wfto fair trade standard

WFTO Guarantee System Handbook Standard February 14

WFTO Fair Trade Standard Version 3.6 (February 2014) of 23/Ch 6

Ch 6 WFTO Fair Trade Standard (3.6)

6.1 Introduction, structure, applicability and definitions

Introduction

The WFTO Fair Trade Standard is part of the WFTO Guarantee System, focusing on the management and operation of WFTO member organisations in relation to their Fair Trade practices. It comprises a set of compliance criteria based on the WFTO Principles1 and International Labour Organisation (ILO) conventions.

Many of these criteria are mandatory requirements, but some of them must be met right from the beginning while others are to be reached over a set period of time. There are also some requirements where a WFTO member must show continuous improvement over time.

A member is expected to apply the WFTO Standard and implement the requirements in a diligent and transparent manner and work on continuously improving their Fair Trade practices. The approach of continuous improvement is to encourage the highest level of achievement for WFTO member organisations over time with measurable tangible improvements in their Fair Trade practice.

Compliance with these standards will be assessed by various means, including Self Assessment, Peer visit and Monitoring audit. These are described in the WFTO Guarantee System Handbook.

The Standard is subject to periodic review and changes, as defined by the WFTO review policy.

Structure

The WFTO Fair Trade Standard comprises the ten WFTO Principles together with defined compliance criteria to assess conformity with the Principles.

The “Compliance Criteria” are the requirements that an organisation must meet to be approved as a WFTO member and continue in membership. Not all criteria must be met from the beginning and the time by which they have to be achieved is indicated in the “Achieve by” column. The compliance criteria are used as the basis for members’ Self Assessments and their Monitoring audits. Some criteria are specific to producer organisations or buying organisations and this is indicated in the text.

The “Applicable to” column indicates which type of member the criterion applies to. The Standard distinguishes between three types of WFTO member, i.e. producer FTOs, marketing FTOs and non-trading organisations2.

The “Achieve by” column indicates the time frame and type of compliance criteria. There are 3 “achieve by” levels, i.e. mandatory, year xx, and continuous improvement.

1 The current version of the Principles as agreed at Rio AGM May 2013.

2 Organisations that support Fair Trade activities but are not directly involved in trading of Fair Trade products. They could be

organisations whose primary mission is to promote Fair Trade through provision of technical, financial, business advisory or other

services to Fair Trade producers and/or Fair Trade organisations. They also may be assessed against this Standard.



Mandatory means that the compliance criteria must be met for approval as a WFTO member. For existing members non compliance with these criteria constitutes major non conformity and may lead to disapproval or suspension of the membership status of the organisation. “Mandatory” sets the minimum level of performance, but member organisations are encouraged to continually improve well beyond meeting the mandatory levels.

Mandatory by Year xx means the criteria must be met at the latest XX years after approval by WFTO (which counts as Year 0). Non compliance with these criteria after this given time constitutes major non conformity and may lead to disapproval or suspension of the membership status of the organisation.

Continuous Improvement means the member organisation is expected to improve its performance against these criteria as long as it remains a member of WFTO. The progress will be monitored and lack of progress may constitute non conformity. This can lead to suspension of the membership status of the organisation, unless it is justifiable.

Applicability of Standard Requirements

For the purpose of applying the Standard, WFTO members are either categorised as trading members (FTOs) or non trading members (NTO).

The trading members are categorised in 2 overarching categories:

1 Producer FTOs (PO)

a) Cooperatives or other formal producer associations owned and controlled by the producers. This includes settings where producers work in a cooperatively owned workshop.

b) Fair Trade workshops or Fair Trade motivated producer companies /organisations with employees producing Fair Trade products.

c) Fair Trade business units contracting individual small scale producers to produce and sell Fair Trade products to them and these producers work at the premises organised by the Fair Trade unit or work at premises of their choice (e.g. homes, farms).

Cooperative

Producers

Employees

Organisation/Company

Employees

Company

Producers

Employees



d) Umbrella organisations of producer organisations where the umbrella organisation is controlled by the producer organisations and responsible for the marketing and selling of their Fair Trade products.

2 Marketing FTOs (MO)

a) Retailers

b) Wholesalers: exporters, importers, other traders, brand companies

c) Marketing organisations (e.g. national exporters) buying from independent producer groups and other Fair Trade suppliers and marketing their products.

Non Trading Organisations (NTO)

Fair Trade Support Organisations or Fair Trade Networks and other member organisations who do not produce or trade Fair Trade products as their main activity.

For all compliance criteria it is indicated which category of member they are applicable to. If an organisation is active in more than one function (e.g. as a producer FTO as well as a marketing FTO for products from other organisations) the criteria of both functions apply for the relevant part of their business. The same would apply to a Non Trading Organisation with a marketing branch.

