The Ethical Trading Initiative


The Ethical Trading Initiative

Hand-in-hand with the SA 8000 framework has come the Ethical Trading Initiative, a UK government- funded project that was established in 1998 as a collaborative effort involving more than 30 European companies, various trade union groups, and 19 NGOs. It is a significant initiative, with considerable and growing influence ” the combined annual turnover of member companies now exceeding $80 billion. [8 ]

Unlike many more general labor codes of conduct, the ETI is specifically focused on helping company members remove risks to their reputation and operations from poor employment conditions in their suppliers. [9 ]

The ETI base code requires that corporate members observe internationally agreed codes of conduct concerning labor and employment standards, including that:

  • Employment is freely chosen .

  • Freedom of association and the right to collective bargaining are respected.

  • Working conditions are safe and hygienic.

  • No child labor is used.

  • Workers are paid a living wage.

  • Working hours are not excessive.

  • No discrimination is practiced.

  • Regular employment is provided.

No harsh or inhumane treatment is allowed. [10 ]

These principles are essentially the same as those found in the SA 8000 standard, and the two groups work hand-in-hand, even sharing common board members. There are important differences, however. SA 8000 is a standard, modeled on the structures of other ISO quality standards such as ISO 9000. This means that it requires that companies be certified by an accredited professional, third-party certification firm. SA 8000 provides a structured method for implementing the principles enshrined in the ETI.

The ETI s approach itself is very different from SA 8000 s, and is focused on working with suppliers on experimental programs known as pilot schemes, which develop new methods for improving working conditions. It is through this exchange of leading practices, they contend, that the ETI brings real value to its members.

[8 ] Teresa Fabian, Supply Chain Management in an Era of Social and Environmental Accountability at www.sustdev.org/journals/edition.02/download/sdi2_1_5.pdf.

[9 ] Peter Burgess, Pilot Interim Review, Ethical Trading Initiative, SOMO Centre for Research on Multi-National Corporations, November 1999, p. 8 at www.somo.nl/monitoring/initiatives/eti-pilotrev.htm ; and also Teresa Fabian at www.sustdev.org/journals/edition.02/download/sdi2_1_5.pdf .

[10 ] From the Ethical Trade Initiative Web site at www.ethicaltrade.org/pub/ publications /purprinc/en/index.shtml.



Horizontal Environmental Performance Standards

While SA 8000 is often wrongly referred to as a social and environmental standard, in fact it only deals with social and labor- related issues.

Following the upsurge in public concern for the environment of the past 10 years , however, several particularly important environmental standards have been developed ” both within individual industries and, with the development of the ISO 14000 series, more universally , with one standard applying to all industrial sectors.



ISO 14001

The ISO 14000 series of standards is rapidly becoming the leading international standard for environmental performance. The full 14000 series includes an Environmental Management System (ISO 14001), as well as various other standards for auditing (ISO 14010 “ 14012), performance evaluation (ISO 14031), environmental labeling (ISO 14024), and life-cycle assessment (ISO 14040). As with SA 8000 in the social arena, the 14000 series is a framework that helps companies organize their environmental management systems, providing instructions on how to create an EMS process, how to collect and retain documentation, and how to communicate the process and train employees .

The 14001 series has become extremely popular, particularly in Japan and Europe, where since it was first published in 1996, some 10,000 companies have received certification. As with any ISO framework, the 14000 series is based on the idea that only a worldwide standard can provide the combination of consistency and comparability that are so important for investors, consumers, and NGOs anxious to understand how companies are managing the environment through their extended supply chain. Based in Geneva, Switzerland, the International Organization for Standardization is a nongovernmental organization that has been developing technical standards particularly related to manufacturing, quality assurance, and the supply chain since its establishment in 1947. In developing the ISO 14000 environmental standards, the ISO works with representatives from member countries , which in turn enlist the advice of corporations and government agencies (such as the U.S. Environmental Protection Agency or the U.S. Technical Advisory Group).

Similar in many ways to the EU s Eco-Management and Audit Scheme (EMAS) and the British Standards Institute s BS 7750, the ISO 14001 EMS standard is probably the most highly developed among the many emerging environmental standards, and much like Baldrige s 18 subsection items, contains 17 key requirements of a company:

  1. Environmental Policy. Develop a statement of the organization s commitment to the environment.

  2. Environmental Aspects and Impacts. Identify environmental attributes of products, activities, and services and their effects on the environment.

  3. Legal and Other Requirements. Identify and ensure access to relevant laws and regulations.

  4. Objectives and Targets. Set environmental goals for the organization.

  5. Environmental Management Program. Plan actions to achieve objectives and targets.

  6. Structure and Responsibility. Establish roles and responsibilities within the organization.

  7. Training, Awareness and Competence. Ensure that employees are aware of and capable of dealing with their environmental responsibilities.

  8. Communication. Develop processes for internal and external communication on environmental management issues.

  9. EMS Documentation. Maintain information about the EMS and related documents.

  10. Document Control. Ensure effective management of procedures and other documents.

  11. Operational Control. Identify, plan, and manage the organization s operations and activities in line with the policy, objectives, and targets.

  12. Emergency Preparedness and Response. Develop procedures for preventing and responding to potential emergencies.

  13. Monitoring and Measuring. Monitor key activities and track performance.

  14. Nonconformance and Corrective and Preventative Action. Identify and correct problems and prevent recurrences.

  15. Records. Keep adequate records of EMS performance.

  16. EMS Audit. Periodically verify that the EMS is effective and achieving objectives and targets.

  17. Management Review. Requires top management to periodically review the EMS for effectiveness in achieving the intent of the environmental policy and identify the need for changes to the system. [11 ]

[11 ] See www.p2pays.org/iso/emsisofaq.asp or for a full description of the ISO 14000 platform see www.iso.ch/iso/en/iso9000-4000/basics/general/basics/.html.