Well, of all the people I expected to be railing against, I’m as surprised as you no doubt are to find that the first people to appear in my sights are the Fairtrade Foundation. I am writing this post on Fairtrade very carefully, (at least it starts out that way), because, although we’ve pretty much decided that Fairtrade (as in the foundation, not the concept) isn’t all it’s cracked up to be, they have at least advertised the concept of trading fairly to a very wide audience, and this is definitely going on the right direction.

Finding fault with an organization who’s heart is in the right place, even if the evidence that they are benefiting their producers isn‘t there, is difficult to do. Perhaps they’ll consider the new wave of criticism coming their way and reassess their strategy.

Why bother with accreditation? Accreditation makes it easy for people to know you keep to specific standards. It’s a matter of trust; in general we believe that organizations like Fairtrade and the Soil Association are neutral assessment bodies unencumbered by the political or financial concerns that might compromise their judgment. When we want to buy organic food in the UK we believe we can trust the organic claims if we see the Soil Association logo, and when we want to make sure that what we’re buying has been fairly traded, generally we look for the Fairtrade logo, because we believe that this means that the producers received a fair deal. It makes sense then that if you want to tell people that your own products are organic and fairly traded you’d get them certified with the Soil Association and Fairtrade. Until recently I never questioned that this would be the way for us to go, but there is more and more evidence emerging that Fairtrade fails its producers, and that its main benefactors are the businesses who are associated with the Fairtrade brand, and not the producers they claim to support.

(Shock, horror, surely this must be blasphemous I hear you cry. If this is hard to believe, read “Stewards of Virtue? The Ethical Dilemma of CSR in African Agriculture” by Michael E. Blowfield and Catherine S. Dolan. If you’re not an economist you may find a dictionary useful, although it becomes a much easier read from page nine onwards. There is also another paper due out later this year that looks specifically at a Fairtrade tea producer in Kenya, and the effects Fairtrade has had on them, also by Blowfield and Dolan – it’s enough to make you breathless. I went to hear Dr Blowfield speak recently in Oxford and I have to say it left me feeling depressed. This post is already a long one, so I’ll tell you what he said in another post. The post below doesn’t cover the stuff he talked about – these are all my own ramblings …)

Fairtrade is an organization that set itself up in 1998, conveniently cornering the market by calling themselves ‘Fairtrade’, and then set about establishing the criteria against which we judge whether something is fairly traded or not. Companies signed up, it became an established brand, and we were led to believe that in some places in the world the problems of poverty and bad trade practices were now being taken care of. In the public mind the Fairtrade Foundation became synonymous with trading fairly. Through clever marketing and lobbying they established themselves as the unquestioned authority on fair trade (one of their stated aims), and although they have established themselves as the regulators, they are not themselves regulated by anyone. What started as a progressive, almost anti-establishment, bottom-up movement exposing unfair and exploitative trading practices, has become an established top-down accreditation body; a gatekeeper with the power to redefine the original concept. That their definition and practice of fair trade might be quite different from our own isn’t something we even consider. I don’t think this is a problem just for the Fairtrade Foundation, but a problem for many emerging ‘progressive’ organizations, and it is also a problem for us, because we trust these unregulated organizations to maintain the moral high ground. In an attempt to quantify the meaning of ‘fair trade’ it appears they have redefined that meaning, and at the very least they have changed the order of priorities of the principles of fair trade. The ‘fair trade’ that Fairtrade promotes, and the ‘fair trade’ that we believe in appears, after some rooting around, to be quite different. (Ticking a list of boxes on another continent whilst avoiding speaking directly to the community about their messy issues isn’t what I envisioned as fair trade).

My uninformed understanding of Fairtrade was that it is primarily there to benefit producers. By paying a decent rate for goods and services, producers have more money to benefit their own communities as they see fit, and develop the kind of multilayered economy we find in the West. I thought it only obvious that a fair trade organization would enable people to grow their own economy, establish their own infrastructure and even establish their own charitable organizations – like we have in the West… I also assumed that the criteria to judge whether something was fairly traded or not was established by the producers themselves, and in general I expected a thoroughly equitable relationship between supplier and consumer rather than the exploitative one favored since Europeans first set sail to distant lands. A form of partnership that radically changed the existing colonial dynamic where, for example, poor rural farmers rely on the handouts and kindness offered by the rich developed nations rather than on the fruits of their own labor (my bias may be shining through here…), thus effectively preventing developing economies from ever establishing themselves as ‘developed’ economies. I expected a lot more respect and an end to the patronizing dependency that charity can bring. (How naive was I!)

