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About Ethical Trading


Ethical Trading, also known as Ethical Sourcing, Social Accountability or Social Responsibility, is increasingly recognised as an important aspect of business strategy. This applies especially to high profile companies because good business ethics can generate a favorable public image. By contrast, failure to act responsibly can result in bad publicity, which can be extremely damaging to a business. Ethical Trading is essentially directed at employees to ensure that their working and living conditions are safe and decent. Ethical Trading should not be confused with Fairtrade. This refers to products which have been awarded the Fairtrade Mark. This is a stamp of approval which guarantees that standards set by the Fairtrade Foundation have been met for production and trading. Furthermore, the price includes a “small premium” to be used by the companies to improve living and working conditions. It is mainly directed at marginalised growers and producers. Ethical Trading is now an important issue, because there is convincing evidence that substantial abuse does occur. For example, there can be:

  • Very poor working/living conditions
  • Failure to pay National minimum wage
  • Failure to comply with Health & Safety legislation
  • Extremely long hours
  • Unlawful deductions from wages

Many of these abuses are associated with casual labour which is supplied by Labour Providers/gangmasters. In the United Kingdom, the driving force is the Ethical Trading Initiative (ETI) which is an alliance of companies, trade unions and NGOs working together to identify and promote Ethical Trading.

It has two main aims:

To encourage companies to implement codes of conduct embodying internationally agreed labour standards on human rights in the workplace. To develop and encourage the use of best practice, monitoring and independent verification methods. The ETI has developed the ETI Base Code which lays down the acceptable standards for Ethical Trading which the trading members and their suppliers are expected to achieve. To demonstrate compliance, independent third party evaluations are carried out against the ETI Base Code. More recently the Temporary Labour Working Group convened by the ETI has developed a Code of Practice for Labour Providers which deals specifically with labour providers/gangmasters. Again, when this type of operation is subject to an evaluation it is against this Code of Practice.


April 2021
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