Fairtrade is a strong partner for ESG and Human Rights and Environmental Due Diligence (HREDD) work. We can support each step of the corporate due diligence process, including reporting.
We are at our strongest in facilitating stakeholder consultation and collaboration in preventing and mitigating adverse impacts in supply chains.
Collaboration between suppliers, buyers, governments and civil society actors is particularly needed to address systemic human rights and environmental risks and their root causes. For example, child labour is still prevalent in some areas and often rooted in poverty and poor availability or quality of schooling.
Each company has a responsibility to conduct due diligence - and this responsibility cannot be delegated to another company or sustainability initiative.
Still, participation in multi-stakeholder initiatives like Fairtrade can support the implementation of due diligence in many ways.
In the words of the OECD Due Diligence Guidance (page 52):
“Collaboration can be beneficial in pooling knowledge on sector risks and solutions, increasing leverage … and making due diligence more efficient for all. ... Cost sharing and savings is often a benefit to sector collaboration.”
Position on the proposed Corporate Sustainability Due Diligence Directive, Article 14
The following chart illustrates Fairtrade’s tools for supporting a company’s work in preventing, mitigating, ceasing and remediating human rights and environmental risks and harms.
International principles expect different levels of due diligence effort depending on the circumstances, risks, size and influence of the company. So collaboration with Fairtrade can form a larger part of due diligence efforts for some companies than others.
Fairtrade’s contribution is strongest, where the highest-risk commodities of the company are in Fairtrade’s product portfolio, the company sources 100% of those commodities as Fairtrade, and the company also participates in Fairtrade’s programme, advocacy and awareness raising work.
Companies shoulder the overall responsibility for conducting due diligence, even when they partner with Fairtrade – or any other sustainability partner. Work with Fairtrade does not absolve the company of these responsibilities.
Fairtrade Standards guide certified organisations to design processes and take action on human rights and environmental risks and harms. Fairtrade’s independent certifier, FLOCERT, follows rigorous practices in verifying whether a producer or trader fulfils the Fairtrade Standards.
HREDD regulations expect companies to adapt their purchasing strategies and practices to reduce the risk that low prices contribute to human rights and environmental harms in supply chains. Fairtrade minimum prices and premium support companies in this.
Fairtrade supports farmers, workers and their organisations to get organised, develop their management, production and business practices, and build environmental and social sustainability.
Fairtrade has exceptionally close dialogue with farmers and workers – or “rightsholders”.
We have global-level mechanisms where any stakeholder can report grievances related to Fairtrade, FLOCERT or a certified organization. We also encourage Fairtrade certified organisations to set up grievance mechanisms.
We advocate for public policies and promote consumption patterns that favour responsible business.
Our tailor-made development projects and business services offer further opportunities for companies to address human rights and environmental challenges in their supply chains.
We collaborate with trade unions, NGOs, multi-stakeholder initiatives, development agencies, business coalitions and governments at local, national and global level to develop and amplify our efforts.
Fairtrade supports companies with the implementation of each step of due diligence.
While much of this support is provided for all corporate partners that source Fairtrade certified products, we can also offer additional tailored services and programmes. For further information, reach out to the National Fairtrade Organisation in your country.
Note that as a globally active organisation, Fairtrade is working to align with the international standards on due diligence. National due diligence laws are based on these standards by the United Nations and the OECD, but may vary in details.
Please note our disclaimer: Each company has the responsibility to establish and carry out a due diligence process. This responsibility cannot be delegated to Fairtrade or anyone else.
A Fair Price for Human Rights Due Diligence, 2022, page 83.
There are three key issues to consider when a company is selecting its due diligence partners.
ISEAL Due diligence guidance reminds companies to check, whether a potential partner covers:
Find Fairtrade’s responses below.
When selecting a due diligence partner, check that the potential partner works on the issues that are salient in your operations and/or value chains. Companies are expected to focus their due diligence work on the human rights and environmental issues that are most severe in their operations and value chains.