Definitions Terms Abbreviation Definition

WFTO members Member/ organisation

All WFTO member organisations. In the text they are referred to as both ‘members’ and ‘organisations’

Fair Trade Organisation

FTO All trading members of WFTO, with 50% or more of their income from trade, i.e. all Producer FTOs and Marketing FTOs

Marketing FTO MO An FTO trading and marketing FT products. This includes retailers, wholesalers, domestic trading organisations, exporters, importers and other trading organisations. Examples for different types of marketing organisation are illustrated above. Marketing FTOs may be in Northern or Southern countries.

Producer FTO PO An FTO that produces FT products. It could be a producer cooperative or producer association, a private Fair Trade dedicated company (e.g. an artisan workshop) with employees, or an umbrella producer organisation marketing the products from its different groups. Examples for different types of producer organisation are illustrated above.

Umbrella Organisation

Producer organisations OrganisationOrganisations

Employees



Producer Individual producers who are members of the Producer FTO (e.g. a farmer or artisan). The producers actively participate in the FTO (normally they have voting rights) and participate in decisions regarding use of the profits of the FTO.

FTO’s Producer groups

Producers in informal or formal group settings producing for/selling to an FTO and included under its WFTO registration. If the producer group is formally organised and acts as an independent business unit, selling as one entity to a variety of traders, they are considered as ‘suppliers’ to the FTO.

Small producer In the WFTO Principles this term refers to producers who predominantly depend on themselves and their families to produce the FT product.

Employees All employees (workers, seasonal workers etc.) working for a member. They can be contracted or seasonal/casual workers.

Supplier Vendor of Fair Trade products to an FTO. This can be a formally established group of producers producing and supplying FT products to an FTO as a group, or a Fair Trade production company etc.

Small scale producers selling their products to the FTO individually, even if through an informal village group/association, are considered as ‘producers’, unless they act as an independent business unit, selling as one entity to a variety of traders.

Fair Trade products FT products Any products produced and sold by an FTO (using the WFTO Label or not) unless specifically excluded from the FTO’s Fair Trade range.

Non Trading Organisation

NTO Member organisation that is not involved in trading of FT products as their main activity e.g. a Fair Trade Support Organisation (FTSO) or Fair Trade Network (FTN).

Fair Trade Support Organisation

FTSO A non trading WFTO member organisation whose primary mission is to support Fair Trade and provide services to Fair Trade organisations. They may have a trading component which is less than 50% of their income. (However if they wish to use the Product Label on these products then they are subject to the requirements of an FTO for the purposes of the Guarantee System).

Fair Trade Network FTN A WFTO member organisation which is an association of Fair Trade organisations.

Fair Trade Partners FT Partners WFTO members who sell or buy FT products from each other.

WFTO Label user A Trading FTO who uses or intends to use the WFTO Product Label on their products.



6.2 Principles and compliance criteria

Principle 1 Creating Opportunities for Economically Disadvantaged Producers

Poverty reduction through trade forms a key part of the organisation’s aims. The organisation supports marginalised small producers, whether these are independent family businesses, or grouped in associations or co-operatives. It seeks to enable them to move from income insecurity and poverty to social and economic empowerment. The organisation has a plan of action to carry this out.

N° Compliance Criteria Applicable to Achieved by

1.1 The organisation has a mission and/or policy documents expressing its organisational commitment to improve social and economic conditions of marginalised producers and suppliers. Such documents are made publicly available to interested parties.

PO/MO/NTO Mandatory

1.2 The management body and the key staff of the organisation understand the WFTO Fair Trade Principles.

PO/MO/NTO Mandatory

1.3 The member primarily works and trades with producer groups, producers and suppliers from socially and/or economically disadvantaged groups, or otherwise demonstrates positive impact on marginalised groups as a central part of its business.3

PO/MO/NTO Mandatory

1.4 The organisation demonstrates 4commitment through its actions and trading activities to improve the economic and social conditions of disadvantaged producer groups, producers and FT suppliers.

PO/MO/NTO Continuous improvement

1.5 The FTO maintains an up-to-date register with basic information about its FT suppliers and producers. The information shall include type of organisation, location, contact person, and their socio-economic conditions.

PO/MO Continuous improvement

Principle 2 Transparency and Accountability

The organisation is transparent in its management and commercial relations. It is accountable to all its stakeholders and respects the sensitivity and confidentiality of commercial information supplied.

The organisation finds appropriate, participatory ways to involve employees, members and producers in its decision-making processes. It ensures that relevant information is provided to all its trading partners. The communication channels are good and open at all levels of the supply chain.

3 This can be demonstrated as a % of total sales and purchases.

4 For example demonstrates via a business plan, annual report, written plans on social or economic improvements.




2.1 The member has a description of its organisational structure and governance, and a working financial administration system.

PO/MO/NTO Mandatory

2.2 The organisation has annual accounts5, audited externally. Exceptions may be considered case by case if it is not practicable to audit accounts and it is not a legal requirement. It has reports of its Fair Trade activities, making them available to its FT partners as well as to its producer members and employees.

