To date, Fair Trade USA and current brand partners have certified 17 factories, impacting over 16,000 workers. Building on the successful pilot initiative, Fair Trade USA commits to work with new and existing brand partners to more than double its impact by certifying 35 new factories and improving the lives of 40,000 additional factory workers by 2017. Additionally, Fair Trade USA will recruit 30 new brand partners through continuous outreach and introductions through companies invested in sustainable sourcing. Certified factories may also make strategic connections between Fair Trade USA and new brand partners.
The goal of the Fair Trade Factory program is improved livelihoods for workers. Certification ensures fair wages, safer workplaces, monitored hours, financial premiums for workers, equal rights for men and women, overtime, and paid leave and vacations, among other benefits.
The certification program has two key attributes:
1) The Fair Trade Committee: Each factory democratically elects a worker committee, which brings about self-organization and leadership among workers.
2) Community Development Premiums: Certification delivers a direct economic benefit to workers on every item. Brands pay a one-to-ten percent premium on the Free on Board (FOB) price. Worker committees meet three times annually to democratically decide how to invest these funds, as an income bonus or for community investment. The Factory program will drive over $1,000,000 back in the hands of workers by 2017. Based on needs assessments, Fair Trade USA anticipates factories will elect to provide additional trainings on reproductive health, nutrition, and financial literacy, among other services
Factory management and workers also receive trainings to comply with Fair Trade standards and how to form a worker committee, among other services.
Patagonia and West Elm, among 20 other partners, are early adopters of the Fair Trade Factory program. Building on a successful pilot initiative which tested new manufacturing standards and certification partnerships, the commitment partners are poised to scale this work. West Elm commits to certify over 20 percent by 2017 and 40 percent of its assortment by 2019. West Elms investment includes supporting certification of ten or more new factories, contributing over $1,000,000 in premiums over the course of the commitment, and improving the lives of over 10,000 workers. Patagonia is pursuing continual growth in its style count, with Fair Trade styles increasing more than 17-fold since the launch of the first line. Patagonia will support certification of four or more new factories to contribute over $500,000 in premiums to support sustainable livelihoods for more than 3,700 workers. Other brand partners will also deliver economic, social, and environmental impact through sales of Fair Trade product lines.
Fair Trade is calling upon other industries to follow West Elm and Patagonias lead to evolve the manufacturing sector.
Fair Trade USA aims to certify 35 new factories and onboard 30 new brand partners by 2017.
The Commitment deliverables are as follows:
Number of Fair Trade Certified Factories: 28 by 2016; 35 by 2017
Number of Workers Benefitted: 25,000 by 2016; 40,000 by 2017
Fair Trade Community Development Premiums: $500,000 by 2016; $1,000,000 by 2017
Factories are identified based on market demand and interest from brand partners. Partners locate key suppliers and partner with Fair Trade USA to initiate the certification process. The process includes the following activities implemented on an ongoing basis:
- Support application and pre-assessment process with interested parties
- Arrange introductory visits with factory management and workers
- Training on Fair Trade Committee creation, training and support for workers
- Consultation to address areas of non-compliance for the factory and risks to the brand
- Trainings on occupational health and safety, the use of protective equipment, first aid and other topics
- Audit partner training and coordination and review of audits;
- Certification decision and coordination with Fair Trades certification department
- Premium calculations and living wage analysis for each factory
- Fair Trade worker committee development and implementation for workers and management
- Marketing, supply chain and sales support.
The usage of community development premiums is democratically voted upon by worker committees, which meet up to three times annually. The Factory program aims to drive $1,000,000 back in the hands of workers by 2017 in real time on a continuous basis as product is sold. Needs assessments have already been conducted at a number of sites to be certified in 2016. Fair Trade USA anticipates factories will provide additional trainings on reproductive health, nutritional, and financial literacy.
Fair Trade USA and its partners will also invest in systems to measure the impact of certification on workers lives. Impact indicators are verified on an annual basis through the certification process. Additional impact assessments are conducted using real-time mobile technology to communicate directly with workers and in-depth, community-based studies five to ten times per year.
The manufacturing industry employs 14% of the global workforce. In India alone, 35 million people are employed in the sector, according to the India Brand Equity Foundation. Factory workers depend on these jobs to sustain their families, however the industry faces significant challenges such as child and bonded labor, wage theft, excessive overtime, discrimination, and dangerous working conditions. Incidents such as recent fires in Bangladeshi and Pakistani sewing units and the Rana Plaza building collapse in 2013 have raised the profile of ongoing challenges and presented enormous reputational risks to brands and retailers.
Meanwhile, consumers are increasingly interested in the provenance of their products and the conditions under which they are made. A 2013 study by Cone Communications/Echo affirmed that one in three global consumers believe businesses should shift the way they operate to support greater social and environmental needs. Nine in ten consumers want companies to go beyond the minimum standards required by law to operate responsibly and address social and environmental issues.
To address these challenges, Fair Trade USA designed an independent, third-party certification for manufacturing facilities based on deeper worker engagement that builds a path toward living wages. The Fair Trade Certified Factory program offers a consumer-facing label a mechanism to recognize brands on their journey towards ethical sourcing, and a signal to consumers looking for high-quality products that also support better wages and safer working conditions.
The working environment for millions of factory workers requires an industry-wide response. Brands and retailers are uniquely positioned to improve the lives of factory workers by adjusting their sourcing practices. Leaders in the Home and Apparel sector such as West Elm and Patagonia have already shifted toward more ethical, transparent, and sustainable sourcing. However, such sourcing practices often comes at a price and a fundamental shift in practices.