Does Ethical Branding Need An Update?

We are very keen to support businesses who prioritise Fair Trade as a key pillar of their brand, but on reflection, does the whole market need a bit of an update? We think so... 

In a series of posts, we explore fair trade, sustainability and environmentally friendliness within branding. In part one, we explore Coffee.

We adore coffee here at THAT Branding Company. We probably have too much of it in fact, but one thing is always clear to us - we get fair trade coffee (always) because that’s the best way of telling a coffee is ethically sourced, right? Well, it turns out it’s not that simple...

The World Of Coffee

What Is Fair Trade?

Though the subject of fair trade has been around for a few decades, with the very first Fair Trade label being created in 1988. The Fair Trade mark we all know and recognise was only created in 2002 to replace a variety of individual national marks used before it. Since then, its popularity has boomed. Companies that meet the Fair Trade Standards are certified to use the mark, which represents a company commitment (and crucially, proof) that farmers are paid a decent wage for their crop. The mark is now the de facto seal of approval for “Fair Trade” and has brilliant brand recognition. After all, the whole point of the mark is that it is an independently audited system, so it is something you can trust. When you peel back the label, however, not all is as it seems.

Like all the regulatory labels we'll be looking at, Fair Trade is not a perfect system and hasn't gone without its fair share of criticism. The main issues are around its pricing system - whilst it offers a fair wage, fair doesn't always mean equal. For example, the price of coffee does not rise or fall with the seasons, nor is there any incentive to improve the quality of coffee as farmers will always be paid the same per pound - leaving many farmers sending their poor quality coffee through the Fair Trade scheme, and selling their high-quality coffee privately.

Studies show that the poorest Fair Trade growers benefit the least, and some find that the financial benefit from Fair Trade matches the cost of fees to be part of the Fair Trade scheme - leaving farmers no better off. Fair Trade coffee has also been found to be one of the least effective schemes in reducing poverty (specifically, second to last).

Not only that, but many are questioning whether coffee growing is actually beneficial to the market. By encouraging farmers to grow coffee, the value of coffee is reduced. We have enough coffee and supply is meeting demand, so instead farmers should be encouraged to innovate and move away from a market that does not need them.

That said, Fair Trade have a rigorous set of standards that their verified organisations are expected to meet, and whilst it's by no means perfect, you can see why one would choose Fair Trade over a product without the label.

What Is Rainforest Alliance?

Rainforest Alliance is often recognised as a Fair Trade symbol, but they are very different organisations. Whilst Rainforest Alliance has similar concerns as Fair Trade, their priority is the environment. To be approved, your products must be sustainable and 'climate smart'. They train their farmers in forest conservation and move them away from tropical deforestation. Rainforest Alliance are also concerned with protecting streams and rivers, nurturing soil health and boosting crop yields. Like Fair Trade, they don't approve companies who utilise child or forced labour and share similar values. Unlike Fair Trade, they don't offer minimum prices or premiums to farmers - but they don't have a licence fee, making it easier to join. In fact, on the whole, Rainforest Alliance approval is a lot easier to gain, which is where a lot of their issues lie.

In order to receive the Rainforest Alliance badge of honour, only 30% of your product needs to be Rainforest Alliance approved. Some say this isn't strict enough, and on occasions when Rainforest Alliance standards have been breached, they haven't exactly laid down the law. This hasn't left the Rainforest Alliance brand in a good way, and now smaller companies are taking matters into their own hands and creating their own system...

What Is Direct Trade?

A relatively unknown contender in ethical consumerism, Direct Trade is an alternative to the Fair Trade mark. It isn't an organisation in its own right - but a movement developed by coffee buyers looking to provide their customers with ethical, yet high quality, coffee.

Direct Trade differs from Fair Trade in that where Fair Trade falls short in the area of confirming a product's quality, Direct Trade incorporates quality at the very core of the agreement with the farmer. In other words, Fair Trade doesn’t necessarily mean you get a decent cup of coffee whereas Direct Trade does (subject to your own personal tastes).

Does that mean Direct Trade don’t pay the farmers? Actually, it’s the opposite. High-quality coffee commands a higher price and when that is negotiated directly with the farmer, they are usually better off as a result. Some coffee makers give upwards of 30% higher margins through direct trade than the Fair Trade system expects.

Sounds great, but why haven't you heard of this before now? Because Direct Trade isn't an organisation - it's a fairly new method of creating mutually beneficial relationships between farmers and buyers, helping farmers out of poverty whilst giving buyers great coffee. It's up to the individual buyers to develop these relationships with farmers and ultimately, they regulate themselves. Some Direct Traders have set up names and standards to give customers a better idea of what it is and what they, as buyers, do for the farmers, but that's as formal as it gets. Whilst those involved in Direct Trade have similar ideals and values, there isn't a set of standards all buyers are expected to follow. And of course, there's no logo to rally behind and gai credibility that you trade via this method.

As time goes on, more and more customers are starting to question the marks that are designed to symbolise ethicality. In a more environmentally and morally aware world, consumers are becoming critical and expecting to see real evidence of their 'ethical' foods being just that.

So, which mark is the fairest of them all? Let us know what you think.