We hear a lot about trade disruptors, from China to the world’s disruptor-in-chief, Donald Trump. But one concept is steadily upending supply chains and has the potential to transform trade. That concept is transparency.
Asia Pacific is often called the world’s economic powerhouse, and for good reason. Population growth, a rising middle class and an explosion of economic activity is reshaping the region, as governments and businesses recognise its role as the global epicentre of development and potential commercial profits.
Trade is central to this economic story. It can be a force for good - or not.
This express-train of economic development comes at a price. An estimated 600 million people in Asia Pacific live in poverty - that’s more than half the world’s poor. More than 490 million are undernourished and another 30.5 million are trapped in modern slavery.
At the transparency tipping point
But a tipping point is approaching. A host of interconnecting factors, from climate change and population growth to rapid urbanization and the rising middle class, are disrupting traditional thinking, business models, societies and social mores.
A whole new generation of consumers is demanding more from our brands and the businesses behind them. When it’s possible to buy a t-shirt for $2 or $200, people are starting to ask for assurance that the way products are made, sourced and sold is fair.
The 2013 Rana Plaza factory collapse in Bangladesh which killed 1,134 garment workers made many of us reconsider the real costs of our shopping habits. When a t-shirt costs $2, the chances are someone down the line paid for it - whether it’s the slave labourer harvesting the cotton, the seamstress stitching it in sweatshop conditions, or the community dealing with the environmental damage wrought during its manufacture.
Asia Pacific is now the world’s garment factory, with more than 40 million workers producing the fast fashion we consume at an ever-increasing rate. Most of these workers never make enough money to lift themselves or their families out of poverty.
But there is another way. Take Etiko, a fashion label that has achieved an A+ rating for ethical production from the Baptist World Aid Australia’s Ethical Fashion Report for the last five years. Etiko’s reputation - and sales - are growing as a result.
Transparency - particularly the stories of the people who made the product - can be used to convince consumers that not only does a product look good, but it’s actually doing good. This is something that Etiko and many other Fairtrade-certified companies do well.
And despite being a small family-run business, Etiko’s clothes and shoes retail for the same price as many major brands. Etiko shows "other companies and consumers that organic certified and Fairtrade certified products don’t just have to be middle-class luxuries", says the company’s founder and director, Nick Savaidis.
Beyond looking good, to doing good
What does this ‘doing good’ actually look like to the people at the end of the supply chain?
At its heart, the Fairtrade movement fosters trading partnerships based on respect, equity and transparency. It cultivates relationships that contribute to sustainable development by securing better trading conditions for everyone, from garment workers to cotton and coffee growers, from banana farmers to soccer ball stitchers.
Consider the Highlands Organic Agriculture Cooperative, or HOAC, a coffee-growing cooperative in a remote part of the Eastern Highlands Province of Papua New Guinea. Since achieving Fairtrade certification in 2005, this collective has invested in a range of transformative projects to improve the lives of 60,000 people throughout the entire community.
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The Fairtrade Premium has helped HOAC to invest in tools and training which have increased its production capacity. The quantity of high-quality coffee has grown, productivity is up and farmers have new transferable skills.
But the benefits of Fairtrade reach far beyond the coffee gardens. HOAC recently funded a water supply project for the local community worth more than $65,000. Schools have been constructed, female quotas in decision-making have improved the lives of women, and programmes are supporting long-term climate resilience. This work addresses numerous Sustainable Development Goals, from tackling poverty and hunger to improving gender equality and taking action on climate.
The story of HOAC is just one tale of transformation. Our challenge is to replicate this throughout the region.
The term 'disruption' is so commonly used today that it’s something of a cliché, but in the case of transparent trade, it’s true. Christine Lagarde, Managing Director of the IMF, has said that inequality is the greatest threat to economic growth and political stability, and is one of the "scourges of our age". Any nation that looks forward to a stable, peaceful future understands that inclusive growth that lifts people out of poverty is as important to the wealthiest nations as it is to the poorest.
Embedding transparency into global trade demands a radical rethink of our business practices and underlying assumptions. It means addressing the injustices of conventional trade, the instability of global markets and the imbalances of power in trading relationships. But it can be done.
Fairtrade has the proof. We look forward to a world in which transparent trade is not disruptive, but simply business-as-usual.