The Ethical Trading Initiative (ETI) is a social code of conduct that commits participating companies in the UK to guarantee decent working conditions throughout the supply chain. The ETI was originally developed in response to a need signalled in the food and garment sectors and these sectors continue to be the most important ones. However, the ETI is open to all companies and among the participants, representatives from for instance the cosmetics and stationery sector are also found.
Note that the ETI is not a label or certification scheme and participating companies do not communicate the ETI on their actual products. Instead, they commit themselves to incorporate labour standards in their supplier demands. Consequently, they will require their suppliers to meet the ETI standards.
The ETI holds a strong market share in the UK food and garment sector. There are no actual figures on the market impact, some sources suggest a market share of up to 70% whereas other sources estimate a share of 40%. Whatever the actual figure may be, it is clear that the participating companies, including the largest supermarket chains in the UK, have a significant share in the British retail market. It is important to note, however, that the ETI initiative applies to the participating companies’ own products and does not require that the companies stop selling brands that do not participate in the ETI.
There are different approaches from ETI participants looking for new suppliers. In some cases, companies are looking for suppliers that already meet the criteria of the ETI. In other cases, companies initially focus on commercial criteria to turn to labour standards at a stage at when the business relationship has already started. In general, however, most companies will prefer an initial proof of commitment to the ETI criteria by their potential suppliers.
ETI in the flower sector
Although ETI in the flower sector initially focused on Kenya, ETI members that source flowers have been applying this learning to other areas of their supply chain. In April 2007, ETI brought Colombian flower exporters, trade unions and companies sourcing from Colombia to the discussion table for the first time. All parties agreed to establish the first-ever multistakeholder forum for addressing workers’ rights in the floriculture industry.
Among the members are the two largest supermarkets in Britain, Tesco and Sainsbury’s. Sainsbury’s was a founding member of the ETI and Tesco signed up at a later stage.
ETI is an alliance of British companies, NGOs and trade union organisations and enjoys the support of the British government. In addition to the ETI Base Code, which all participating companies commit themselves to, the initiative also sets up projects and develops methods for including ethical considerations in trading practices. The projects aim to identify and promote good practice in specific aspects of code implementation and as such, the ETI is a platform where the different members can work together and share their experiences.
Companies joining the ETI commit themselves to meeting the ETI Base Code. The ETI Base Code forms the foundation for the work and contains nine clauses which reflect the most relevant international standards with respect to labour practices:
- no forced labour
- freedom of association and the right to collective bargaining
- safe and hygienic working conditions
- no child labour to be used
- living wages to be paid
- no excessive working hours
- no discrimination
- regular employment to be provided
- no harsh or inhumane treatment
The Base Code is accompanied by a set of general principles concerning implementation. ETI members are expected to adopt the Base Code, or to adopt their own code as long as it incorporates the Base Code. They must require that suppliers meet agreed standards within a reasonable time frame, and that performance in this regard is measured and transparent.
You can download the Base Code on the ETI website.
Participating companies are committed to report annually on their progress in implementing the Base Code. In case targets are not met, the members receive feedback and assistance. Although the reports are not required to be made publicly available, most participating companies share their experiences and results with the rest of the participants.
Consequences for suppliers
As mentioned above, ETI members will require their suppliers to comply with ETI standards. This means that they will probably require that the supplier is audited. These audits are used as a way of diagnosing problems, not as a ‘pass or fail’ test. ETI member companies should not stop trading with a supplier if the audit uncovers only minor issues. However, if they uncover very serious issues, the supplier will be expected to take immediate corrective action. If they do not do so, they may lose the business.
Sources: EU Market Research, ETI, CBI (2009)