Corporate buying needs new incentives

By Safia Minney

Photo by Ioana Cristiana on Unsplash


Mike Gidney, CEO of the Fairtrade Foundation, spoke to me during a podcast interview to celebrate 25 years of Fairtrade in the UK.

In a meeting room covered in bananas Mike and I discussed the beginnings of the now ubiquitous Fairtrade Mark which guarantees a better deal for producers through minimum economic, social and environmental standards.

With 1.7 million farmers, workers and miners over 3 continents and 125 countries selling fairtrade products it has seen tremendous growth, however Mike argues there is still much to be done to take the concept of Fairtrade to scale.

“There are long, dirty supply chains which are bad for the planet and expose workers to untold injustice,” he told me and added it was still a ‘buyer dictates’ world.

Yet when thinking about sustainability in supply chains, fairtrade often seems to conflict with the carbon heavy nature of international trade. So I asked him how we can find a balance between localism and globalism.

“If you can buy local, do it, if not, you should buy Fairtrade to guarantee that the growers and makers are not exploited. Cumbria Local and Fairtrade is a good example of a healthy balance between local and Fairtrade.”

In the longer term he says we should be doing more to help producers with their own sustainable enterprises such as certified Fairtrade coffee in Kenya and Fairtrade certified tea in India.

Ultimately, however, he argues that what is needed is a trade overhaul and better regulation to eradicate “exploitative trade” and CEOs should be incentivized by social justice indicators.

“There is a moral need to ensure that those with the lightest footprint on the earth are supported…the climate emergency needs to be tackled, we need a revolution about the way we trade…it needs to be a fair revolution.”

With sources as credible as The Financial Times arguing the current form of capitalism is dead, Fairtrade is a movement that aligns itself with a much needed new economic model. But despite its incredible growth, most traders are smaller.

Mike told me that the concept needed to be taken to scale by larger companies.

“90% of people recognize the FT mark and 80% trust it,” he points out and he is heartened that companies such as Greggs (the third biggest coffee retailer in the UK) are committing to Fairtrade.
Mike firmly believes business should be a force for good but for this to happen he says change is needed in three areas:

1 Buying. Corporate strategy needs to translate through to where the buyer buys and they should be incentivized to look for sustainable production, social and environmental targets.
2 Corporate Governance. Sustainability has to be integral to all parts of the business – if it’s not, then it’s greenwash.
3 CEO performance targets. Too many CEOs targets are based on earnings per share and mandated to shareholders only. They should also be incentivized with social, environmental and justice indicators.

“It’s about value and power,” he tells me. “Value needs to be distributed better across the supply chain. To do this, consumers need to realize the cheapest products are made at the cost of the producer.”

If you would like to start the journey to transition your business model check out REAL’s course on Leadership for Sustainability.