Procurement SourcingProcurement Strategy

Procurement sourcing: is your ethical cup of tea, actually ethical?

By 27th July 2018 No Comments
Modern Slavery

Procurement sourcing at face value seems a straightforward endeavour. Suppliers respond to confirmed demand from a buyer and business is subsequently done between them. Globalisation and the new context within which international supply chains are managed complicate things, however. There are often overarching obligations in law to ensure suppliers are treating their employees in line with international national labour laws. Increasingly, anti-modern slavery measures are also being defined and applied as minimum criteria a supplier must be capable of demonstrating to buyers. These are key components of what is called ethical sourcing.

As global pressure to perform from buyers on suppliers of products like clothing and agriculture produce remains high, it is inevitable that tension will exist between the noble goals of ethical sourcing and the hard costs that arise from doing business in a way that meets consumer demands. Some consumers simply want cheap products and are not particularly concerned about how those products are produced. Others are concerned and pay a premium on their selected products in the belief that producers are better treated.

 

Ethical sourcing in the tea and cocoa industries?

A recent report on ethical sourcing investigated practices in the cocoa and tea industries. It found there was no noticeable difference in the working conditions of people employed by “ethical sourcing” brands and those that are not selling under any “ethical sourcing” trademark or brand. Specifically, plantations that were certified as having no forced labour had similar conditions to those plantations where forced labour conditions are part of their business model and way of doing work.

Genevieve LeBaron, professor of politics at the University of Sheffield and author of the report, said: “It’s not clear that certification helped at all with forced labour, and they may give a quite misleading picture of what’s happening in supply chains to businesses and to consumers.” We found absolutely no difference on most indicators between certified and non-certified tea plantations – both had very, very serious forms of labour exploitation.”

This pioneering report is part of the Global Business of Forced Labour project, and is a result of in-depth interviews with more than 120 workers and 100 business and government actors and a surveys of more than 1,000 workers in the cocoa and tea supply chain. The report was funded by the UK Economic and Social Research Council and the University of Sheffield. It aggregated data from plantations certified by Fairtrade, Rainforest Alliance, Ethical Trade Partnership and Trustea, and looked only at the impact on labour rights.

 

Placing the spotlight on ethical sourcing certification programmes

The best known certifying programmes provided no clear answers as to how they will address their certification programmes following this report. These schemes claim they set standards around basic services, fair treatment, wages and debt, health and safety, and workers’ rights. This creates a quandary for businesses that have ostensibly strong CSR programmes but which do not stand up to pioneering research like this (the first report of its kind). The companies buying cocoa and tea overwhelmingly do so on a lowest price to quality ratio. Paying fair wages along the supply chain means that a commodity price + model is the only one that is capable of ensuring these certification programmes stand up to scrutiny.

The report found workers being docked pay without cause, being underpaid, being forced into debt due to below subsistence pay conditions, not being paid at all for work and being forced to work in very poor conditions. There is an implication from these certification programmes that these issues are less likely to apply (or not apply at all) if you buy their brand. Brands purporting to sell ethical chocolate, cocoa and tea products are, according to this pioneering research making extraordinary claims to their customers. In return for these claims, they charge the consumers a premium. The onus is now on them to back this up. Extraordinary claims require extraordinary proof.

It is extraordinary indeed when a humble cup of tea may be a dirtier and less ethical product than a legally purchased product from the arms industry like a shotgun (for use on a farm) or a packet of cigarettes festooned with health warnings.

Tea Harvest

Three measures that can improve conditions across the sector

There are some potential solutions outlined in the report. Our views on the main recommendations are as follows:

Review certification programmes: there is no point in allowing these programmes continue to suggest what they suggest without being subject to serious, rigorous and ongoing scrutiny. Governance in the sunshine is the best disinfectant. The onus should be placed on these organisations to demonstrate the effectiveness of certification or they should be simply closed down and replaced.

Tackle the business demand for forced labour: leading companies in the cocoa, tea, palm oil and coffee sectors should be forced to demonstrate that their procurement processes are not leading to forced labour. The report is explicit that the conditions these workers endure are a result of the way global supply chains driven by leading brands work today. Everyone consuming these products needs to understand their choices have the potential to make an impact. They cannot make an impact exercising choice if certification programmes are ineffective.

Pay wages that allow people to live: In places like Ghana, workers are barely being paid half the national minimum wage and are being forced into debt. This abounds across other sectors. Again, this is a consequence of the way sourcing is taking place and the choices businesses make across the supply chain. This includes local firms and the multi-nationals that are predominantly based in the Global North. It cannot be resolved without an industry-wide approach to these issues.

It is EU policy to support the UN Sustainable Development Goals.

Target 8.7 reads: ‘Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms’.

There is some way to go to making this happen. We have written previously about other similar issues on this site and will continue to do so. We provide links to previous articles on ethical procurement sourcing below.

Major sourcing issues in public and private procurement – lessons and opportunities

Keystone Column no 79 – Environmental, Social and Labour Law Standards in Ireland

Keystone Column 92 – Green Public Procurement in Ireland

Circular procurement – a glimpse at our shared future