Winning over shoppers with sound ethics

Retailers have been criticised this month for exploiting factory workers in Asia by human rights group War On Want. Employee wages and working conditions were slated in the organisation’s annual Let’s Clean Up Fashion report.

On a positive note, New Look, Primark, Gap, Marks & Spencer, Monsoon Accessorize and Next were praised for their moves to increase workers pay. However, the review stated: “No brand or retailer is paying its workers a living wage, or has yet put together a systematic programme of work that is likely to raise wages to acceptable levels in the near future.”

But this isn’t the whole story. Some retailers are going above and beyond the call of duty to ensure their workers in Third World countries are being treated fairly. Many are working with charities to improve the areas related to their supply chain, or going into countries where there is need and attempting to improve trade.

Last year, Marks & Spencer opened the first of four planned eco-factories in Sri Lanka where it manufactures lingerie. In addition, the retailer’s clothes exchange scheme – run in partnership with Oxfam – has raised £2m for the charity.

Elsewhere on the high street, Arcadia has worked on a living wages project for its workers in a factory in Bangladesh where each employee earns three times the minimum wage. The retailer intends to extend this scheme to more of its factories in the area. Trade union rights are also recognised if workers are members.

Meanwhile, Burberry has a confidential worker hotline for employees in its supplier factories and has consultants teaching staff and management how to run more effective worker committees.

In the Labour Behind the Label report Gap received the highest grade for its work to ensure employees in its supplier factories are paid and treated fairly. The retailer works with trade union Self Employed Women’s Association (SEWA) in north India and employees have received an 80% pay increase in the past year.

The importance of displaying corporate social responsibility – be it through fair wages, having an eco-conscience or implementing schemes to help the community – has never been more important in maintaining a good reputation domestically.

Documentaries such as Channel 4’s The Devil Wears Primark and BBC3’s Blood, Sweat and T-shirts have ensured outsourced production remains a topical issue and certain retailers have borne on-screen criticism as a result.

On paper, the facts and figures surrounding retailers’ work abroad are impressive and mark a change in their approach to production in other countries. Efforts to increase wages and better working conditions are ongoing but it is clear very few are resting on their laurels.

But how does it feel to be the person implementing these initiatives? Over the next two pages, Ikea and Hotel Chocolat describe their experiences in India and St Lucia.

Ikea: support on the sub-continent

Marianne Barner is head of social initiative for Ikea. The retailer began working in a coalition with Unicef, Save the Children and 500 villages in India and Pakistan 15 years ago to educate and empower women and children.

The areas they focus on are closely related to the retailer’s supply chain. In these villages, Ikea gives thousands of children access to education. In addition, children and mothers are immunised against illnesses such as measles, polio, diphtheria and whooping cough.

In June, the retailer also launched an initiative called the Sunnan Lamp Campaign. Through this programme, every time one of the solar-powered Sunnan lamps is sold in an Ikea store, the retailer donates one of these lamps to Unicef for children in homes without electricity to help them do their school work.

Most recently, the retailer dedicated a budget of £113m to extend its work to 5,000 villages in Central and Eastern Europe, Africa and Southeast Asia by 2013 with the help of Unicef and the United Nations Development Programme (UNDP).

At least 50,000 women will be encouraged to become entrepreneurs, contribute to the income of their household and participate in local political decision making. The UNDP will assist Ikea by educating women in finance and business and helping them access micro credit loans. They will also have the opportunity to take advantage of classes to become more literate and will be offered leadership training.

Barner says: “We launched our project in 500 villages and now about 80,000 more children go to school. I feel proud of our work in Pakistan and India – very, very proud. I think everyone in the company does.

“It is important to us as a business, because we are working to try and make sure child labour does not happen, and to do this we need to concentrate on issues like adult illiteracy, poverty and access to education.”

She adds that the retailer’s work in India has evolved, and will continue to, because of the positive response staff working on the programmes have had from co-workers and also from the people they are trying to help in India.

