As the fair trade movement becomes increasingly mainstream, the French government has taken a proactive stance to regulate the proliferation of apparently ethical consumer products by setting a legal standard that companies making fair trade claims must adhere to. The move is timely: CPG players need to realize that ethical consumerism is less about labels and more about trust.
Fair trade labelling schemes are currently regulated by FLO (the Fairtrade Labelling Organization), an international organization that imposes the same criteria for each individual scheme such as Fairtrade in the UK or Max Havelaar in France.
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In France, 60% of consumers claim to be aware of the concept of fair trade, which guarantees developing world producers a fair price for their produce as well as making a commitment to support sustainable development initiatives. However most lack specific knowledge and understanding of how this works, and are confused by the apparent diversity of “ethical” labelling schemes.
Now Le Monde has reported this week that the French government now intends to establish a single set of fair trade standards that all companies that claim to follow such schemes would have to adhere to. This is currently scheduled to happen in 2006. However the plan is by no means limited to France. French and German ministers hope a Europe-wide standard can be established by the EU over the next few years.
In addition to a desire to encourage the fair trade sector, this initiative is also intended to provide some clarity and order in the proliferation of similar schemes amongst manufacturers and retailers, some of which can be misleading. Many private “ethical” commerce schemes are limited to paying producers more than the generally low global commodity prices, but without any of the commitment to sustainable development (such as investing in local community projects such as schools or hospitals) that characterize the labelling schemes endorsed by FLO.
The rise of ethical consumerism provides food, drinks and personal care players with an opportunity to review their relationships with consumers and to strengthen them. Essentially, the overarching issue is one of trust. Consumers’ ethical concerns are inexorably linked to concerns over the safety of products, whether they are food, drinks or personal care items, and to issues relating to quality such as provenance, traceability and freshness. Over the next five years it will be essential for CPG manufacturers and retailers to reassure consumers that these are matters that are equally important to them
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