Fair Trade changes lives. It disregards business-as-usual and adopts just ways of paying, valuing and treating people. Alongside Social Enterprise, Fair Trade is a stubborn alternative in a business world that is obsessed with growing profits at the expense of people and planet.
As inequality widens, poverty persists and an ecological crisis looms large, transforming the business world becomes ever more urgent. As a leader in the Fair Trade movement, I feel the pressure to step-up our efforts and become bolder in our ambitions. I think the combination of Social Enterprise with Fair Trade is the gateway.
In my work, I have become convinced that Fair Trade and Social Enterprise are two sides of the same coin. As I have watched businesses of different stripes attempt to embrace Fair Trade, one thing has become clear: without a truly mission-led business-model (i.e Social Enterprise), Fair Trade becomes limited.
Why it must be Social Enterprise
For businesses that aren’t Social Enterprises, they pick-and-choose where they apply Fair Trade. These companies will use Fair Trade in a specific supply chain, market or product where it makes business sense (e.g. where consumers will sufficiently reward them). The same company will abandon Fair Trade once that financial reward isn’t there. That’s what they’re designed to do. In fact, as a profit-maximising entity, that’s what they’re mandated to do. But for enterprises who have built their business-model around the mission of benefiting workers, farmers and communities, they will stick with Fair Trade through thick-and-thin. These are the enterprises we need to fill our economies with. These are, by definition, Social Enterprises.
The key to holistic Fair Trade
Take for instance Gebana in Switzerland. It was established by the Swiss women’s movement in the 1970s to pioneer Fair Trade. As an importer and distributor of food and agricultural products, it practices Fair Trade with all its suppliers, reinvesting all its profits to improve the lives of the farmers. Regardless of the financial rewards, it sticks to its long-term commitments and shares its profits.
Or consider Manos del Uruguay, a fashion producer and brand made up, and owned, by 12 women’s producer cooperatives across Uruguay. Established in 1968, it exists to serve these producers, prioritising the mission of providing livelihoods and personal development opportunities for rural women in Uruguay. All profits are distributed to or reinvested to benefit the producers.
Unlike mainstream corporates, Gebana and Manos del Uruguay don’t practice Fair Trade only where it is profitable to do so. They do it regardless because they are Social Enterprises in the truest meaning of the term. You can find many more case studies of such enterprises at wfto.com/jointhebusinessrevolution.
Social Enterprise, at its core, is about mission-primacy. Social Enterprises prioritise the social or environmental mission even if it reduces its profits. In mainstream sustainable business circles, this is considered nuts. Why would you sacrifice profits, ever? For mainstream business, they can do the right thing, but only where it helps profits by strengthening the brand, attracting new consumers, reducing risks or increasing stability. It’s about the ‘business case for sustainability’. If the numbers don’t stack up, efforts to promote sustainability take a back seat. We desperately need a business world unshackled from this limitation. Social Enterprises liberate the idea of business so it is no longer trapped by the idea of maximising profits.
A more resilient model
What’s remarkable is that mission-led enterprises are actually more resilient than regular profit-maximising businesses. In fact, the WFTO community of Fair Trade Enterprises is 4 times more likely to remain in business than mainstream businesses. This is due to many factors, including their long-term partnerships, support from their community, present a more authentic brand, ability to reinvest their profits and draw broader support. And by being liberated from the burden of constantly extracting profits for their shareholders, these businesses can viably prioritise other goals.
We must celebrate and promote Fair Trade and Social Enterprise together. This combination is the most dynamic, authentic and deep-rooted transformation that is happening in the business world. Together, the Fair Trade and Social Enterprise movements are pioneering the business models of the new economy. It’s time to spread the idea far and wide.