It was with this in mind that I visited the Fairtrade website to see how our Nepali suppliers might benefit from a little Fairtrade intervention. Under the heading ‘Facts and Figures’, where I expected to find facts and figures about the benefit to farmers and the like, I found two categories: ‘Sales of Fairtrade certified products in the UK’ and ‘Consumer awareness of the FAIRTRADE Mark’, with pages of data on how businesses branded as Fairtrade were doing (very well it must be said). Surprisingly there were no facts and figures on the supposed benefactors of the Fairtrade brand, the actual producers of these Fairtrade goods. Instead I found lots of encouragement on how we, as a UK company, would benefit from being branded Fairtrade.

There seems to be a very clear division between the businesses using the brand, and their suppliers benefiting from the brand, and it appears from their own website that the actual benefactors are the UK businesses. I assume from their list of newly built schools, health facilities, roads and the anecdotal stories from some of the suppliers that this charity-like benefit is the way Fairtrade think it best to ‘reward’ their suppliers. (It’s not enough for me to know how many schools have been built. A school is just a building; I’d like to know how many children attend those schools, what the community genuinely thinks of those schools, and how many of those schools are standing empty. I’d like to know who decided to build the schools in the first place.) I have to say I didn’t expect to see an organization that promoted trade, using methods more akin to charities as a way to benefit suppliers. (They are advertising for volunteers on their site.)

I thought the actual fair trade was the benefit.

As my main primary concern is for the workers and not about how much mileage can be gained from being associated with what is now a large brand, I’m more interested to see how, through fair trade, communities have been able to establish their own facilities, and have been able to raise themselves out of poverty. Something beyond a few personal anecdotes and a list of how many schools the kind benefactors have built. Perhaps some data a little like the data provided for the UK companies!

Here is how Fairtrade describe themselves:

• “The Fairtrade Foundation is the independent non-profit organisation that licenses use of the FAIRTRADE Mark on products in the UK in accordance with internationally agreed Fairtrade standards.” (Obviously one needs to find out what these standards are somewhere else).

Here is their mission statement:

• “being a passionate and ambitious development organisation committed to tackling poverty and injustice through trade
• using certification and product labelling, through the FAIRTRADE Mark, as a tool for our development goals
• bringing together producers and consumers in a citizens’ movement for change
• being recognised as the UK’s leading authority on Fairtrade”

So straight off I realize I have a very different understanding of the role of trade. Their first mission statement leaves me cold, in an incandescent kind of way. I don’t believe it’s the job of companies to build infrastructure and encourage democracy (monetizing democracy can‘t be a good thing!) It is outrageously patronizing.
It appears that Fairtrade is trying to play the role that we used to believe should be played by sound governments: regulating against injustice (including trade injustices), encouraging democracy and eliminating poverty.
This mash-up of responsible trading and political agenda is condescending. Would we be happy if large trading bodies believed they held the key to our democracy? Would you like to hand your chances of poverty elimination and justice over to Sainsbury’s, Tesco’s or Starbucks, all of whom use the Fairtrade branding? I know I wouldn’t. Outrageous.
Two points in the mission statement pertain to benefits for UK companies, so by my reading the only benefit Fairtrade is offering their producers (other than the citizens movement for change whatever that might mean to an itinerant farmer) is that they will help you to get what you should be getting from your government. They will make you dependant on UK companies for these rights, rather than dependent on yourselves and your ability to form and run sensible governments.

Clearly this isn’t something I can offer to the Nepalese, who are very much aware of their own right to govern themselves.

As an aside, when we asked our Nepalese partners if they’d heard of Fairtrade, and whether they would want to be part of it, they went to great lengths to assure us they would trade fairly with us (as in they wouldn’t diddle us). That put us nicely in our place.

This is possibly needless to say, but we’ve decided not to hand over our social responsibilities to an organisation in the hope that they know what they’re doing, and we’ve decided to steer clear of using our little business as a great movement for the lofty ideals of democracy etc. Privatising people’s democratic rights just isn’t my thing… Also, there have been enough stories of brand new empty schools built in the wrong places and with no teachers by well meaning charities who never got round to asking the communities they were benefitting what they really wanted. How can making decisions on someone else’s behalf ever empower them?

We’d rather work with the socially responsible suppliers we found ourselves, the Nepalese social entrepreneurs or ‘middle people’ (as in ‘middle men’, except that they’re not all men) others are trying to eliminate. We’ll find other ways to help (perhaps even talking to our suppliers and seeing what they’d like help with – how novel is that!).
The notion of the rich cousins from over the seas helping out the poor and destitute cousins in the developing world without ever asking them what it is they might want is not a good strategy for mutual pride and independence. (Ok, that’s probably enough of that for now.)

