The Fair Trade model for sustainable development

Imagining a world of Fair Trade enterprises
Rudi Dalvai, delivered at the Fair Trade International Symposium at Portsmouth University, 27 June 2018

Hello friends from across the world. It is an honour to be here today and speak about how we can embed fairness into sustainable development. I believe we have a great solution to achieve this. And we are increasingly confident in telling the world about it. It’s at the heart of the Fair Trade movement – a model of business and trade that puts people and planet before profit. This is at the heart of the new Fair Trade Charter that we will launch on 25 September, the 3rd anniversary of the Sustainable Development Goals. It’s a charter that has been developed by the Fair Trade movement and driven by WFTO and Fairtrade International. And at the core of this charter and our vision is a desire to inspire a change to the world economy. But first I will talk about the challenges that face us, before moving on to the solutions we as a movement are offering. I will focus mostly on the enterprise-level models that we are proud to represent at the WFTO. The 400 members from over 75 countries who are showing business and trade can truly prioritise the interests of producers.

The SDGs have captured all of our imagination. These ambitious goals have been celebrated by people the world over. We must achieve them as a species if we and our planet are to survive. And the Fair Trade movement is completely behind them.

But sustainable development means we need to live within ‘the doughnut’ not exceeding the limits of our planet while meeting human needs. The planet has a limit to the economic footprint it can handle. And we are stretching beyond this at present on multiple levels. Meanwhile, we are failing to meet basic human needs. This is what the graphic shows us. We need to ensure the benefits of the economic activity benefit people more equally as we cannot keep growing our footprint and going further beyond our planet’s boundaries. This means tackling inequality is key.

This framework was developed by Oxford academic and best-selling author Kate Raworth, and builds on the planetary boundaries work of the Stockholm Institute.

If we look at the SDGs, on social goals, we are falling behind. And as you can see, we are particularly bad on inequality. But this is critical and impacts the achievement of nearly all SDGs.

The reason inequality is such a critical SDG is that resources are limited so how we distribute the benefits of those resources drives if we meet many social SDGs. This means inequality is critical. How we distribute value and spoils of the economy determines if we achieve most goals. As the World Bank have acknowledged, we cannot achieve zero poverty if we do not tackle inequality. We cannot feed our people if the value and resources of economic activity go increasingly to the richest. We cannot fund education and health without a more equal distribution of resources. And we will have economic and social instability if inequality continues to rise. We cannot ignore growing inequality as its at the very heart of fairness.

But inequality is growing and is driven by a system of business, finance and trade that rewards wealth, not work. This graph shows that increasingly the spoils of the economy are not going to people who work. Instead they are going to those who have the money to invest. If we reward people based on how much capital they have to invest, we will create spiralling inequality. This way of doing business and trade cannot continue.

Business and trade drives how economic spoils are distributed. The kinds of businesses that populate our economy is critical. Let’s look deeper into inequality and see how the world economy, and the businesses that populate it, spread the spoils of economic activity.

Economic inequality is largely driven by the unequal ownership of capital, according to the leading economists behind the World Inequality Report. So if business is increasingly obsessed with growing returns to shareholders, it is supercharging higher inequality. We must promote an alternative.

All this inequality means there is less and less money for producers around the world. An ever smaller share of the value of products you buy are going to farmers and workers. This is trapping people in poverty and means we cannot reach the SDGs. Reversing this is what embedding fairness into sustainable development means.

But instead of a business world obsessed with maximum profits for shareholders, we could have a business world that is giving power and priority to workers and producers. There is a long spectrum of business models and we are part of this growing movement of alternatives. Fair Trade enterprises have pioneered social enterprise and are joined by a large movement from the social solidarity economy, cooperatives, BCorps and employee-ownership that show we can share value and power differently.

Fair Trade enterprises are both viable and desirable. Fair Trade has pioneered models of business that put people and planet first. Fair Trade enterprises prioritise the mission but are commercially viable. Fair Trade enterprises are the alternative to profit maximisation.

What binds Fair Trade enterprises together is that they are focused on the mission of Fair Trade. This is the first test for becoming a WFTO member. And this is a clue behind what we offer the world in terms of the business transformation that is necessary. Fair Trade enterprises show an alternative of what business can be. We hope this can inspire a new vision for the world, one that is populated by businesses that have a real social mission.

Take Creative Handicrafts from India as an example. The workers are truly at the heart of the business. They control the board and get the profits. Business decisions are made to benefit them and the business models ensures this. There are many other models that give the workers and producers real priority in the business. This is the opposite of mainstream companies, who are designed to give power and priority only to investors. Our models are innovative, they are diverse but they always put the mission of fairness first. We now need to present this to the world as an experimentation ground for an alternative models of business. We need to speak up about the rich and inspiring models of business that we are proving can work across the entire value chain.

Fair Trade has pioneered what fairness can be, in terms of business and trade. The world needs our innovation and spirit more than ever as we create sustainable development.

See accompanying presentation below: