Markets working to support sustainable development

The Ethical Trading Initiative (ETI)

Members of Ethical Trading Intiative (EITI) have to adopt the Base Code for ethical trading and sign up to the Principles of Implementation – these require a company to demonstrate its commitment to ethical trade, to integrate ethical trade into core business activities and drive year-on-year improvements. In addition they should support suppliers through training and capacity building and should report on their activities openly and accurately.

The ETI Base Code Principles are that:

  • Employment is freely chosen
  • Freedom of association and the right to collective bargaining are respected
  • Working conditions are safe and hygienic
  • Child labour shall not be used
  • Living wages are paid
  • Working hours are not excessive
  • No discrimination is practised
  • Regular employment is provided
  • No harsh or inhumane treatment is allowed

Members of ETI have to report annually on their ethical trade activities. The ETI Secretariat and representatives from trade unions and NGO membership conduct random validations on these reports on 20% of members. There is no consumer facing label and compliance with the principles is used for business to business purposes.

Market coverage: 

ETI market coverage is achieved through their members, which include:

  • 84 companies (July, 2014) with a collective turnover of £166 billion. These sign up to the initiative and commit to making sure that their producers and supplier commit to meeting the base code. This leverages approximately 40,000 suppliers and covers more than million workers worldwide.
  • Trade unions that together represent nearly 160 million workers around the world, including the Trade Union Congress and the International Trade Union Confederation (ITUC), as well as the eight members of the Council of Global Unions. 
  • 16 international NGOs,  including fairtrade, anti-slavery and labour organisations. 

 

Background information: 

The Ethical Trade Initiative was launched in 1998 by a group of companies, NGOs, and trade union organisations in the UK with the backing of the then International Development Secretary, Clare Short. The Initiative started as a result of concerns about the poor working conditions across supply chains. A number of codes were developed in the mid 1990s however they were often disparate and not universally applied. As such the ETI sought to move beyond this by developing the Base Code – derived from ILO conventions – and commit members to apply it across their supply chains.

The governance structure is ‘tripartite’ with equal representation from corporate, trade union and NGO sectors – DfiD has continued to have a presence as an observer on the board. The trade union members are the Trade Union Congress (UK); the International Trade Union Confederation; and the Council of Global Unions. 

Funding source: 

The ETI will receive income of £1.3 million in 2011-14 from DFID, and will supplement that with membership fees from members and NGOs.