There are a number of people trading fairly who do so without using branding to increase their market share, but instead put their efforts into ensuring that their trading partners aren’t being exploited, whilst also helping them set up stuff that they find difficult to organise. I think we’ll be joining their ranks.

Whilst discussing where this leaves us, we ended up discussing all the ethical pitfalls in setting up a business that trades in goods produced in a developing country, and we’ve come to what for us is a radical conclusion, but the only logical one.

Long term aid prolongs poverty. It’s for this reason that companies in the developed world are not so willing to invest in genuine entrepreneurs in the developing world (surely not!), however, they are happy to give aid. It is not in the interests of the developed partners to see their developing partners move from poverty to prosperity. If this were to happen the margins that they rely on would disappear, and their businesses would collapse. (England can no longer afford to produce anything, as the cost of production in a developed economy is high). Far better to keep them dependant, and long-term aid is a good way to do this.

We realize that although trade with our partners in Nepal is helpful to them now, our whole business model is essentially predicated upon Nepal’s relative poverty. If the value of the Rupee was to strengthen significantly against the British pound our margins would disappear, and so would our business. In fact the only way for the business to survive after this point would be to cut out the ‘middle people’ (ourselves) and hand the business over to our Nepali partners. (I realize that this is a different understanding of which middle people should be cut-out. Other business models will prefer to cut out their Nepali middle people, and keep themselves in the picture, and this is indeed the direction most ‘fair trade’ businesses seem to take, although they call it working directly with the farmers/weavers etc. However the results of this model are what we see today in countries that have never developed a multi-layered economy, because no-one invested in the entrepreneurs).

So, this is our conclusion: we will work with our Nepali partners and attempt to help them develop their own economic growth. When the margins in our own business disappear due to their relative economic growth, we will then hand the business over to them (instead of charging an absolute fortune for our products, relative to the market). This will be our exit strategy. From our perspective if we followed any other strategy we would be perpetuating a poverty model in Nepal. We are not so foolish as to believe we can single handedly change the Nepali economy, but the advisors all say you should start your business with the exit strategy in mind, as it provides a clear model and pathway for the development of the business.

This is a radically different approach to the one we’ve been following up to now; in fact last night was a watershed moment.

Neither of us are economists or business school graduates and we may have come to a conclusion that appears rather crazy, so please feel free to point out the faults in our argument…

When you’re witnessing your world going slowly but surely down the tubes, and big business doing its best to keep the deadly status quo, (the recent bail out of the motor industry in the same week as the UK govt encouraged everyone to opt for electric cars springs to mind), it’s fairly easy to get discouraged. The best we can do in our own little lives is stuff like changing our light

bulbs for energy efficient ones, which is great, but it really doesn’t form a credible challenge to Npower and the like who would prefer us not to find solutions that make us less dependant on their energy. As a pack they are large enough to lobby the government, and they can pretend to be as green as they like, but the fact remains that enabling people to sustain a high-energy lifestyle is like a drug dealer drip feeding an addict cocaine. Its seems like a good idea to the addict for now, but it’s not helping them kick the habit – something they must ultimately do if they want to survive.

Our little tweets of protest aren’t going to do much to destroy this Trojan horse, which is why its such a relief to go to the occasional conference. It gives you a bit of a boost listening to people who seem to have some access to both big money and clever engineers, and who are doing their best to make everyone see sense. I can highly recommend it.

A week or so ago I went to the Beyond Kyoto conference at Said Business School in Oxford (living in Oxford is quite lucky – there is a lot going on. In fact some people are trying to make Oxford the place for the development of green technologies).

The conference was held for the main part in the Nelson Mandela Lecture Theatre, which was great, because it happened to take place on the day South Africa was voting. (although hiding the speaker’s water bottles behind Madiba’s bust was an interesting touch.)

Not being a journalist, I’m not equipped to make witty flowing summaries of the various speakers input, so I think I’ll just copy out the notes I took on the stuff I found interesting. Please don’t use these points as quotes, as I’ve rephrased some of it so it makes more sense in my dramatically cut-down version of the day. (My apologies to the speakers – I cannot hope to do them justice). I’ve put my own comments in brackets.

My favourite quotes of the conference :
“we need to build this ship while we are sailing it”
“Its only when you’re looking at large theoretical policies of climate change and global emissions that one uses these big terms, however the real stuff is always the local stuff, that’s where carbon is being emitted.”

Opening keynote address:
Michael Liebreich, Chairman and Chief Executive Officer, New Energy Finance.