PO/MO/NTO Mandatory by Year 4

2.3 The FTO commits to transparent communication with its FT producers and suppliers as well as FT partners. This includes communication on the structure of Fair Trade pricing, taking into account the sensitivity and confidentiality of commercial information supplied.

The FTO provides detailed information6 about FT producer groups and basic information about the FT producers and FT suppliers they purchase from/work with.

PO/MO Mandatory

2.4 The organisation implements appropriate and participatory ways to involve constituent members and employees in its decision-making, such as annual general meetings or regular producer/employee meetings with management.


2.5 The organisation has a good process for internal communication with its constituent members and employees, such as regular meetings or internal newsletters.


2.6 The organisation collects feedback, at least once every 2 years, from all significant stakeholders, workers and producers, and considers this when making its plans for improvement.


Principle 3 Fair Trading Practices

Intent The organisation trades with concern for the social, economic and environmental well-being of marginalised small producers and does not maximise profit at their expense.

Defined trade commitments It is responsible and professional in meeting its commitments in a timely manner. Suppliers respect contracts and deliver products on time and to the desired quality and specifications.

5 Working accounts need to be available in year 1 with a timeline for fully audited accounts agreed.

6 The PO/MO has to develop detailed information on their FT producers (i.e. producer/supplier profiles) that includes information

about the kind of organisation, number of members/producers, their social and economic background, location, production, etc.



Pre-finance Fair Trade buyers, recognising the financial disadvantages producers and suppliers face, ensure orders are paid on receipt of documents and according to the attached guidelines.

For Handicraft FT products, an interest free pre-payment of at least 50% is made on request.

For Food FT products, pre-payment of at least 50% at a reasonable interest is made if requested. Interest rates that the suppliers pay must not be higher than the buyers’ cost of borrowing from third parties. Charging interest is not required.

Where southern Fair Trade suppliers receive a pre-payment from buyers, they ensure that this payment is passed on to the producers or farmers who make or grow their Fair Trade products.

Cancellation and dealing with problems Buyers consult with suppliers before cancelling or rejecting orders. Where orders are cancelled through no fault of producers or suppliers, adequate compensation is guaranteed for work already done. Suppliers and producers consult with buyers if there is a problem with delivery, and ensure compensation is provided when delivered quantities and qualities do not match those invoiced.

Long term trading partnerships The organisation maintains long-term relationships based on solidarity, trust and mutual respect that contribute to the promotion and growth of Fair Trade. It maintains effective communication with its trading partners. Parties involved in a trading relationship seek to increase the volume of the trade between them and the value and diversity of their product offer as a means of growing Fair Trade for the producers in order to increase their incomes.

Fair competition The organisation works cooperatively with the other Fair Trade Organisations in country and avoids unfair competition. It avoids duplicating the designs of patterns of other organisations without permission.

Cultural identity and respect of traditional skills Fair Trade recognises, promotes and protects the cultural identity and traditional skills of small producers as reflected in their craft designs, food products and other related services.


3.1 When buying FT products, the FTO has written agreements (e.g. contracts or purchase orders) with its FT partners, producer members and suppliers, with relevant and appropriate details e.g. product specification, delivery and lead times, pre-finance, price and payment terms, cancellation and dealing with problems.

PO/MO Mandatory

3.2 The producer FTO respects contracts and delivers products on time and to the desired quality and specification. In case of problems it communicates in a timely manner with its trade partners and endeavours to improve its performance as needed.

PO/MO Mandatory




3.3 When buying FT products, the FTO respects the agreed terms of payment, and ensures timely payment on receipt of completed documents.

PO/MO Mandatory

3.4 When buying FT craft products, the FTO provides interest free pre-finance (at least 50%) for purchases from producer FTOs and FT suppliers, if requested.

When buying FT food products, the FTO provides a pre-payment of at least 50% at a reasonable interest, if requested. Interest rates that the suppliers pay must not be higher than the buyer’s cost of borrowing from third parties.

MO Mandatory

3.5 When receiving pre-finance it should be used as agreed, and any changes to the use should be agreed by the trading partners (and finance providers if applicable).

PO/MO Mandatory

3.6 The producer FTO or marketing FTO ensures that producers and/or its suppliers are paid immediately upon delivery of the product, and provides pre-finance for inputs and raw materials bought by them, where applicable.

PO/MO Mandatory

3.7 The FTO has a fair and transparent system, including a communication mechanism and a system of compensation, to deal with quality problems and product cancellation in line with Fair Trade objectives.

PO/MO Mandatory by Year 2

3.8

The FTO maintains long-term relationships with its FT partners, producers and suppliers. It does not terminate trading relations or stop buying from them without appropriate notice and reason.

PO/MO Mandatory

3.9 Where possible efforts are made to increase the value or diversity of products to benefit producers and suppliers.


3.10 The FTO does not engage in unfair competition7 towards other FTOs.

PO/MO Mandatory

3.11 The FTO is respectful of intellectual property and associated rights regarding protected names/brands, organisational designs, including logos, labels, and culturally based designs or names.

