New Fairtrade initiative will help UK grocery retailers collaborate on sustainability in supply chains

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A new sustainability initiative created by the Fairtrade Foundation has become the first of its kind in the UK to go through the Competition and Markets Authority’s (CMA’s) new open-door policy for green agreements between businesses.

Published today, the CMA’s inaugural informal guidance looks at Fairtrade Foundation’s new Shared Impact model, which aims to drive collaboration within the UK grocery sector by bringing retailers together to pool their new Fairtrade sourcing commitments to a targeted group of farming cooperatives.

Given that Shared Impact is designed to boost sustainability through sector collaboration, the Fairtrade Foundation submitted it for assessment to the CMA under its Green Agreements Guidance open-door policy, which aims to help businesses understand how they can collaborate on environmental goals without falling foul of competition law. In response, the UK regulator has stated that at this stage, it does not have concerns about the model: it concludes that “the Shared Impact initiative is unlikely to raise competition concerns”.

Shared Impact will enable UK grocery retailers operating at the same level in supply chains to take collective action on enhancing sustainability and resilience in supply chains – in partnership with Fairtrade farmers at the sharp end of the climate crisis and a challenging global economic context.

The Fairtrade model provides a market-facing solution to the challenges farmers in low-income countries face, which sees them subject to frequent changes to sourcing agreements for small proportions of their products. With inconsistent incomes from year to year, many farmers have little choice but to prioritise their critical basic needs, such as for food, healthcare and housing, rather than invest in longer-term sustainable farming practices.

Real and lasting change

As part of an initial one-year pilot of Shared Impact, participating UK retailers would source additional Fairtrade banana, coffee or cocoa volumes from certified Fairtrade producer groups, on top of their existing Fairtrade sourcing commitments, under a new, focused sourcing approach.

Alexander Carnwath, Head of Public Affairs at the Fairtrade Foundation said: “We are delighted that the CMA has today published informal guidance on our Shared Impact initiative to help businesses drive real and lasting change within their supply chains and meet their sustainability goals. Shared Impact is the first of its kind to go through the new  open-door policy, demonstrating that Fairtrade is leading the way when it comes to improving sustainability in food supply chains at a time when the climate crisis demands credible and collaborative solutions.

“Farming remains one of the main drivers of deforestation globally, as well as a significant contributor to an increase in global greenhouse gas emissions and biodiversity loss. Farmers and workers cannot drive forward sustainability initiatives without supply chain collaboration.

“That’s why Shared Impact is a joint pledge between farmers, retailers and Fairtrade. Expanding on the existing way we work with our retail partners, the new model allows them to target salient risks in their supply chain, drive forward a more resilient food sector, work together to advance shared goals, and fund real, lasting change in partnership with farmers and workers.”

This unique three-way partnership will address the challenges, share the burden and achieve lasting results.

Alexander Carnwath, Head of Public Affairs, the Fairtrade Foundation

A more sustainable future

Under the terms of Shared Impact, businesses who sign up to the initiative will be given the means to report on key impact outcomes, measure progress on sustainability commitments and share the responsibility of supply chain risk management. For farmers and workers, it will mean longer-term sourcing commitments, closer relationships with retailers, and greater opportunities to sell more of their produce on Fairtrade terms.

This is expected, in turn, to lead to better incomes, more Premium funds, a greater share of power in supply chains, and more resources to invest in a greener, more sustainable future. It will also allow retailers to jointly contribute Fairtrade Premium to specific groups, who will benefit from this higher level of investment – driving impact for farmers and workers within those groups.

In its informal guidance, the CMA explains how competition law applies to UK grocery retailers who participate in Shared Impact, which the CMA considers to be an ‘environmental sustainability agreement’ (agreements between competing businesses that involve co-operation to achieve green outcomes, such as tackling climate change). The CMA invites other businesses with questions about how to apply competition law to their own initiatives to follow Fairtrade’s example and use the open-door policy.

Fairtrade Foundation’s submission to the CMA was made possible with support of global law firm Freshfields Bruckhaus Deringer, leaders in UK competition law, who offered their expertise to the Fairtrade Foundation on a pro-bono basis.

Read the CMA informal guidance: Fairtrade environmental sustainability agreement.

ENDS

For more information or interviews email Tomilola Ajayi: Tomilola.ajayi@fairtrade.org.uk

Notes to Editors

About Fairtrade
Fairtrade is an independent non-profit organisation representing more than 2 million farmers and workers worldwide. It owns the FAIRTRADE Mark, a registered trademark appearing on more than 37,000 products, which is the most recognised and trusted sustainability label in the world. Fairtrade International and its member organisations – including the Fairtrade Foundation – collaborate with businesses, engage shoppers, activate civil society, and enable producers to take control in order to bring about a fair, sustainable future: a future rooted in social justice.

About the CMA
The CMA is an independent non-ministerial UK Government department and is the UK’s principal competition and consumer protection authority. It helps people, businesses, and the UK economy by promoting competitive markets and tackling unfair behaviour. For more information visit https://www.gov.uk/government/organisations/competition-and-markets-authority