• Oxford university prides itself as being the foremost university looking into environmental issues and social entrepreneurship as well as new technologies (told you so).

• It’s a very interesting time, exciting things are happening. A real transition in the energy sector.

• Clean energy grew very rapidly from 2004 – 2008, a five times increase over that period, but it has since started to stall.

• When Lehman Brothers went, a lot of clean energy investment went as well. Because clean energy is in its early stages, a lot of research is still needed, therefore there is a lot of re-evaluating of risk.

• These clean energy companies are cash hungry as they invest heavily in R&D and establishing new infrastructure, like wind farms.

• As all the investment needed is front-loaded it makes for a risky investment model. Typically investors need to see good returns within five years, developing technologies can’t survive in this environment.

• Because of this, there has been a 44% drop this quarter to last quarter in clean energy investment.

• Obama has made a promise to establish a low carbon economy as a major gear to his campaign.

• The UK is quite low down in the list of how much money countries have put aside for clean energy.

• Industry is facing real stress after some very good years.

• Each Brit owns £60 of wind farm debt because the Royal Bank of Scotland was the biggest investor in wind farms.

• Liquidity has left the market.

• Three major areas of clean energy at the moment.

• 1. Wind (see above)

• 2. Photovoltaic’s: the price is about to come down big time. At the moment solar is not competitive, so governments are not investing. It makes no sense economically, as it is divided into individual components. However, supply is going to outstrip demand and prices will come down. Silicon is the key bottle neck item. When this is corrected there will be an enormous drop in the price.

• 3. Bio fuels. This has absolutely soured, because of the US dotcom-like hysteria to produce ethanol from corn (anyone see the television show about Cubans in Miami called “Cane“?). Company after company has now gone bankrupt in the corn/ethanol thing. Now, sugarcane ethanol mainly from Brazil is on the rise. However a squeeze on funds has effected the rollout of some projects. The Brazilian government is starting to help out this industry.

• Three-quarters of all venture capitalist funding in next generation bio fuels is coming from America.

• Google is now also investing in the energy space

• There needs to be a new way to do energy. Data driven smart grids will change the way we get our energy. They like to call it data energy – digital energy because all this is based on data sources.

• The recession does reduce emissions because it reduces economic movements and business, but it doesn’t change the trajectory in the long term.

• We still need to reduce carbon, rather than financing failing companies.

• We need to make sure carbon emissions not only level off, but also start to decrease. The technology is there, but the investment isn’t at the moment.

• Climate change, energy security and oil and gas depletion: these are the three drivers for clean energy. Climate change is still critical, energy security is still a big issue, and oil and gas is still being depleted. So good news (much laughter).

• In energy, half of available finance has to go to the developing world.

• We have to build this ship while we’re sailing it.

• There is an obvious difference between investing in clean energy and investment in developing energy infrastructure in emerging and developing countries.

• Investment in clean energy is front loaded in a way that fossil fuels aren’t, and this makes it very sensitive to capital investment markets.

• If you want economic growth of 2%, you need to reduce carbon by 4%. If you try to reduce the energy on each item – printers, kettles etc, that’s a good start.

• Digital energy: using text messages to control energy by switching things on and off is an area feasible for start-ups. But don’t go up against incumbent suppliers. These data mining services will decide in the middle of the night whether to start using clean energy, wind turbine or fuel energy.

• Aggregating the billing service will lower costs. Look more into what digital energy and what it means, this is a 50 year solution.

PANEL DISCUSSION: Kyoto and Beyond: Climate Change Policy in the 21st Century

Steve Rayner

• The mid century goal (500 – 550 part per million carbon stabilisation) is unachievable.

• No-one did a cost to benefit analysis when bailing out the Fannies, Freddies and others.

• Carbon tax isn’t realistic.

• Reconceptualise the carbon issue as a technological challenge.

• Climate change is a Christmas tree upon which you can hang all sorts of glittery ornaments as policies.

• Not really a question of science, but a question of values. We don’t expect war to break out every day, but we keep a large navy, army and air force none the less. We should do the same for energy.

• We shouldn’t have emissions targets, we should have technology targets. This isn’t a climate challenge, it’s a technology challenge.

Dave Frame

• Sustainable development can help as a mitigation policy. For instance studies show that educating women reduces fertility, which reduces population growth, which has an overall effect on climate.

• Targets need to be revisable to keep up with new sciences, and to understand when hopes are not met. We can never sit still and say “now we’ve done it”.

• Penalising is one thing but in a place where there are no alternatives, you end up with a lot of environmental bads that are never re-explored.

