Fairtrade – an ethical investment

Published: 29-Jul-2010

Since the first fairtrade certified beauty products were launched in the UK last year, the market has gone from strength to strength. Katie Middleweek asks why it makes good business sense

Since the first fairtrade certified beauty products were launched in the UK last year, the market has gone from strength to strength. Katie Middleweek asks why it makes good business sense

Research from Globescan suggests at least 5 billion units of cosmetic products are sold in Europe annually, using approximately 1.5 billion tonnes of ingredients. Its research also finds that 31% of UK consumers would be actively interested in purchasing a fairtrade cosmetic product.

Last June, the Fairtrade Foundation added beauty to its accreditation process, having established that its approved growers could supply ingredients for cosmetic products as well as the more usual food, drink and textile ones, initially accrediting 57 beauty products from five companies – Lush, Boots, Bubble & Balm, Essential Care and Neal’s Yard Remedies. A year on it has accredited 130 beauty products.

“While this is a drop in the ocean when you think that there are over 4,500 fairtrade products in all, it is still reason to be very positive as more companies are really getting on board with the idea,” says Julia Franklin, business development manager for beauty at the Fairtrade Foundation. “This is part of a global movement and there are 23 other labelling initiatives worldwide so we form part of a very big picture.”

The main European organisations are Max Havelaar in France, TransFair in Germany, Fairtrade TransFair in Italy and the Asociación del Sello de Comercio Justo in Spain. Others include TransFair USA, Fairtrade Label South Africa and Fairtrade Labelling Australia and New Zealand. These organisations also licence companies to use the Fairtrade mark in their particular country. Franklin says research has shown that the Fairtrade logo itself now has a 74% awareness rating and manufacturers are all too aware of the positive impact carrying this label can have on their sales.

“It is a proven requirement of ours that companies source from producers that are fairtrade certified and that the supply chain needs to comply with our standards and be transparent across the board. We work with registered supply chains to create valuable long-term relationships,” adds Franklin. She says companies are now aware of what impact their actions can have and CSR (Corporate Social Responsibility) forms a much larger part of their remit these days. However, she is aware that the bottom line is still the priority for any business and fairtrade can give a brand a real point of difference, particularly pertinent in a C&T market awash with so many existing brands and constant new launches.

Ingredient options

Fairtrade ingredients that can currently be used in beauty products include shea butter, cocoa butter, brazil nut oil, honey and sugar and the list is growing.

“If a cosmetics company wants to get Fairtrade accreditation then it has to agree to a Trading Partnership Plan with us and it is a three-year agreement. Then, once accredited, 1.7% of any product’s wholesale price goes back into the Fairtrade Foundation. This money is used by us for further producer development and standard setting so it’s something of a win-win situation,” says Franklin.

This continued work includes investment with the fairtrade supply chain to make other derivative versions such as water soluble shea butter and surfactants. The Fairtrade Foundation is also looking into opportunities for other ingredients to go fairtrade with argan oil and beeswax top of the list.

Traidcraft was founded 30 years ago with the aim of fighting poverty through trade and it was one of the groups that helped to set up the Fairtrade Foundation in the early 1990s. Marketing director at Traidcraft, Larry Bush feels that in terms of cosmetics the trend for more natural and organic beauty products has paved the way for fairtrade items because the three go hand in hand so well together. Also, consumers are already heavily influenced by seeing the Fairtrade symbol embossed on consumer goods from chocolate to coffee. “With so many FMCG products now carrying the Fairtrade logo we have found that once consumers start to actually choose Fairtrade marked products they will apply this to all purchasing occasions, and as cosmetics are both practical and a luxury it is an ideal category to benefit from the interest and enthusiasm in fairtrade,” he says.

It must also make good business sense or companies wouldn’t be so keen to get involved.

Simon Duffy is co-founder of men’s natural grooming brand Bulldog which this year became the first male grooming company worldwide to bring out fairtrade certified skin care products for men. “Fairtrade resonates really well with people who love our brand,” says Duffy. “We have always looked to offer an alternative to the big brands we compete with and this adds another string to our bow. The launch of our Eco System range of products means we are now working with five producer co-operatives in the developing world and I think our consumers love that fact.” He admits that working within the framework of the Fairtrade Foundation’s policies can “certainly present challenges” but insists that one must remember the bigger picture.

