8 February 2020, Frankfurt Germany

New research on Fair Trade Enterprises provides fresh insights on business models that put people and planet first. Research conducted by the University of Cambridge, University of York and Stockholm Environment Institute demonstrates specific governance, management and profit reinvestment models that make Fair Trade Enterprises unique. These are all social enterprises that are verified as holistically practicing Fair Trade. Key insights about Fair Trade Enterprises include:

• 92 per cent reinvest all profits in their social mission;
• 52 per cent are led by women;
• 4 times less likely to go bankrupt; and
• 85 per cent report actively sacrificing financial goals to pursue social or environmental goals, while retaining commercial viability.

These characteristics give Fair Trade Enterprises an ability to prioritise social and environmental goals in their investments, practices and impacts. Meanwhile, they remain commercially resilient. This combination of commercial resilience and mission-primacy is a glimpse at the enterprise models of the new economy.

Roopa Mehta, the president of WFTO, said: “The new economy is already here. Fair Trade Enterprises are joining forces with the broader social enterprise movement and others to demonstrate that business can truly put people and planet first. We all need to embrace this revolution in business.”

Upcycling, recycling and natural fibres

While practicing a holistic model of Fair Trade, these enterprises also pioneer ecological practices. For example, Deco Himal makes eco-friendly alternatives to fabric softener: dryer balls made from felted wool. Fair Trade Enterprises such as Prokritee and Dhaka Handicrafts in Bangladesh have built business models that upcycle waste fabrics and use natural materials to make bags and baskets. In Tanzania, Chako turns waste glass into light fittings and WomenCraft turns food sacks in refugee camps into baskets. Cambodia’s Villageworks makes bags from various waste bags and produces reusable bamboo straws. 

HDIF in Armenia is built as a social enterprise focused on economic development, and is investing into circular economy and use of natural local fibres. Another example is Gone Rural in Swaziland, who works with 750 artisans across the country to make baskets and tableware crafted entirely from locally-sourced, natural fibres and recycled materials. Both HDIF and Gone Rural will be represented at the WFTO press conference in Ambiente on 8 February 2020.

Alternatives to plastic

Meanwhile, Fair Trade Enterprises have pioneered anti-plastic campaigns decades before this became a trend. For instance, in the 1980s, they came together to create the Jute not Plastic campaign. Today, CORR the Jute Works from Bangladesh make jute mesh produce bags as alternatives to plastic bags and Dhaka Handicrafts makes products from a range of natural materials, including bamboo, jute and sea-grass.

In response to the research, a growing number of academics, NGOs and business networks are signing a letter calling for action to promote these enterprise models. Their letter challenges governments, finance institutions and corporations to take real steps to foster such business models. Leaders from the EU, including Nicolas Schmit (European Commissioner for Jobs and Social Rights) have already made supportive statements, along with leaders from across the UN and international NGOs.

Fair Trade Enterprises embody unique business models that are designed to put people and planet first. They are the ultimate business partners for brands and retailers who are ready to embrace the most authentic and holistic approach to sustainability and ethics. 

The report is published at: https://wfto.com/jointhebusinessrevolution/

Founded in 1989, WFTO is the global community and verifier of social enterprises that fully practice Fair Trade. More information on WFTO can be found at wfto.com.

SUPPORTING QUOTES

"The extractive economy of profits at any cost have brought us to an ecological brink and polarised society between the 1% and 99%. Fair trade based on ecological sustainability and social justice have become a survival imperative . Fair trade is based on giving back to the Earth and society ." - Vandana Shiva, Environmental activist, food sovereignty advocate, founder and director of Navdanya International

"Putting fairness at the heart of the demographic, digital and green transitions is the challenge of our times. Fair trade based on decent social and labour standards at global level is key to sustainable development. New business models aiming at generating positive social impact will play a key role in this. The example of Fair Trade Enterprises shows that new thinking in business and social responsibility can support more resilient and inclusive communities, by creating fair jobs and promoting gender equality, and altogether contribute to socially and environmentally sustainable economies and societies." - Nicolas Schmit, European Commissioner for Jobs and Social Rights

"Fair Trade Enterprises are not just a niche; they are a laboratory for what all business should become. In a world of scarce resources and growing inequalities, the corporate world must reinvent itself. This report shows how it can grow from being an obstacle to becoming part of the solution." - Olivier De Schutter, Former UN Special Rapporteur on the right to food and Member of the UN Committee on Economic, Social and Cultural Rights

"This report is a timely contribution to our search for innovative strategies to accelerate the achievement of the Sustainable Development Goals.  Fair trade enterprises, particularly those that have gone through the WFTO verification process, represent a mature segment of social enterprises – new models of business that are social mission driven and have a distributive enterprise philosophy.  This means that they are key in any strategy to resolve systemic poverty and widening inequality. Rather than accumulating wealth for stockholders, Fair Trade and other social enterprises distribute the wealth they create to uplift the lives of the poor and marginalized as stakeholders in equitable and sustainable development." - Dr. Marie Lisa Dacanay, founding President of the Institute for Social Entrepreneurship in Asia