• The more you burrow down to a local scale the more you realise you’re looking at resource management and sustainable development.

• Its only when you’re looking at large theoretical policies of climate change and global emissions that one uses these big terms, however the real stuff is always the local stuff, that’s where carbon is being emitted. (This is really empowering).

Chris West

• We have a duty of care in the developing world. The impacts of climate change has been our own doing.

• The environment which has been victim for decades, is now turning round and biting back.

• Now it’s stopping us from doing what we want to do.

• It’ll have life and death impacts for millions of people in the south. (he talks in terms of north and south, rather than ‘west’, ’developed’ and ‘developing‘).

• In the north we’ve become efficient, but often at the expense of resilience.

• We have a difficult time adapting to the impact of an ailing climate.

David Henderson

• A dissenting voice at the conference in the interests of balance.

• He disagrees that businesses should play a leading roll in creating a green economy.

• Policies should be evolutionary and not presumptive.

• There is smoking gun evidence that climate change is happening.

• Lots of the arguments layer uncertainty upon uncertainty.

• The green lobby is too alarmist as there are so many unknowns, however the basis that this is a problem that warrants a response is not really in question.

• What the figures and projections are or should be, or how heating will progress is all quite unknown, and we should not presume that we‘ve analysed it correctly.

• There are many studies that don’t seem to prove the extreme crisis scenarios the scare mongers describe.

• Climate change as an issue is a political issue, but one that should be really connected at a local level.

Points that came out in the subsequent discussion:

• There is a difference between business opportunities in sustainable development as opposed to businesses developing sustainably.

• The carbon markets are the next sub prime waiting to happen.

• Getting dirty technology out is as much a problem as getting clean technology in. We buy a new energy efficient fridge, what do we do with the old fridge? Put it in the garage and put the beer in it. Same for all industries, for example cars. No matter how advanced new cars are, if we carry on using old cars we’ll fail.

• The only fuel we have stopped using in the history of humankind is sperm whale oil. The difficulty lies in trying to get rid of old technologies, not finding new ones.

• The new move to “declare war on carbon” is crazy. Because it’s a moral problem it’s a good rallying cry. It says you should be concerned over the lives of others, and their conditions, which is correct. But you can only declare a “war” when you can describe what the victory scenario will be. With carbon, we can’t say what the victory scenario is. That’s an unknown.

• Is it international policy or national policy that’s most important? It’s the coupling between the two that’s important. The interplay between the two. The coupling between policies are becoming really important in terms of trade, carbon agreements etc.

• There is an understandable desire for elegant solutions, however the problem is inherently messy. You can’t really solve it. You can simply either manage it well, or manage it badly.

• Think messy, don’t try to solve it elegantly as a primary goal, and you’ll be able to make good decisions. Otherwise you’ll not reassess previous bad conclusions.

SECOND PANEL DISCUSSION : Doing well and Doing Good — Business Opportunities In a Low Carbon World.

Moderator: Pamela Hartigan, Director, Scholl Centre
Harish Mandel, MD, SELCO-India
Martin Chilcott, 2 Degrees Network
Nick Eyre, Head, Low Carbon Futures, Environmental Change Institute

• If you have a good idea go and do something without money, somehow finance it in small stages. Money will always follow you.

• When developing for the rural poor don’t take away rural poor money, but take money from the profits that is created through what has been developed in a community.

• At SELCO-India 5% of their time goes to the actual product. 95% goes onto financial organising. An onion vendor buys per day, a teacher buys per month, a farmer buys per year or twice per year. For an onion street seller who trades daily buying an energy solution for £10 a day is cheep, but paying £300 a month is expensive. A new way of financing fit’s the payment scheme to the buyers needs.

• For an entrepreneur its good to make mistakes at the beginning, you have no money and no-one knows you. Later, when people know you and you’ve made some money, you’ll have learned from your mistakes. However, thinking in terms of mistakes is not suitable for an entrepreneur. Entrepreneurs’ ALL have difficulties.

• Always work with people who think differently from you.

• The people who will change the world the most won’t be people who are making huge technological advances. They’ll be small companies simply working in a different way. We should look at working in a completely different way. Activist communities will change stuff most. It drives development and policy.

• Social entrepreneurship uses a model that benefit’s the end user, not the bottom line. But developed in a financially sustainable way.

• The environmentalist community is now an exclusive club, it‘s not always open to new developments, new ideas. Communities, friends and family will share information if its valuable, not businesses and governments. When the green movement was bottom up people listened and changed, now that its been taken over by governments and businesses it has become top-down and people are less inclined. The momentum locally has slowed. Getting some momentum back will take decentralised initiatives.