Fairtrade Foundation unveils breakthrough CMA initiative to drive retailer sustainability

Fairtrade Foundation has delivered what is believed to be a first of its kind initiative in driving business sustainability through the Competition and Markets Authority’s (CMA’s) new open-door policy for green agreements between companies, reports Neill Barston.

As Confectionery Production has previously reported, environmental agendas are now pivotal for many enterprises across sectors, including manufacturing, retailing and related industries, which is leading to a greater level of creative solutions coming forward.

The new 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.

Notably, the organisation’s ongoing mission was shared with audience members at this year’s World Confectionery Conference, which highlighted the significance of the global movement’s ongoing work supporting agricultural supply chains, including the vital cocoa industry underpinning the confectionery sector. (See our exclusive video review of the event here).

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.

Market facing solutions
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.

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.”

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 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.



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