As the Ethical Trading Initiative turns 10, Charlotte Hardie looks at a decade of progress in responsible retailing and finds out why it remains vital through the downturn.

A decade ago most consumers barely knew what ethical trade was. A decade ago retailers could rarely be in the same room as trade unions and NGOs when it came to matters of ethical trade, let alone engage in constructive debates about how to improve it.

Now this debate is much more constructive and a key part of that success has been down to the dialogue created by the Ethical Trading Initiative. ETI chairman Alan Roberts says: “The problem at the time was there was a lack of trust. Trade unions were there to challenge employers and NGOs were seen – rightly so – as campaigning organisations. “Now we have a situation where everyone has a clear understanding of how they can work together to solve a problem.”

This week 10 years ago the alliance that it formed between retailers, NGOs and trade unions began its mission to improve the working lives of those people producing goods that are sold in the UK.

At a time when consumers are preoccupied with their finances, many argue issues of ethical trade have less relevance. Roberts couldn’t disagree more. “It has been demonstrably proved that those businesses that have divorced themselves from business ethics have proved themselves to be unsustainable, as well as unjust. The principles of ethical trade – which demand business transparency and accountability – will be higher than ever on the corporate agenda,” he says.

So just how much has been achieved since 1998, and how much is left to do?

Inditex joined in October 2005. Its director of CSR Javier Chércoles says that although the retailer had worked for a long time to improve working conditions in its supply chain, it “had got as far as we could on our own”. He adds: “A tripartite approach is the best way to resolve local issues.” Marks & Spencer head of CSR Mike Barry says the ETI way of working has “driven a consistency of approach across the industry and it’s helped both us and our supply chains to be as efficient as possible”.

Between 2004 and 2006, an independent impact study commissioned by the ETI took place to investigate its achievements. It showed that the working conditions of those producing goods for the UK market had improved dramatically year on year as a result of these formal, collaborative discussions. Roberts says there are far fewer incidents of poor working conditions, working hours have been reduced and child labour has dropped dramatically. “That’s not to say it doesn’t go on, but companies are better at recognising it and doing something about it,” he says.

In reality, though, Roberts says the ETI was a little disappointed with the report’s results. “It’s fair to say we didn’t understand the scope and complexity of the supply chains of some of the major retailers.” One such area of disappointment was trade union rights. “The opportunity for trade unions to represent workers’ rights has been restricted by law,” he explains. There hasn’t been as much progress on minimum wages as the ETI would have liked, either. “We’ve been able to raise the living wage to the legal minimum, but often that’s not enough to sustain a family. That’s one of the challenges going forward.”

Not all about money

While Roberts admits that encouraging membership has always been tricky, growth has been steady. To date, many of the major high street retailers have signed up (see box). The real cost to the retailer is not the value of the cheque they hand over every year for their membership fee, but the time and effort required. One condition of membership is to contribute to the ETI’s learning and developing agenda, which involves participating in working groups and projects.

For instance, in 2003 the ETI sent a working group to carry out an investigation after being alerted to serious allegations of breaches of labour rights in Kenya’s cut flower industry. It found that the allegations were true and representatives from the retailer, the NGO and the trade union worked to put in place a code of practice. “It’s no longer an area of campaigning and standards are very high, but that has involved in-kind contribution and time,” says Roberts.

There are also notable absences from its membership list. Roberts says: “Those who aren’t a member believe they have a good enough process themselves. But our argument would be that they don’t benefit from collaboration. Collaboration is critical because it adds credibility to the process.”

What’s more, it provides the perfect opportunity to develop constructive relationships with other retailers. As Chércoles says: “The ETI is our common framework. Whenever I’m over in India, I’ll meet up with Lakshmi Bhatia [director of social responsibility] at Gap, for example, to discuss progress or any problems. We’re all in this situation together. At the end of the day, we’re all competitors but we’re finding solutions to a common problem.” He adds that because many retailers share suppliers, they can also share very specific problems. “It’s far better to discuss them together on a global perspective.”

