The Agency

Do companies who market themselves with ethically labelled products do what they say on the tin? How fair is Fairtrade?

In recent years our food, clothes and household goods have become coated with a layer of ethical labelling. Many products have been marketed with a Fairtrade, Organic or Rainforest Alliance stamp – but do we really know what this means?

A global survey of Fairtrade was carried out by Nielsen in 2008 and found half of European consumers ‘always recognise Fairtrade products’.  However the European Commission noted in a communication on Fairtrade that ‘the multiplicity of these schemes carry risks of consumer confusion.’ The challenge for consumers is to decipher what these labels mean and distinguish between the legitimacies of the claims.

The purpose of labelling is to prove that the company producing the product is conforming to ethical best practice, as set out by whichever not for profit organisation is providing the labelling stamp. In addition, the company should be giving an amount of its profits to the not for profit organisation - but how much the organisation receives can vary greatly.

The lack of trust in where and how profits are distributed has led some eco aware consumers to doubt the validity of commonly seen labels like Fairtrade and Organic. Companies such as Nestle have devalued the Fairtrade brand by using it as a tool to ‘green wash’ its brands. Uproar ensued in 2007 when Nestle received Fairtrade status for one of its coffee products, particularly from Monsanto, which supports GM crops and also has Fairtrade status.

When launching a new product, it is wise for companies to consider carefully which ‘ethical label’ to support and investigate the legitimacy of the company and the work they carry out. Ultimately, this could have a strong negative or positive effect on the way a company is perceived.

There is a danger that small companies looking to gain an eco or ethical status are beginning to suffer against the ‘fat’ labelling organisations and are being pushed out of the framework by large companies, which can afford to get accredited.

There is some merit to suggest a new organisation could benefit from developing its own ethical labelling model. If a new product was launched that supported a new or alternative way of harvesting, farming or producing, a company should not be afraid to display its ethical credentials in its own way.

Increasingly, many eco savvy consumers actively look for companies that are supporting more niche, tailored, not for profit organisations such as the Rainforest Alliance or Marine Stewardship Council.

Regardless of some spikes of awareness in the sector, the mass market still seems to perceive the Fairtrade stamp as a ‘pat on the back’, allowing them to purchase their favourite Nestle coffee in comfort. When it comes to Fairtrade and Organic, consumers do seem willing to accept the premium price. But, they may not be paying for ideological reasons or even quality, but simply to provide peace of mind and massage the green ego of the parent organisation.