What is Ethical Trade?
In this section...
Introduction - What is ethical sourcing, why is it an issue, and what does it mean in practice? (below)
Frequently asked questions (FAQ)
Ethical trade factsheets
ETI Factsheet for consumers [PDF, 120kb,
updated August 2008]
ETI Factsheet for small businesses [PDF, 122kb,
updated August 2008]
ETI Factsheet for suppliers [PDF, 111kb,
updated August 2008]
(ETI Factsheet for suppliers - simplified chinese) [PDF, 698kb,
updated October 2007]
See also:
Introduction
What is it?
“Ethical trade” means different things to different people. In particular, some people refer to “ethical trade” as an umbrella term for all types of business practices that promote more socially and/or environmentally responsible trade. Others use the term in a much narrower sense, referring specifically to the labour practices in a company’s supply chain.
For ETI, and throughout this Website, we use the term “ethical trade” in the narrower sense. For us, ethical trade – or ethical sourcing – means the assumption of responsibility by a company for the labour and human rights practices within its supply chain.
Why is it an issue?
Ethical trade became a growing issue during the 1990s because companies with global supply chains – in particular those in the clothing and food sectors – were coming under increasing pressure to ensure decent working conditions for the people who produce the goods they sell. A number of NGO and trade union campaigns raised consumers’ awareness of poor working conditions in factories and farms in developing countries – factories and farms that produced goods for leading companies in Europe and North America.
As a result, a growing number of companies have decided that they can no longer turn a blind eye, and have adopted some form of ethical sourcing policy to address growing public concern over supply chain labour issues. Pressure on companies has been maintained as NGOs and trade union organisations, both large and small, and both in developing as well as developed countries, have continued to campaign on these issues. Moreover, corporate investment companies are increasingly screening their investments according to a range of social and environmental criteria, including a company’s efforts in addressing supply chain labour conditions. Together, these trends are making it more and more difficult for companies to ignore ethical sourcing issues.
What does it mean in practice?
Companies take responsibility for their supply chain labour conditions in many different ways. That is, there are many different approaches to ethical sourcing, and while some approaches are undoubtedly more effective than others, there is no one “right way”.
Nevertheless, a company’s ethical sourcing strategy usually involves adopting a “code of practice” (next page), that sets out minimum labour standards that they expect their suppliers to comply with.
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