Ethical trade refers to the practice where companies take into account the labor and human rights, environmental impact and the socioeconomic implications of their business activities, particularly within their supply chains. It focuses on improving the working conditions and treatment of workers involved in the production of goods and services, aiming to ensure that they are made under fair, safe and equitable conditions. Key principles of ethical trade include:
- Respect for Workers’ Rights: Ethical trade involves ensuring that workers’ rights are upheld. This can include ensuring fair pay, reasonable working hours, safe and healthy working conditions and the right to collective bargaining. Child labor, forced labor and other forms of exploitation are strictly unacceptable.
- Environmental Responsibility: Ethical trade also involves minimizing the environmental impact of business activities, promoting sustainable practices in the production and delivery of goods and services.
- Economic Fairness: It requires businesses to engage in fair trade practices such as paying a fair price to suppliers and avoiding practices that may exploit suppliers or distort market competition.
- Transparency and Accountability: Companies engaged in ethical trade are typically expected to be transparent about their sourcing and labor practices and hold themselves accountable for maintaining ethical standards in their operations.
Ethical trade is implemented through various means, such as setting up and enforcing codes of conduct for suppliers, regular auditing of supplier practices and collaboration with NGOs, trade unions and other stakeholders to improve working conditions and practices. Many companies join ethical trade initiatives or networks that help them to collaborate and learn from each other, share best practices and jointly address common challenges.