Neal’s Yard Remedies’ head of sustainability, Louise Green says talking about fairtrade has really brought the focus back to the ingredients used at Neal’s Yard Remedies. “Our customers are actually very interested in where we source our ingredients from and about whether they are from fairtrade or ethically traded projects,” she says. “I think the fairtrade message is easily understandable and retains a strong customer loyalty even in tough times. This has been proved by the fact that fairtrade sales have continued to grow even during the recent recession whereas the organic market by comparison has dropped slightly. I also think that fairtrade is a much simpler message for consumers to understand compared with organic.”

Green also says the fact that a company the size of Neal’s Yard Remedies is involved will give encouragement to smaller companies to do the same.

Former corporate banking executive Sue Acton officially launched fairtrade soap company Bubble & Balm last June to coincide with the Fairtrade Foundation’s launch of certified beauty products. “Having a Fairtrade logo on my product is a very simple and effective way of showing a commitment which is both public and provable,” she says. “Many more beauty products could and should go down the fairtrade route and research shows that if a company is less than ethical this will be reflected in its share price.”

Green does admit that getting fairtrade accreditation has its challenges and has found the biggest obstacle is finding the appropriate fairtrade ingredients to use. “We settled on using Mexican honey along with Peruvian Brazil nut oil and South African rooibos herb,” she says. “We then had the challenge of getting the ingredients delivered in the appropriate bulk sizes for use in manufacturing rather than the retail industry sizes they were used to supplying.” Since then the company has been able to source fairtrade apricot kernel oil from northern Pakistan which is used in its Sensual Jasmine Body Oil, its fifth and latest product to achieve accreditation.

Fairtrade – an ethical investment

However, Green feels that the company will probably stick to just five fairtrade certified products for the time being for three reasons: international trade limitations with the Fairtrade Foundation; limited ingredients available; and lack of collaboration between international fairtrade organisations. “Until international licensing agreements are finalised by FLO [the international parent body of which Fairtrade is the UK division], it is not possible to export fairtrade accredited cosmetics. This means we can’t include those products in our overseas portfolio.

“When it comes to ingredients, at present there are a limited number of accredited Fairtrade Foundation ingredients available for use in cosmetics, as the original focus of fairtrade had been for foodstuffs. There are a number of well respected international organisations looking at ethical trade across the globe and across our supply chain this means a wider range of certified ingredients are becoming more available, and from a wider number of locations.”

Despite the ongoing challenge of getting global certification bodies to work together, fairtrade is increasingly attractive to consumers. It is a valuable business and ethical route.

Accreditation essentials
There are strict standards that cosmetics manufacturers need to comply with in order to get their products certified as fairtrade:
• All ingredients that can be fairtrade must be fairtrade
• Non fairtrade oils must be substituted by fairtrade oils where possible
• Ingredients for scrub-type products must come from fairtrade sources where possible
• Surfactants should be substituted with surfactants derived from fairtrade materials where feasible
• Companies are expected to use the highest amount of fairtrade ingredients possible in their products
• Products must comply with the relevant national legislation in each individual country

Fairtrade Community benefits
The UGPPK is a union of shea butter producers in Burkina Faso. This group of over 3,000 women gathers shea nuts to produce shea butter which is used locally for cooking and also exported for use as a cosmetics ingredient.
To produce a product to organic and export quality standards the shea butter is transported by cart to the union’s processing plant in Léo where it is purified, filtered and stored in hygienic metal drums.
The premium that the UGPPK received for its shea butter has been used for many useful purposes, the main one being to part-fund several buildings to house processing units while other funds have been used to provide school equipment for a local orphanage and to purchase carts for the women who have to collect the nuts from up to 20km away from the site.
The premium has also been earmarked to extend a literacy programme and to take over the long-term funding of a children’s day care and playground project which is currently funded by the union’s main buyer, L’Occitane. Members of the UGPPK have made it known that fairtrade has provided them with an invaluable opportunity to improve their livelihoods and develop their communities and they are keen to attract more buyers.

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