PO/MO Mandatory

3.12 Where possible, efforts are made to use traditional local skills, materials and products. Respect for the value of cultural identity, local materials and skills is encouraged.


7 Unfair competition is defined as any deliberate action to harm competitors.




3.13 The member demonstrates that it applies ethical sourcing principles for the raw materials, products and services it buys in.


Principle 4 Payment of a Fair Price

Fair price A fair price is one that has been mutually agreed by all through dialogue and participation, which provides fair pay to the producers and can also be sustained by the market. Where Fair Trade pricing structures exist, these are used as a minimum.

Fair pay Fair pay means provision of socially acceptable remuneration (in the local context) considered by producers themselves to be fair and which takes into account the principle of equal pay for equal work by women and men.

Capacity building to set prices Fair Trade marketing and importing organisations support capacity building as required by producers, to enable them to set a Fair price.


4.1 The FTO has a mechanism to set the FT product price, based on transparent and verifiable costs and profit margins, taking into consideration the prevailing market prices and other Fair Trade minimum prices, if they exist.


4.2 The FTO ensures that FT partners and/or FT producers mutually agree the process in which prices are set, through dialogue and participation.


4.3 The FTO provides to its FT partners and/or FT producers transparent information on costs along the value chain on request.


4.4 The Producer FTO strives to pay producers prices that provide a sustainable livelihood8.

PO Continuous improvement

4.5 The FTO reviews its cost structures and strives to improve production management in order to maximise benefits for FT producers.


8 Ensuring that at least minimum wage level is met.




4.6 The FTO supports producer organisations to enable them to participate in setting prices. Similarly, the producer FTO does the same with its producers.


4.7 The member ensures that the wage9 paid to its employees and any directly employed producers equals or exceeds national/local minimum wages, or market rates if these are higher.


4.8 The organisation is committed to provide living wages for its employees and directly employed producers by adjusting wages according to changes in the cost of living (e.g. inflation) and providing training to optimise productivity.


4.9 The FTO strives to understand the production costs and cost of living within the local context of its production, and progresses toward a sustainable livelihood for producers.

PO/MO Mandatory

Principle 5 Ensuring no Child Labour and Forced Labour

Child Labour The organisation adheres to the UN Convention on the Rights of the Child, and national/ local law on the employment of children. Organisations who buy Fair Trade products from producer groups either directly or through intermediaries ensure that the producer complies with the UN Convention on the Rights of the Child, and national/ local law on the employment of children. Any involvement of children in the production of Fair Trade products (including learning a traditional art or craft) is always disclosed and monitored and does not adversely affect the children’s well-being, security, educational requirements and need for play.

Forced Labour The organisation ensures that there is no forced labour in its workforce and/ or members or home-workers. Organisations who buy Fair Trade products from producer groups either directly or through intermediaries ensure that no forced labour is used in production of their purchases.


5.1 The member does not employ children and complies with relevant national law with regard to child labour and young workers. The organisation has a system to verify the age of their employees and directly employed producers.

PO/MO/NTO Mandatory

5.2 For specified cases where child work is allowed by national law (e.g. children working with their parents to learn skills or students working in school holidays) and the organisation does

PO/MO Mandatory

9 Employment contracts with clear payment terms and pay slips to demonstrate the wages paid.




employ them, the member must demonstrate that it has mechanisms, appropriate to its resources, to monitor the health, safety, welfare, education and right to play of working children according to the relevant UN Convention on the Rights of the Child.

5.3 The member has a policy (or policy statement included in other documents) with regard to child labour and the involvement of children in the production process.


5.4 If young workers (minimum working age of 17 years) are employed, the organisation shall ensure that their working conditions conform to applicable national regulations, in particular that they do not work more than 8 hours per day, do not work at night, are not involved in heavy labour or working with chemicals and that their work does not prohibit schooling if relevant.


5.5 The organisation does not employ forced labour and complies with relevant national law with regard to forced labour.

PO/MO/NTO Mandatory

5.6 The organisation shall not withhold payments or any legal documents from its employees and directly employed producers.

PO/MO/NTO Mandatory

5.7 The organisation shall ensure that it does not restrict employees and directly employed producers’ freedom of movement or employment.10

PO/MO/NTO Mandatory

5.8 The Producer FTO ensures that its producers also do not employ child labour or forced labour.

PO Mandatory by Year 4

Principle 6 Commitment to Non Discrimination, Gender Equity and Freedom of Association

Non-discrimination The organisation does not discriminate in hiring, remuneration, access to training, promotion, termination or retirement based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, HIV/Aids status or age.