Fairtrade focuses on issues that are salient in the commodities and geographic areas on which we work. These issues are
Please refer to the salient issues pages for further information.
We work towards continuous development, through a holistic set of interventions. Please see the above section on Fairtrade Support for Mitigation and Remediation for further information on our interventions.
Second, check which operations and value chains the potential partner can support with. HREDD efforts need to cover all operations and value chains of the company, but most effort should be directed at the highest risk parts, so it makes sense to select due diligence partners that work on the highest risk raw materials, sourcing areas and business partners.
Fairtrade mainly addresses the risks in primary production. We are also working to strengthen our due diligence requirements for traders, processors and manufacturers.
Fairtrade works with 17 commodities/commodity groups:
Please refer to the map for further information on Fairtrade’s geographic coverage.
Third, assess if the potential partner has credible governance and core processes. The OECD Due Diligence Guidance (page 52) proposes that companies check at least whether the initiative has sufficient processes for
Here is a summary of Fairtrade’s related processes:
Governance and stakeholder consultation. Fairtrade is the only global sustainability standard that is equally owned and managed by producers: Farmer and worker representatives have 50 percent of the vote at Fairtrade’s General Assembly. There is also a balance between producer and market representatives at the Fairtrade International Board and the Standards Committee that decides the regular updates to Fairtrade standards and prices. Please find further information about our governance on the website of Fairtrade International.
Fairtrade takes consultation very seriously. Standards and pricing updates are built on public consultation, including online surveys, online workshops and physical workshops across Africa, Asia, Latin America, the Caribbean and market areas. Development programmes are planned with rightsholders. See the section on Managing Risks at Fairtrade for further information.
Addressing, remediating, grievances. Fairtrade has a holistic toolbox for addressing and remediating adverse impacts and grievances. Please see the above section on Fairtrade support for each step of due diligence.
For further information, please see our due diligence report. As the first of its kind for a sustainability certification, the report describes our HREDD process, drawing attention to poverty and inequality as underlying causes of persistent human rights and environmental harms and the need for collective action.
Monitoring and revising own policies. Fairtrade’s global strategy is revised every five years. We also aim to revise the non-product specific standards – standards for traders, plantations and other organisations that rely on hired labour, smallholder farmer organisations, and contract production settings – every five years.
Policies on specific human rights and environmental issues and commodities are revised on needs basis. For example the Fairtrade policy on agroecology was developed to bridge the gap between social justice and the global climate crisis and bring our climate work in line with our 2021-2025 Global Strategy.
You can find further information on Fairtrade’s monitoring system on the website of Fairtrade International. „Few Multistakeholder Initiatives are as committed as Fairtrade International to assessing and responding to research on their impacts“, notes MSI Integrity (2020, page 202).
Communicating risks and progress. This Fairtrade Risk Map communicates the salient risks related to Fairtrade’s operations and certified supply chains, their root causes, and Fairtrade’s key interventions on the salient issues. The map is based on Fairtrade’s ongoing risk assessment and designed to support risk assessment by companies and producers.
Partnerships. We collaborate with trade unions, NGOs, multi-stakeholder initiatives, development agencies, business coalitions and governments at local, national and global level to develop and amplify our efforts. Please see the above section on Fairtrade support for mitigation and remediation for further information.
For further considerations, please see
Fairtrade’s support for corporate HREDD efforts does not guarantee that a supply chain is free from human rights or environmental violations. Many violations are rooted in poverty and complex societal, economic and commercial challenges that cannot be fixed quickly.
However, Fairtrade is committed to support companies on their journey towards aligning with due diligence laws. Collaboration and continuous improvement underline our work.
Fairtrade supports farmers and workers to speak up about their challenges. We seek to connect farmers and workers with retailers, brands and traders to foster meaningful dialogue, concrete collaboration and co-investment in the mitigation and remediation of salient issues.
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