"There is growing evidence from around the world that links shareholder capitalism to growing inequalities. The Davos Manifesto seems to indicate that the world's biggest corporations may be ready to move toward adopting a more purpose driven business model that prioritizes social and environmental goals along with profit motive. This will no doubt need to be closely monitored. For over a century cooperatives and other social and solidarity economy enterprises have been community based, value driven businesses with principles of solidarity, self-help and mutualism, and tenets of democratic governance, autonomous and independent management, reinvestment of surplus to their communities, voluntary and open membership. Enterprises that are part of the fair trade movement are a good example of such a mission-led model for the future. They are, therefore critical partners that need to be recognized and supported by local and national governments and international organizations alike." - Simel Esim, Head of the Cooperatives Unit at the International Labour Organization

“The Cooperative Movement and Fair Trade are natural partners, promoting and advocating for alternative business models centered around people and values instead of profit maximization - this gives greater power and value to producers and consumers all over the world.” - Georgia Papoutsi, Policy Coordinator on International Development at the International Cooperative Alliance

“Fair Trade enterprises are one of a number of exciting alternatives to business as usual. Placed together, these alternative models that prioritize people and the planet represent a new business ecosystem fit for the purpose of supporting a wellbeing economy.” - Michael Weatherhead, Organisation and Projects Lead and Business Cluster Coordinator at the Wellbeing Economy Alliance

"We can all make a change, as a consumer, as a citizen, as a politician and as a business leader. For my organization Oxfam-Magasins du monde, doing business and taking into account human rights and the planet is the norm. Mission-led enterprises such as Fair Trade Organizations are structured to tackle in an integrated way both the inequality and ecological issues, the main struggles of our times." - Pierre Santacatterina, General Director of Oxfam-Magasins du Monde

"Fair Trade Enterprises are demonstrating that an alternative business model is economically viable and ecologically sustainable - another world is possible. This is a message that now urgently needs to be heard and acted on by policy-makers, investors and business leaders." - Dr Matthew Anderson, Senior Lecturer in Business Ethics, Portsmouth Business School at the University of Portsmouth

"With their business model based on re-distributing wealth back to communities, prioritizing the social and environmental needs, and organizing bottom-up, Fair Trade Enterprises are the inspirational organizational models that demonstrate an alternative, fair and just economy is already possible." - Dr Ozan Alakavuklar, Associate Professor of Organisation Studies at Utrecht University

"Social Mission plus Economic Mission equals Fair Trade Enterprise." - Prof. Somboon Panyakom, Department of PhD (Peace-building) at the International College of Payap University

"The ‘business models that put people and planet first’ report is a remarkable demonstration of how ‘mission-led’ enterprises such as Fair Trade enterprises are much more successful than the profit-maximisation ones when it comes to creating a positive social impact, reducing poverty and increasing wellbeing, re-investing in social and environmental causes, increasing opportunities for farmers, workers, artisans and communities. Not only: gender equality is greater in Fair Trade enterprises and in general they have more diverse and representative governing boards. As social solidarity enterprises, they are usually more financially resilient. What does this all mean? It means that in today’s unsustainable globalised financial market economy, not only it is possible to survive with different business models that care for community and environment, but that on the long run, those enterprises – networking with each other and in cooperative and SSE circuits – will have much better chances to emerge and to be part of the change of economic system we urgently need." - Jason Nardi, European Coordinator of RIPESS

"Our economy should not generate poverty, inequality and climate change. This report shows how a different approach to organizing business can empower the poorest and give ordinary people a say in their jobs and communities. Taking back the economy from those who use it to speculate and make themselves rich, this is business practiced with ethics at its heart. It should be essential reading on all business school courses." - Martin Parker, Lead for the Bristol Inclusive Economy Initiative

"WFTO and Traidcraft Exchange's research gives us hope that there are practical and realistic ways to make our economy work in a way that is fairer for people living in poverty. The alternative to the shareholder first business model is thriving and we urge governments, investors and businesses to adopt the paper's recommendations to help achieve the Sustainable Development Goals.” - Alex Maitland, Head of Oxfam GB’s Future of Business Initiative

"Putting fairness at the heart of the demographic, digital and green transitions is the challenge of our times. Fair trade based on decent social and labour standards at global level is key to sustainable development. New business models aiming at generating positive social impact will play a key role in this. The example of Fair Trade Enterprises shows that new thinking in business and social responsibility can support more resilient and inclusive communities, by creating fair jobs and promoting gender equality, and altogether contribute to socially and environmentally sustainable economies and societies." - Nicolas Schmitz, European Commissioner for Jobs and Social Rights

"While the business community has been taking ever more steps to embrace its responsibility to help address the environmental and socio-economic crises facing the world, it isn't evolving fast enough to avert catastrophe. For-benefit businesses, including Fair Trade Enterprises, are pioneering a new kind of business structured to prioritize people and planet, demonstrating how to accelerate the transition to a sustainable and inclusive global economy." - Heerad Sabeti, CEO, Fourth Sector Group

Photo credits:

Photo 1 – Association for Craft Producers
Photo 2 – WomenCraft Social Enterprise