Barry says collaborative discussions also fuel innovation. “We’ve learnt from other people and other people have learnt from us.” He cites the Sedex system, whereby a supplier can have an independent audit carried out and all retailers that use that supplier can access it. The idea, now widely used, was spun out from ETI discussions. “Again, it’s about bringing consistency,” explains Barry.

Taking an active role

The ETI believes the stance that some retailers that are not members take on ethical trade is neither rigorous nor effective. Roberts says: “Some retailers will have a process whereby they pay a third party company to do an audit [of factories]. But at the end of the day, that company is commissioned to do a job. Our challenge would be about how independent that is.” In contrast, Roberts believes that active NGOs and trade unions in each country are able to independently verify the real goings on.

The ETI is the first to admit that there are serious challenges on the horizon. It wants to continue to work on raising wages. “The International Labour Organization says that abject poverty is living on less than US$2 a day. If you’re earning US$1 a day in Bangladesh, you’re doing well,” says Roberts.

Another area of focus is retailers’ buying practices. Many businesses have compliance specialists who travel to manufacturing countries to check supplier standards, but they tend to be allied to IT departments. Instead, the ETI wants compliance to be driven by retailers’ buying and merchandising teams from the top down. “Buyers are the ones with the chequebook,” says Roberts. “If they’re sitting there with a supplier [and] asking them about working conditions, it doesn’t half focus the mind of that manufacturer. If you have a separate technology compliance specialist go out and visit that manufacturer, the impact’s not so great,” he says.

The ETI also wants to ensure that the benefits of ethical trade are extended to those particularly vulnerable workers such as homeworkers, migrant workers and those on temporary contracts. As Barry concludes: “There are millions of people making product for UK retailers and we know there are high expectations that they are treated well. The ETI has got to help on delivery progress and keep on anticipating new, emerging issues.”
The ETI will be the first to admit that, even with all the progress it has made since its launch, it has barely scraped the surface. Building on its achievements will require even more support from UK retailers. Without doubt, this costs money, but that pales into insignificance compared with the cost of trading unethically.

What people say about the initiative

ETI director Dan Rees
“I’ve seen good and bad conditions, but the worst I’ve seen is people who have been kept in conditions, really, of slavery. It’s about someone walking into work in places such as Bangladesh or India and assuming they’ll have the same rights at work as you or I. Businesses need to work together – and lots of them in critical mass.
A decade ago, this was just an idea. Now ethical trade is a very clear expectation on business. In a decade’s time, businesses are going to have far more to do, not far less.”

TUC general secretary Brendan Barber
“I’m glad to see, within the ETI, so many of the major retailing organisations taking this agenda seriously. We want to see the biggest countries from the developing world playing their part in lifting the standards of the poorest of the world.”

Next global code of practice manager Pam Batty
“Through our membership at the ETI we have the opportunity to work with other brands and retailers, and NGOs and trade unions, and look at solutions to bigger issues that would otherwise be very difficult for us to tackle as an individual brand. The ethical trade issue is absolutely not going away.”

Gap director of social responsibility Lakshmi Bhatia
“When you go into those factories, when you connect with those workers, there is no way you cannot be moved. When we saw the value of sitting at the table with NGO and trade union colleagues and friends, and looking collectively at the issue, we realised there was an incredible amount of expertise in terms of networking and problem solving.”

Female worker, India
“Now we have our identity through these artisan cards. It is recognition of our skill – that we are skilled, not ordinary labour. This makes us very proud.”

Male worker, India
“The biggest benefit is that this has given us the confidence to speak. We will be able to resolve our work and other related issues on our own.”

Retail members of the EThical trading initiative

Associated British Foods (Primark)
Body Shop
Co-operative Retail
Fat Face
Johnson Clothing Group
Monsoon Accessorize
New Look
Pentland Group
River Island