She continues: “I love being in India and meeting the children and women we started these initiatives to help. Obviously it’s very different to being in the boardroom. It’s very satisfying to see what we are achieving and that it is doing good for people. It’s one of my favourite parts of this job, I’m very lucky.

“We wanted to take a holistic approach to this and we knew if we empowered women this would have the same effect on their children. We knew this had to be achieved through education. In order to reach children, reaching women was of the utmost importance. Teaching women about health and the importance of education will have a knock-on effect and create change, and we think this is the best way to do it.

Barner says that the support won’t stop there: “We are working on the next step now. We want to help women become enterprising and allow them to contribute to their family’s income.
It’s very, very important that they receive leadership training and understand business. Then they can become entrepreneurs and start their own businesses.”

Ikea has closed the loop on its corporate social responsibility work, with products developed to help fund the schemes being expanded and gaining popularity with customers in their own right. Barner explains: “We started the Brum Bear campaign in 2003 and from every bear sold we donated £1.50 to Unicef. Now, we donate e1 (92p) from every soft toy to our social responsibility schemes. This has raised e16.7m (£15.2m).”

The success of the campaign has led to the expansion of Ikea’s soft toy range. They have grown in popularity, and the retailer now makes over 70 different toys.

Barner concludes: “They’re such cute little guys too, I’m really proud of them and children seem to enjoy them. I think this has been such a success because the child who gets the toy will be happy and the children on our schemes who also benefit will be happy. Our customers realise this.”

Hotel Chocolat: Cocoa production in the Caribbean

Angus Thirlwell is co-founder and managing director of Hotel Chocolat. The business began in 1993 and after creating its own engaged ethics programme in 2002, the retailer bought the 140 acre Rabot Estate in St Lucia in 2005. Since then Hotel Chocolat has grown its own cocoa on the island, creating jobs and trade for farmers who previously had been earning very little income for their product. The retailer, which currently has a factory in Cambridgeshire, plans to build and open a St Lucia facility by 2011.

Thirlwell says: “I get out three or four times a year and it’s probably the most fulfilling part of what we do on a couple of levels. Growing cocoa is so rewarding – a big cocoa pod is about half the size of a rugby ball.”

When the retailer entered St Lucia it did not want to be seen to be getting rich while the farmers it traded with were not improving their own living standards. It has signed up 70 cocoa growers to
its scheme.

Thirlwell says: “This is not just about largesse, we are trying to set up a business that is profitable and gives sustainable food to other cocoa growers. We found out a lot of farmers had left cocoa because the way the business worked here before – they didn’t make much money. They had to drive to a warehouse in the capital city and leave their bags of cocoa there without any money changing hands. This system was run by a private company that had its own objectives – the farmers would have to wait six months to get paid.

“We need good cocoa for our business and had a series of meetings with farmers and told them: “If your cocoa meets our quality standards we’ll buy every bean you grow and we guarantee to pay you within a week”. We wanted to be honest and transparent about this.

“The farmers are good to work with and it’s easy to have a dialogue with them. They are very well-informed about British politics and most of them support English football teams. They are very well educated people, the schools in St Lucia are of a high standard.”

Like Ikea, Hotel Chocolat has married its corporate social responsibility message and its products. “They are so proud St Lucia cocoa is being made into a St Lucian chocolate bar, it has always been put into a blend with other beans before,” explains Thirlwell.

“We have an event every year where we invite the farmers to a lunch and talk about our plans for expansion and what this will mean for them. We enter the St Lucian chocolate into taste awards and bring the prizes over to show them.

“Now that we have more cocoa we can start to experiment with different recipes. Previously we only had two recipes but now we are launching four new ones.”

Thirlwell concludes: “The ultimate expression of our commitment to St Lucia will be when we build our chocolate factory there. We’re planning to open that in 2011 and then we can offer jobs to local people there. Local artists will do our designing and local engineers will keep the factory working.”