Gender Equity The organisation has a clear policy and plan to promote gender equality that ensures that women as well as men have the ability to gain access to the resources that they need to be productive and

10 Sometimes even well intended services can lead to undue dependence or restriction of freedom, e.g. loan schemes that keep

producers in long-term debt and oblige them to remain in the group, keeping original identity papers of workers while employed etc.



also the ability to influence the wider policy, regulatory and institutional environment that shapes their livelihoods and lives. Organisational constitutions and by-laws allow for and enable women to become active members of the organisation in their own right (where it is a membership based organisation), and to take up leadership positions in the governance structure regardless of women’s status in relation to ownership of assets such as land and property.

Equal pay Where women are employed within the organisation, even where it is an informal employment situation, they receive equal pay for equal work. The organisation recognises women’s full employment rights and is committed to ensuring that women receive their full statutory employment benefits. The organisation takes into account the special health and safety needs of pregnant women and breast-feeding mothers.

Freedom of Association The organisation respects the right of all employees to form and join trade unions of their choice and to bargain collectively. Where the right to join trade unions and bargain collectively is restricted by law and/or political environment, the organisation will enable means of independent and free association and bargaining for employees. The organisation ensures that representatives of employees are not subject to discrimination in the workplace.


6.1 In its employment practices the organisation does not practice any discrimination in hiring, access to training, promotion, termination or retirement based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, HIV/Aids status or age, unless it is part of its mission to favour particular disadvantaged groups.

PO/MO/NTO Mandatory

6.2 The organisation respects the right of all employees to form and join workers’ organisations of their choice and to bargain collectively. Where the right to join trade unions and bargain collectively is restricted by law and/or political environment, the FTO will enable means of independent and free association and bargaining for employees. The FTO ensures that representatives of employees are not subject to discrimination in the workplace.

PO/MO/NTO Mandatory

6.3 The member actively supports and encourages its employees and directly employed producers to organise, meet and discuss problems both with each other and with management.


6.4 The organisation has a clear policy and plan to promote gender equality that ensures that women as well as men have the ability to gain access to the resources they need to be productive and also the ability to influence the wider policy, regulatory and institutional environment that shapes their livelihoods and lives. Organisational constitutions and by-laws allow for and enable women to become active members of the organisation in their own right (where it is a membership based organisation), and to take up leadership positions in the governance structure.





6.5 The member supports women employees and directly employed women producers in combining family and work duties, e.g. by flexible working hours, childcare support, leave if family members are ill.


6.6 Where women are employed within the organisation, even in an informal employment situation, they receive equal pay for equal work. The organisation recognises women’s full employment rights and is committed to ensuring that women receive their full statutory employment benefits.

PO /MO Mandatory by Year 2

6.7 In selection of FT producers and suppliers, the FTO does not practice any discrimination based on gender, race, caste, national origin, religion, disability, sexual orientation, marital status, union or legal group membership, political affiliation, HIV/Aids status or age, unless it is part of its mission to favour particular disadvantaged groups.

PO/MO Mandatory

6.8 The FTO shall identify particularly disadvantaged and vulnerable groups among its FT producers and/or suppliers and give priority and/or special preferential conditions when working with them.


6.9 The member does not practice any discrimination with regard to wages (equal pay for equal work) for its employees and directly employed producers.


Principle 7 Ensuring Good Working Conditions

Health and Safety at work The organisation provides a safe and healthy working environment for employees and/ or members. It complies, at a minimum, with national and local laws and ILO conventions on health and safety.

Working hours and conditions Working hours and conditions for employees and/ or members (and any home-workers) comply with conditions established by national and local laws and ILO conventions.

Safe working conditions for producers Fair Trade Organisations are aware of the health and safety conditions in the producer groups they buy from. They seek, on an ongoing basis, to raise awareness of health and safety issues and improve health and safety practices in producer groups




7.1 The member conducts a basic assessment of health and safety conditions11 and demonstrates awareness of the main risk areas.


7.2

Accidents or work related health problems of employees and directly employed producers (working at the premises organised by the member) are recorded and analysed with appropriate corrective action to prevent similar cases in the future.

PO/MO/NTO

Mandatory by Year 2

7.3 The member respects all legal requirements regarding pregnant and breast-feeding women and takes into account their special health and safety needs.

PO/MO/NTO Mandatory

7.4 The organisation provides safe working conditions and addresses conditions to prevent risks of serious accidents or health problems for all employees and directly employed producers, including:

fire hazards

responsible handling of any chemicals (adequate personal protection, training in their use, locking chemicals away when not in use, providing product safety information)

safety of machinery to prevent accidents

safe drinking water

adequate toilet facilities

protective clothing provided

first aid provision (first aid kits, trained first aider)


7.5 The FTO directly working with producers who work at premises outside the FTO’s responsibility, maintains an overview of their working conditions. It works with producers to ensure safe production methods and introduces training and preventative and improvement measures when necessary. The FTO is aware of the health and safety conditions in the producer groups they buy from. They seek, on an ongoing basis, to raise awareness of health and safety issues and improve health and safety practices in the producer groups in their supply chains.


