Redefining the Bottom Line

Fair Trade in North America

Fair trade is not a new concept to North American consumers. It is one of many certifications for the environmentally and socially conscious shopper. Yet, discussions around fair trade seem to have fallen off the map. As businesses and consumers value increasingly environmentally and socially responsible practices, it is time to reignite the conversation.

“Fair trade” as a concept is simply about fairness in the marketplace – it is about doing business with ethics and decency at all stages from production to consumption. Fair trade considers the multitude of relationships involved in a business transaction. Rather than minimizing the role of where a product comes from, fair trade looks at telling the full story. Rather than “externalizing” costs to the environment or communities from which goods are produced, fair trade encourages companies and consumers to think. Fair trade encourages companies and consumers to change the way they do business.

A Brief History of Fair Trade

While the concept of fair business practices has permeated activities and organizations for generations, there is a widely accepted “starting point” for Fair Trade as we know it today. Groups were formed post-World War II, then known as Alternative Trade Organizations, to support struggling artisans in Puerto Rico and Europe. The focus of these organizations eventually shifted to “developing” nations throughout the globe. These initiatives were driven by humanitarian, social and environmental efforts.

Through the 1960s, 70s and 80s, increased levels of activism and global awareness led to many Fair Trade efforts. The United Nations began promoting the concept of “Trade not Aid” in 1968. Organizations such as Oxfam, Ten Thousand Villages, and Equal Exchange were developed and stood out as leaders in the Fair Trade movement.

In 1989 the International Fair Trade Association was established (IFTA). This was the first global Fair Trade network. Today, Fairtrade International (FLO) is recognized and respected as an international body for certification. The FLO was established in 1997.

Fairtrade Certification

“Fairtrade” refers to the specific certification as outlined by the FLO and its member organizations. “Fair trade” is the overall concept. Fairtrade certification is a process of achieving third party recognition for a product, assuring consumers that all those involved in the making of that product have been treated and compensated ethically and fairly. In 1988 the first Fair Trade certification was developed for a brand of coffee by Solidaridad, a Dutch Development Agency. The FLO oversees Fairtrade certification bodies globally. Twenty-eight countries host Fairtrade certification organizations that are part of the FLO. This international network ensures common standards and practices in the certification process. Producer networks exist in Latin America, Africa and the Middle East, and in the Asia and Pacific region.

The FLO and member organizations have common labeling to indicate that products are Fairtrade Certified. The process of obtaining certification is extensive and rigorous. Standards are applied to both producers and traders.

The FLO is open about key standards in its certification process, as well as what these standards are intended to achieve. Overall, Fairtrade certification is meant to contribute to decreasing the gap between the wealthiest and the poorest nations in the world. At the very base of Fairtrade, producers are paid a fair wage for their work. An additional “Fairtrade Premium” is provided to workers to support their communities through social, economic and environmental projects. Fairtrade certified products are supposed to be sourced from consistent producers, meaning that long-term trading relationships are established and maintained so that the community development aspects of Fairtrade can actually make an impact. The conditions of production and trade must also be environmentally sound.

Individual companies have developed their own labeling techniques to indicate that their products are “Fair trade,” ethical, sustainable, and so on. Some of these labels mean that a legitimate third party organization has indeed certified the product. However, some companies have co-opted the concept of fair trade to the extent that they can use convincing labeling without following through. Similar criticisms have been raised around other trends such as organic, local, or non-genetically modified (GMO) foods.

Indeed, the conscious customer is tasked with doing their research. In business, the bottom line is profit; fair trade as a concept is about changing the way business is done in an increasingly globalized world. It changes that bottom line.

The “Triple Bottom Line”

It is becoming increasingly clear that one can do good business by expanding the concept of the bottom line. Consumers have demonstrated that they care about more than just cheap products: they are willing to pay more for something, if it is better for the environment and for the people who worked to make it.

John Elkington coined the phrase “triple bottom line” in his 1997 book Cannibals With Forks: The Triple Bottom Line Of 21st Century Business. While the single bottom line is only about profit, the triple bottom line also incorporates people and the planet. Costs to people and the environment are typically externalized in order to maximize profits – yet redefining the bottom line has also proved to make good business sense.

Fairtrade certification focuses on people, ensuring that workers are paid fairly and that their communities are supported through the Fairtrade Premium. The environment is important in Fairtrade certification, although it does not necessarily mean that products are certified organic; organic certifications are separate processes. Many Fairtrade certified products are also certified organic.

The Future of Fair Trade

These trends in social and environmental consciousness are also health trends. Chefs, nutritionists, and other health professionals promote eating organic, local, whole foods. While doctors might not prescribe Fairtrade certified food for overall health, foods with these labels should be considered alongside the “local” and “organic.”

Supporting local economies via local food systems is incredibly important. Depending on the local climate, there is a wide array of fruits, vegetables, meats, dairy and grain products available throughout the year. For all of those products that do not grow in the local area – bananas, coffee, pineapples, oranges, quinoa, to name a few – Fairtrade certified is a consumer’s strongest choice to take the idea of “local” to a global level.

The future of Fair Trade encompasses all of these concepts that support personal health and community wellbeing, from the farmers field to the kitchen table. Social, economic and environmental development at a global scale requires a triple bottom line. Businesses and consumers must evaluate, and reevaluate priorities and make choices to support people and the planet, not just profit. Fairtrade certified products are one among many small pieces of a much larger solution.

April 25, 2017, 8:33 AM EDT