The incredible rise of ethical trading

It was in the 1990s that the global giants first became familiar with ‘ethical trading’. Companies such as Marks & Spencer, Body Shop and Nike became famous for their sensitivities in this area. These firms steal an edge on other companies in many fields, ranging from the rights they offered to their employees to their attitudes to environmental protection. They grow by an average of 20 percent of a year and secure a share of a market worth nearly 1 billion Euro.

There have been many studies on ‘ethical trading’. But the one which most clearly demosntrated the extent to which the market has developed is the survey supported by The Heinrich Böll Foundation which covers 25 European countries. The survey shows that at the end of 2005 the market in ethical trading products had grown to just short of 1 billion Euro with a total value of 942 million Euro. The market has expanded by a total of 155 percent over the last five years, growing by 20 percent a year, largely as a result in an increase in interest from companies which  are active in the global arena.

In fact, most companies became familiar with ‘ethical trading’ in the second half of the 1990s when brands spread across the world and some of them attracted protests. It was then labor and human rights activists, determined to reveal the true cost of the shiny packaging, first began to put the companies under pressure. In 1995 the manager of a GAP factor in El Salvador reacted to an attempt to form a trade union by firing 150 workers. Activists publicized this move all over the world. In 1999 a report was published which showed that the workers sewing Disney costumes in factories in China were earning 13.3 cents an hour and forced to work overtime. As a result, Disney became labeled as an exploitative company. All of these attacks and accusations of exploitation forced companies to introduce ‘ethical trading’. They began environmentally friendly production, protected the rights of their workers and respected to the rights of the third party companies with which they worked.

Consumer Awareness
The worldwide increase in consumer awareness of ‘ethical trading’ has also galvanized retailers. According to a survey by the famous British retailing giant Marks & Spencer, 80 percent of the company’s customers want to know how what they are wearing has been made. They want to learn whether or not the partners with whom the company works are exploited while making these products. For this reason, in March this year Marks & Spencer began to produce its own cotton series with an ethical trading certificate. This series guarantees that cotton producers earn more and reassures those of the company’s customers who are aware of the issue of ethical trading.

The increase in consumer awareness means that the earnings of companies who work in this area also rise. In 2004 the volume of ethical trading products increased by 30 percent compared with the previous year to 40 million Pound. This has persuaded leading retailers to increase their investments in the field in order to take a share of this growing market.

Ethical Companies Attract Investors
Ethical companies attract the interest of large companies which are active in the same sector. These giant companies acquire companies which are smaller than they are and active in this field in order to try to change their own image. At the beginning of this year, L’Oreal said that this was the reason for its acquisition of Body Shop, which is one of the leading companies when it comes to ethical trading. Over the last 20 years Body Shop has opposed the testing of its cosmetics products on animals. It manufactures its own products and is very sensitive in this regard. The company also conducts activities to increase awareness of the issue. Body Shop collected five million signatures to protest the use of animals in testing. As a result, knowledgeable British consumers have followed the acquisition of Body Shop with interest. Concerns that the acquisition will signal the end of Body Shop’s independence and ethical trading practices have meant that it has remained on the agenda. L’Oreal announced that it bought the company in order to reach British young consumers who are aware of and give importance to ethical production.

Ethical Company Certificate
Ethical trading is not just a question of sensitivity during production. Companies engaged in ethical trading also have to meet certain standards when it comes to working conditions. Social Accountability International (SAI), which is a non-profit organization specializing in this field, identifies the leading ethical trading companies by the SA 8000 certificate. Only nine companies in Turkey have this certificate which covers processes such as not employing child workers, health and safety at work, wages and payments, the management system and working hours.

Companies which want to obtain a certificate must not employ anyone under the age of 15. The required criteria also include ensuring a safe and healthy working environment. In addition, companies must allow collective bargaining agreements and union membership. In terms of wages, companies are advised to ensure that wages are sufficient to meet the basic needs of the workers and their families.

In order to obtain one of these certificates companies must go beyond simple practices and establish a management system which will integrate these standards into the company’s other management systems and practices.

Şeyma Öncel Bayıksel
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