7.6 The organisation has a system of recording and managing working hours of its employees and directly employed producers, especially overtime. It meets national legislation with regard to working hours, overtime remuneration, statutory holidays and annual leave.


11 This can be done internally or with external experts.




7.7 The member provides its employees and directly employed producers with all legally required social benefits (e.g. retirement funds, sickness leave, basic social security).


7.8 Within its possibilities, the organisation strives to provide additional social security and benefits to its employees and directly employed producers, above what is required by national regulations, in particular:

health insurance/medical support

retirement schemes

social security in case of disability or death of the income earner

sick leave


7.9 The organisation does not use limited term contracts, or apprenticeship as a means to avoid social security for employees and directly employed producers. The organisation regularly reviews its employment practices and long term “casual” workforce and strives to provide as many employees and directly employed producers as possible with regular employment.


7.10 The FTO discusses working hours with its employees and directly employed producers and optimises processes and lead times to avoid excessive workload during peak times of production, in collaboration with FT partners.


Principle 8 Providing Capacity Building

The organisation seeks to increase positive developmental impacts for small, marginalised producers through Fair Trade.

The organisation develops the skills and capabilities of its own employees or members. Organisations working directly with small producers develop specific activities to help these producers improve their management skills, production capabilities and access to markets – local / regional / international / Fair Trade and mainstream as appropriate.

Organisations, which buy Fair Trade products through Fair Trade intermediaries in the South, assist these organisations to develop their capacity to support the marginalised producer groups that they work with.


8.1 The member develops a plan and budget for capacity building of producers and employees according to their needs and the needs of the organisation.





8.2 The organisation provides regular capacity building for its employees and producers according to their capacity building plan.

Training may be provided internally or externally.


8.3 The Producer FTO provides regular training and support, when required, to FT producers and employees with the aim of strengthening their:

professional qualifications

product quality and designs (if applicable)

marketing capabilities (market information, pricing)

management capabilities

improvement of practices with regard to Fair Trade principles (e.g. children in the production process)


8.4 The Marketing FTO assists the producer organisations it works with to improve their management skills, production capabilities and access to markets. If buying through an intermediary, the FTO must support capacity building assistance to the FT producers through the intermediary or other local/national Fair Trade support organisations.12

MO Continuous improvement

Principle 9 Promotion of Fair Trade

The organisation raises awareness of the aims of Fair Trade and of the need for greater justice in world trade through Fair Trade. It advocates for the objectives and activities of Fair Trade according to the scope of the organisation.

The organisation provides its customers with information about itself, the products it markets, and the producer organisations or members that make or harvest the products.

Honest advertising and marketing techniques are always used. N° Compliance Criteria Applicable to Achieved by

9.1 The member promotes and/or raises awareness of Fair Trade and Fair Trade principles internally with its employees and directly employed producers.

PO/MO/NTO Mandatory

9.2 The Producer FTO or Marketing FTO buying locally from producers or producer groups, promotes Fair Trade and its principles to its FT producers, as appropriate to its size and scope of operation.


12 Records of training, assistance etc. need to be kept to monitor progress in capacity building.




9.3 The Marketing FTO engages in the promotion of Fair Trade and its principles to the general public and consumers, as appropriate to its size and scope of operation.

MO Mandatory by Year 2

9.4 The member demonstrates engagement in on going and planned promotion of Fair Trade (internal and external), awareness raising, education, campaigning or advocacy.


9.5 The member collaborates with local/national Fair Trade Organisations and/or its FT partners in Fair Trade campaigning and networking.


9.6 The member provides its customers with truthful information about itself, the products it markets and the suppliers and producers of the FT products.

PO/MO/NTO Mandatory

9.7 The organisation employs honest and ethical advertising and marketing techniques.

PO/MO/NTO Mandatory

Principle 10 Environment

Sustainable sourcing Organisations that produce Fair Trade products maximise the use of raw materials from sustainably managed sources in their ranges, buying locally when possible.

Production techniques They use production technologies that seek to reduce energy consumption and where possible use renewable energy technologies that minimise greenhouse gas emissions.

Managing waste They seek to minimise the impact of their waste stream on the environment. Fair Trade agricultural commodity producers minimise their environmental impacts by using organic or low pesticide use production methods wherever possible.

Purchasing policy Buyers and importers of Fair Trade products give priority to buying products made from raw materials that originate from sustainably managed sources, and have the least overall impact on the environment.

Packaging and shipping All organisations use recycled or easily biodegradable materials for packing to the extent possible, and goods are dispatched by sea wherever possible.




10.1 The organisation complies with relevant key local and national rules and regulations on environmental aspects that concern their activities.

PO/MO/NTO Mandatory

10.2 The FTO understands and strives to minimise negative environmental impacts of production of FT products with regard to water conservation, protection of water bodies and natural ecosystems, bio-diversity, energy usage and waste.


