Ethical Trading Initiative

Last updated: Jan 2007


It was launched to stamp out sweatshops but has the Ethical Trading Initiative made any difference, asks Simon Birch?

Globalisation’s great isn’t it? Not only has it delivered us TVs, trainers and toasters at a fraction of the price they were a decade ago, it’s also given us a brand new term: ‘race to the bottom’.

Sweatshop owners in developing countries are now forcing down labour standards as a way of competing with other developing countries for contracts from Western retailers.  These retailers need goods at the cheapest possible price in the shortest possible time because of the intense competition now taking place on the high street – hence ‘race to the bottom’.

It was to improve the lives of hapless sweatshop workers and their families that the Ethical Trading Initiative was launched, by the UK government, in 1998.  The group is funded by the Department for International Development and is made up of 39 of some of the UK’s biggest retailing companies (including Gap, Marks and Spencer and Tesco) and 16 campaign groups and Trades Unions.



The Base Code 

Central to the ETI’s work is its Base Code, a Ten Commandments-style list of nine ethical trading principles which include the outlawing of child labour, the payment of a living wage and the right of workers to join free trade unions.

By joining the ETI companies agree that they’ll take voluntary steps to ensure that at some stage in the future, their suppliers will meet each of these nine ethical principles, though crucially the ETI has no powers of inspection or enforcement.  So whilst the ETI has commendable aims, has it actually delivered in improving workers’ lives, or, is it, as its critics argue, little more than a toothless talking shop?



The good news 

In a recently published study of the ETI’s work, the Institute of Development Studies concluded that, yes, there have been some improvements for workers. 

Neil Kearney, General Secretary of the International, Textile, Garment and Leather Workers’ Federation, which represents the interests of 10 million workers in developing countries and is an ETI member, agrees with the findings of the report:  “There’s no doubt that there’s been real progress particularly with regard to the issues of health and safety and child labour.”



The bad news 

“There’s been less progress, though, on wages, working hours and unions,” adds Kearney.  “One of the key weaknesses in the ETI process is the auditing of supplier factories,” he claims. “Auditors generally seem ill-trained, not up to standard and open to corruption.”  Alarmingly, Kearney also believes that in countries such as China, records showing the hours that workers have worked are routinely fiddled.



China crisis 

Sourcing from countries such as China, which have appalling human rights records, is one of the biggest issues facing the ETI.  “Nobody could justifiably say that they’re trading ethically and also source from China, given that a key Base Code principle of the right to join a free trade union doesn’t exist in China,” states Kearney.

So how do ETI member companies justify their continued trading with China?  “We believe that participating in the modernising and increasing prosperity of China is moving that society in the direction we would welcome,” says Geoff Lancaster from Primark.  However, to criticise the ETI for its member companies’ commercial involvement with countries such as China would, in all honesty, be unjustified.

"The key thing about the ETI is that it’s a tool and not an end in itself,” says Martin Hearson from the campaign group Labour Behind the Label. “Where there’s been a lack of progress on the Base Code, it’s member companies who are to blame, not the ETI.”

They may still be trading with dodgy regimes and not enforcing the Base Code, but the bottom line is that membership of the ETI at the very least demonstrates that ethical issues are on the radar of member companies.  “Let’s not forget that 10 years ago it was almost unheard of for trades unions, campaign groups and companies to be talking about these issues,” points out Julia Hawkins from the ETI.



The real villains 

The people who truly deserve our criticism, though, are the directors of companies such as Matalan who have yet to join the ETI club.

So whilst the Ethical Sceptic may give the ETI a conditional, could-do-better thumbs up, the small steps that the ETI has made so far fall well short of the giant leaps that are needed before Tesco can beat Traidcraft in the ethical stakes.

“The current business culture of ‘race to the bottom’ is totally incompatible with implementing ethical trading standards,” says Ethical Consumer’s Ruth Rosselson.  

“The only way that the principles enshrined in the ETI’s Base Code will ever be fully adopted is when companies completely change the way they do business and place ethical standards at the very heart of their operations.” 


From Ethical Consumer, Issue 104, Jan/Feb 2007


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