucrative premiums for organic and fair trade cotton has – perversely – created fresh incentives for exploitation,” wrote Bloomberg’s Cam Simpson.
According to Simpson, the project that made some Victoria’s Secret garments was paying sub-par wages to children labouring in inhumane conditions.
"Fair trade labels should be seen as a symbol of that healthy growth, but not a certification of ethics."
In January, FLO responded to the investigation, claiming Bloomberg’s reporter had fabricated key elements of the story. The young girl profiled, they said, was not 13 but 18, and worked not on a Fairtrade-certified cotton farm but in her family’s vegetable business. The facts remain in dispute. But as the story heated up, it was announced that FLO’s chief executive, Rob Cameron, had resigned, although FLO stated it had nothing to do with the Bloomberg allegations.
The contretemps is emblematic of a growing controversy that threatens to upend the burgeoning ethical consumer market: child labour is a persistent, global problem and there are no easy fixes.
FLO was already embroiled in controversy because its affiliated but independent American operation, Fair Trade USA, announced last autumn that it was cutting ties with the mother organisation as part of what it called a progressive reform of its labelling strategy. It now offers designation to larger private operations, mostly coffee plantations, and has lowered the required minimum fair trade component to as little as 10% from 20%.
Fair Trade USA says the changes will encourage corporations to adopt ethical standards, which will seed change and directly benefit far more poor farmers and workers than the current system. The organisation believes sales will double in three years.
It’s a battle royale between the self-proclaimed reformists and old guard purists, who are afraid the movement will be coopted and the label reduced to little more than a corporate rubber stamp. FLOagrees that sales would rise under the rival system, but would water down worker protections. It says the changes suggested by Fairtrade USA amount to an assault against the movement’s founding values – the focus on small farms, self-management and sustainability.
The Fair Trade USA proposals are a “neoliberalisation of Fair Trade,” writes Francisco VanDerhoff Boersma, co-founder of the first fair trade certifying body in a joint response to the plans issued with the renowned small farmer co-operative UCIRI (Union of Indigenous Communities of the Region of Isthmus) in Mexico. “Our small producer organisations can only move forward with authentic fair trade and sustainable or organic production.”
“Do we want it to be small and pure or do we want it to be fair trade for all,” responds Paul Rice, chief executive of Fair Trade USA. He believes the move is “visionary,” saying it will bring benefits to the “poorest of the poor.”
So who’s right? That’s a tough call. There is no question that fair trade label rivalry will dilute the movement’s message. Consumers, particularly those in the US, who want to support small, sustainable farms, will be out of luck.
The big picture is more promising. Although it’s not guaranteed, there is reason to believe that liberalising the designation will drive change, particularly at farms that could not qualify for the label for size reasons only. For example, Green Mountain Coffee Roasters, which is believed to be the largest buyer of fair trade coffee in the world, is participating in a pilot project with Fair Trade USA involving a 500-acre Brazilian organic coffee plantation (coffee accounts for 70% of the US fair trade market) that has been too large to get certification.
The new label would open the door for game-changing giants such as Wal-Mart, Whole Foods and Starbucks to follow suit. Starbucks says it has not yet decided whether it will put fair trade labels on its larger, organic farms.
The good news is that such fractiousness suggests the movement is going through growing pains as demand for organic products rises. Fair trade labels should be seen as a symbol of that healthy growth, but not a certification of ethics. No person or product certification system can provide a guarantee that any product is free of child labour. But either labelling system is far better than nothing.
Jon Entine is a visiting fellow at AEI.