10.3 The FTO strives to understand key environmental challenges in its supply chains, and prioritises products13 from sustainable sources, use of local materials where appropriate and those produced with least overall impact on the environment.


10.4 FTOs educate consumers, suppliers and producers about meaningful steps they can take to lessen their environmental footprint, especially in the responsible production, use and disposal of their products.

MO Continuous improvement

10.5 FTOs educate producers and employees about best production practices with regard to minimising energy consumption and emissions into water, air, soil or waste.


10.6 FTOs use recycled or easily biodegradable materials for packaging as far as possible, and goods are dispatched by sea wherever possible.


6.3 Supply chain management

Purchasing A marketing FTO is expected to buy the majority of its products from suppliers who comply with the core Fair Trade Principles (see Appendix 1 below).

All products which are available14 from Fair Trade sources, must be bought from suppliers who comply with the core Fair Trade Principles (from WFTO members or equivalent sources or monitored under the FTO’s Internal Monitoring System (IMS)).

Fair Trade Supply Chain Management A marketing FTO must have an internal management system in place to ensure that it is buying products from Fair Trade supply chains and that even unverified suppliers comply with the core Fair Trade Principles.

13 Products made from raw materials from sustainable sources or grown using sustainable agricultural methods .

14 Availability refers to the product being readily available in the required quality, quantity, technical specification and provenance.



A producer FTO working with producers or informal producer groups outside its own premises, must develop an adapted Internal Monitoring System to monitor the application of Fair Trade standards in its operation as required in all criteria referring to “producers”.

Internal Monitoring reports In their Self Assessments FTOs need to fill in the Supplier Monitoring form (Annex 11.1.1 c Section 1) and have the records from their Internal Monitoring System (IMS) available for peers and auditors to check. Annex 11.1.2 gives guidelines and sample questions which can be included in an FTO’s IMS where appropriate.

Use of the WFTO Product Label Fair Trade products from the following sources may carry the WFTO Product Label, once the FTO has undergone its first Monitoring audit and signed a labelling contract with WFTO:

other WFTO members

suppliers certified or approved by a Fair Trade system deemed equivalent by the WFTO Guarantee System (see 6.3.2 Appendix 2 Recognised schemes for supplier monitoring). In the case of partially equivalent schemes, the FTO can reduce the internal monitoring of that supplier accordingly.

producer groups/ suppliers directly monitored by the FTO as part of its Internal Monitoring System.

The Label may not be used on products bought from unverified suppliers who are marketing organisations but not working directly with producers, as the FTO would be unable to carry out any monitoring of the producers of those products.

Other products in their range which are not specifically Fair Trade and therefore excluded from use of the Label, are expected to be from sustainable/ responsible production and from a supplier who does not act contrary to the values of WFTO. The FTO must declare in its WFTO membership Profile (11.1.1 b) which of its suppliers are not to be included in the scope of the WFTO Guarantee System and therefore cannot carry the WFTO Product Label. Compliance Criteria Applicable to Achieved by

In the Supplier Monitoring form (11.1.1c Section 1) the FTO identifies all Fair Trade suppliers, as well as those suppliers to be included or excluded from the WFTO Guarantee System15. It also identifies the monitoring programme for each of the included suppliers, e.g. WFTO member, FTO's Internal Monitoring System, WFTO equivalent system.

PO/MO Mandatory

A marketing FTO operates an internal management system to ensure that all its suppliers of FT products adhere to the core Fair Trade Principles. This includes responsible selection of suppliers and up to date information of the Fair Trade verification status of all suppliers (e.g. WFTO membership, FT certification, internal

MO Mandatory

15 Please note that an FTO is expected to buy the majority of its products from FT supply chains. The option to exclude suppliers

from the WFTO Guarantee System scope is mainly to allow marketing organisations to add a few commercial products lines to their

range. Although this does not serve their primary aim of benefitting marginalised producers it may help overall sales success to add

items such as recycled or locally sourced products.



Compliance Criteria Applicable to Achieved by

monitoring results) as well as basic risk assessments of possible violations of Fair Trade Principles in their supply chains, in particular unverified supply chains.

A marketing FTO buying from unverified Fair Trade suppliers must have in place an Internal Monitoring System (IMS) to verify their compliance with the core Fair Trade Principles. The IMS shall at least include:

A site visit to the production areas at least once every 3 years (every 2 years for complex/ high risk operations). This can be sub-contracted to another FTO, local researcher or local NGO but the FTO must ensure that the person carrying out the monitoring visit understands the core Fair Trade Principles and compliance criteria and must evaluate the findings;

The visits must be documented and cover the core Fair Trade Principles;

There must be demonstrated follow up on identified needs for improvement (e.g. training, awareness raising).

For verified suppliers (members of WFTO, or certified according to an approved FT certification system) the FTO may accept the result of their audits, without further need to conduct additional monitoring.

If a supplier is part of another FTO's IMS, the FTO may accept the result of their monitoring.

