Ethical trading focuses on protecting workers' rights throughout the supply chain. By treating your employees, your suppliers and their workers fairly and ethically, you can demonstrate corporate social responsibility (CSR).
What is ethical trade?
Ethical trade is about the purchasing practices of your business - and the steps you take to ensure that you and your supplier companies respect workers' rights.
The term ethical trading often implies socially responsible sourcing, which focuses on:
- worker welfare
- agricultural practice
- natural resource conservation
The leading alliance that supports ethical trade in global supply chains is the Ethical Trading Initiative.
Ethical trade and suppliers
Choosing your suppliers carefully can be an important part of your approach to CSR. For example, you might try to use local suppliers as much as possible. This helps you to support your local community and reduces the environmental impact of your sourcing, logistics and distribution practices.
When choosing suppliers, you should also examine their:
- employment practices
- health and safety procedures
- environmental policies
Customers are increasingly concerned about the wider impact of supply chains, for example on the local workforce and environment. Being associated with businesses that abuse the rights of their workers or their local environment can significantly harm your reputation.
Larger organisations often audit their suppliers to ensure that they follow responsible working practices. You could do something similar - simply asking them about their attitudes to CSR might be revealing.
You should also treat your suppliers fairly, particularly smaller businesses that rely on you. For example, on-time payments can make a big difference to them.
Ethical trade and customers
Your customers will want to know that you don't exploit the people who make and sell your products. To reassure them, you could:
- Create brochures in plain English and frankly disclose any 'small print' limitations.
- Be open and honest about your products and services. Tell customers what they want to know, including what steps you take to be socially responsible.
- If something goes wrong, acknowledge the problem and deal with it.
In return, you can expect customers to reward you with their loyalty. Listening to your consumers can also help you improve the products and services you offer them.
Find out more about ethical trading.