Ethical trading

Considering the social and environmental impact of your business can help attract sales and investment from ethically-motivated customers and investors.

Guide

3 min read

1. Overview

Ethical trading means looking beyond strictly economic objectives to consider the wider implications of your business decisions. It is becoming increasingly important for those trading internationally.

By considering social and environmental objectives when trading overseas, you can:

  • build sales, as customers increasingly choose to base their purchasing decisions on more than strict financial factors
  • attract investment from ethically motivated investors
  • maintain staff loyalty and motivation, by treating people fairly and offering them chances of development
  • enhance trust in your business, by fostering good relations and being transparent in your activities
  • boost revenue, by opening up your business to new ideas
  • save money, for example by implementing better waste-management procedures.

2. How socially responsible is your business?

To promote your business as socially responsible, you need to chart your progress in implementing socially responsible activities and identify areas where you can make improvements.

First you need to assess how far your business goes beyond fulfilling its minimum legal obligations. This means carrying out a social responsibility audit in which you consider your business' impact on:

  • the market - for example, how you promote yourself, how and where you obtain supplies and how you sell your products or services
  • your workforce - the wages you pay, your employees' conditions and your equal opportunities policies
  • the environment - for example, your emission, waste and consumption strategies
  • the community - for example, whether you are a 'good neighbour' and what you put back into the community
  • human rights - such as taking into account not just your own direct relationships but also your suppliers' business relationships

You can minimise your impact on the environment - and even help repair damage already done - by implementing sustainable development policies.

Before you implement an environmental policy, you should:

  • assess your current environmental impact, here and overseas
  • appoint someone to champion and oversee sustainable development
  • make small, simple and manageable changes.

You should also have a look at:

  • Your design processes - for example, could you replace toxic substances with less harmful ones? Are your products designed to be multifunctional or reusable?
  • Your energy consumption - for example, could you replace equipment with newer, more energy-efficient or less polluting models?
  • Your resources - are you using renewable or recyclable materials? Do you recycle your own waste?
  • Your environmental and health and safety training for employees.

3. Staff welfare in your supply chain

You should look beyond your own direct relationships, such as those with your own employees, and to consider those further back in the supply chain.

You should ask questions about your overseas suppliers' labour practices, such as:

  • Is employment freely chosen and are workers free to organise themselves?
  • Is child labour used?
  • Are working conditions safe and working hours reasonable?
  • Are fair wages paid?
  • Is discrimination practised?

A written questionnaire can be a useful way of getting information about workplace conditions from your suppliers, though onsite visits - if practical - are the most reliable way of checking these conditions.

Dealing in Fairtrade products

One way in which your business can help ensure that producers' basic rights are respected by dealing in Fairtrade products.

Fairtrade products are those which carry the Fairtrade label known as the Fairtrade Mark. They will have been certified by the Fairtrade Labelling Organisation (FLO) as conforming to standards which improve the development of disadvantaged producers in developing countries.

There are two sets of standards. The first is designed to protect the rights of smallholders organised into co-operatives and the second applies to workers on plantations and in factories.

Fairtrade products are mainly agricultural commodities, eg tea and sugar, though manufactured products including footballs, clothing and beauty products have now been certified.

4. Support communities where your goods and services are produced

You can support communities overseas by:

  • linking up with charities working in the area
  • sponsoring specific workplace projects, such as factory training
  • sponsoring wider initiatives, such as village literacy projects
  • offering employment to disadvantaged groups

Business in the Community has developed the CommunityMark standard to recognise the work that small and medium-sized enterprises do in the community, both here and abroad.

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