MO Mandatory by Year 2

A producer FTO buying from individual producers or informal producer groups, puts in place a simple Internal Monitoring System (IMS) to verify implementation of the Fair Trade Principles at all levels of the organisation down to its FT producers, as required in the WFTO Standard criteria. The IMS shall at least include:

That each producer group (or producer village) is visited (by field officers, advisors, representatives of the FTO etc.) at least once every 2 years with visits of production sites and interviews/discussions with producers. In justified cases a visit frequency of up to 4 years can be agreed with WFTO;

The visit must be documented and cover the core WFTO Principles applicable to producers (in particular in relation to safe working conditions, child labour, fair prices). The visit should include site tours of production units (including a number of individual farms or homes if applicable)

There must be demonstrated follow up on identified needs for improvement e.g. training, awareness raising.

PO Mandatory by Year 4



Compliance Criteria Applicable to Achieved by

When selling a FT product that qualifies for the WFTO Product Label, the FTO shall ensure that all product labelling and information text is accurate and in line with the WFTO labelling guidelines (Handbook Ch 9).


When selling a FT product under the WFTO Product Label, the provenance (e.g. primary producer group) of the product is communicated to the buyer.




6.3.1 Appendix 1 Core Fair Trade Principles

This is a list of the core Fair Trade principles that apply to all an FTO’s suppliers16 of FT products, whether they are WFTO members or not. These aspects must therefore be considered in the selection of FT suppliers and monitored by FTOs in their Internal Monitoring System.

1. Creating opportunities for small producers or other marginalised groups.

2. Transparent and accountable business relations with suppliers and customers.

Producers and workers are given a chance to participate in decision making processes and have a voice within their organisation.

3. Responsible and trade fairly. The organisation pays producers on time and according to mutual agreement. They handle quality problems fairly.

4. The organisation pays a fair price to producers, as mutually agreed by both sides.

5. No child labour or forced labour.

6. Commitment to non-discrimination, gender equity and freedom of association.

7. Ensuring safe and fair working conditions. The organisation pays at least the applicable minimum wage, provides legally required benefits and manages working hours responsibly.

8. Where possible, assist in developing the capacity to support the marginalised producers that they work with.

9. The organisation is expected to provide truthful information about its organisation (including prices to producers) to the FT buyer.

10. Respects the environment and where possible sources raw materials responsibly.

16 Marketing organisations or producer organisations selling to FTOs.



6.3.2 Appendix 2 Fair Trade schemes accepted for supplier monitoring

One of the aims of the WFTO Guarantee System is to create, wherever possible, synergies with existing Fair Trade certification schemes in order to avoid duplication for Fair Trade Organisations in the field of inspection and monitoring. For this reason the Guarantee System has a Recognition policy for other FT systems with comparable Standards and monitoring systems (see 8.3.3).

As well as recognising equivalent Fair Trade systems to replace WFTO monitoring, the FTO too can rely on other recognised FT schemes in their internal monitoring (IMS) of suppliers to check that they comply with the core Fair Trade Principles (Ch. 6.3.1).

Therefore if a WFTO member purchases from a producer or export organisation certified by one of the WFTO recognised certification schemes, no supplier monitoring for this specific supplier is required. Furthermore FTOs can accept all FT certification audit reports by qualified social certification bodies which cover core aspects of Fair Trade, and need not include these suppliers in their internal monitoring.

For the selection process of the recognised FT schemes, WFTO has considered the outcome of several pieces of research17, which analyse and compare existing FT certification schemes. According to the outcomes of these studies the list of organisations below has been produced18. The certification systems in this list can be considered by our members to be comparable with/ equivalent to their supply chain monitoring and therefore no additional supplier monitoring for these suppliers is required by the WFTO member. In the Supplier Monitoring Form (Section 1 of the Self Assessment Report) the FTO will need to declare which system each supplier is monitored under.

The list below is an open list and other FT certification schemes can be considered by the Standard and Guarantee System committee. In future national FT guarantee or certification systems may also be considered for this list. FT schemes will remain in this list as long as WFTO considers their monitoring to be comparable to the supplier monitoring requirements of the Guarantee System.

The following organisations are accepted as fully equivalent:

ECOCERT

FLO Cert

FUNDEPPO

IMO - Fair For Life

Naturland

Other social certification bodies may be accepted as partially equivalent where FTO's have the audit reports on file and have scrutinised the results and complemented the monitoring to ensure the supplier complies with core FT Principles.

17Research which has been taken into account: The BTC study about Fair and Sustainable Trade guarantee systems (2011), Fair

Trade Crafts Labeling Research Report 09-2010 Traidcraft, Comparison FLO - IMO - Equitable by Claro 2-2011, Research on

certification IIED May 2012, Comparison FT Certification Systems Report Germany – Nov 2012, Comparison FT Certification

Systems Matrix C Germany – Nov 2012

18 Provisional list 2013 - 2014

wfto fair trade standard

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