Wednesday, April 25, 2012

Interview: Mr. Chip Pitts, Vice Chair/Chair Designate, Fairtrade International

Fairtrade International (FLO) is a non-profit, multi-stakeholder association that develops and reviews Fairtrade Standards, assists producers in gaining and maintaining Fairtrade certification and capitalizing on market opportunities. Its mission is to enable the sustainable development and empowerment of disadvantaged producers and workers in developing countries through Fairtrade certification by: setting international Fairtrade Standards; facilitating and developing Fairtrade business; supporting producers in making maximum use of the opportunities offered by Fairtrade certification; and by promoting the case for trade justice in debates on trade and development. FLO is the only organization in the world that specializes in Fairtrade standard-setting. 25 members around the world produce or promote products that carry the FAIRTRADE Certification Mark. They developed the Fairtrade labeling model and are responsible with the global board of directors for governance and decision making within FLO. Its members include three producer networks, 19 labeling initiatives, two marketing organizations, and one associate member. The Europe Korea Foundation, philanthropic arm of the EUCCK, has been involved as it’s marketing organization for the initiative in South Korea since early last year. As noted by Mr. Chip Pitts, Vice Chair/Chair Designate of the FLO Board, Fairtrade represents a new way to do business that looks holistically at the supply chain to address market failures and their social impact at source. It is not about aid or charity, but about recognizing the global community as having rights and responsibilities that extend across all of its stakeholders. “This is a really exciting time for FLO because Fairtrade has had an exponential growth over the past years. This mega-trend of Fairtrade which leads to more sustainable, and more equitable economic relations is something we need to build on. We have to make sure that the movement is always at the cutting edge of being relevant and high impact for small farmers and workers in the quest for a more just world.” One of the focuses of the board is to take cognizance of the changing dynamics, the fact that there are these competitive approaches that are coming up, including ones that focus just on sustainability, or just on environment, or just on human rights or labor rights. The nice thing about his particular label is that it represents all of these things- environmental, human rights and labor rights. It also really contributes to the companies’ needs to have sustainable supply chains, he said. He observed that Fairtrade certification benefits marginalized producers and workers in the Global South in four critical ways. First, it provides producers with guaranteed prices that are higher than conventional world market prices, particularly in volatile tropical commodity markets. Second, it supports organizational capacity building for the democratic groups that are required to represent small-scale producers and workers. Third, it enhances production and marketing skills for participants and their families which extend beyond Fairtrade Certified production. Fourth, it provides a social premium to finance broader community development projects, such as health clinics, schools, better roads and sanitation, and other social services. Mr. Pitts is an academic, technologist, attorney, businessperson, and activist who has led technology enabled grassroots campaigns and coalitions for human rights, economic development, and social justice in the United States and in various countries around the world. Having started his international career with a public interest law firm working against apartheid in South Africa, he then became a partner at the world’s largest law firm, Chief Legal Officer of Nokia, Inc., and founding executive of startup companies in Silicon Valley and Austin while offering volunteer leadership to various non governmental organizations. He is also an advisor to the UN Global Compact and former Chair of Amnesty International USA, and serves on several other global boards and advisory boards, including the Business and Human Rights Resource Center (London), the Negotiations Center (Dallas), and the Electronic Privacy Information Center (D.C.). During the current academic year, he is serving as a Visiting Professor at CEIBS (Shanghai), Kyung Hee University (Seoul), and the Center for Human Rights (University of Minnesota), in addition to ongoing teaching in Corporate Social Responsibility and Sustainable Development at Stanford Law School and Oxford University. “I prioritized my personal activities in this region because despite being one of the most connected regions in the world, in terms of economic globalization, Asia is a bit of a laggard when it comes to human rights and social compliance.” For this reason, although the Fairtrade movement has been making inroads in many Asian countries, it has not made much of an impact in China. There are nascent pilot efforts because of the government obstacles that have to be overcome. Notwithstanding this, the other emerging markets are coming on-line and and are acting in big way. Without a doubt the ‘second world’ economies will be driving the process in the future, he said. There is a nascent ASEAN mechanism for human rights now, with the establishment of a Working Group whose primary goal is to establish an intergovernmental human rights commission for the region. It is a coalition of national working groups from ASEAN states which are composed of representatives of government institutions, parliamentary human rights committees, the academe, and NGOs. It is still at an early stage, while the mechanisms in America and Europe are well established. Even the African system is actually quite strong, while Asia is a latecomer, he said. “Asia is at the forefront of economic liberalization, but needs to catch up when it comes to CSR and human rights. We have seen amazing progress just in the last five years and there is a rapid race to catch up with the global norms. Not just WTO and commercial norms but also best practices and social norms. This old idea that CSR is just about philanthropy or giving back a percentage of your profits, that was dominant five years ago, is changing rapidly in countries like India, Malaysia, Indonesia, China and also definitely here in Korea.” “This is partly being aided by the United Nations Global Compact and the new UN Business and Human Rights Framework which have very strong roles for the State to protect rights. They also have roles for civil society and businesses, whereby human rights must be respected. It is not a discretionary matter anymore, but rather an imperative...a global norm, crystallized in ethical norms and also in soft law and hard law. We are seeing an explosion of soft law standards on this topic. In every industry in the world there is a code of conduct and often those codes are made into hard law,” he noted. The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption. The UN Framework on Human Rights and Business comprises the State’s duty to protect human rights, the corporate responsibility to respect human rights, and the duty to remedy abuses. “Asia is playing catch up, and the opportunity that Fairtrade presents is something that should be compelling to all stakeholders. It is in the interest of government and businesses as well as producers. It addresses the trust deficit that businesses are having globally and is a non-partisan, neutral, common- sense way to have more fair, sustainable trade that is in the interest of everyone. Moreover, consumers, too will benefit as they don’t want to be part of unethical trade,” Mr. Pitts noted “Human Rights are about empowerment. This was one of the best things going. Having studied international development, and been active with a lot of anti-poverty initiatives around the world, ranging from direct cash grants to less direct systems, I think that the Fairtrade system represents a sort of culmination of a market-based system based on enhanced transparency in the value of the supply chain but also enhanced equity. It has the potential to contribute a changed consciousness globally where we as consumers, business people, government, all the stakeholders, we all need to be aware that the old idea of “business as usual” --exploitation, violating labor rights, and destroying the environment -- is not only wrong morally is not sustainable. We cannot have business like that in the world; it’s not fit for our current population. That’s what fair trade represents...not just the commercial perspective but also people and the planet.” Fair trade guarantees that there are minimum standards that all rights will be complied with standard processes. So instead of the classic race to the bottom we have the race to the top. All companies can compete on a level playing field. “Frankly it’s sort of a microcosm of the core challenge of the 21st century economy: How do we have a more sustainable and ethical capitalism, showing the way for an equitable relationship between capital and the supply chain -- one that will be sustainable for the future? We can avoid these frequently recurring and ever more intense and problematic financial crises. Fairtrade and CSR offer circuit breakers for global capitalism so that we can achieve a more level playing field and a more resilient system that will allow people to survive and prosper in the future.” Speaking on the challenges that the movement faces, he said that the organization has to ensure that it is an adaptive learning enterprise, that can take on board scientific challenges like climate change, but also not lose its core anti-poverty mission, which is essentially to connect producers and consumers more fairly. It has to do so in a more equitable fashion, so that farmers and workers who are often excluded from the global economic system have a means of earning a more sustainable living, with more empowerment, more autonomy over their lives. “What we need is economic development, not growth, so that people have opportunities. We have to look at ways in which these are interrelated. South-South trade is increasing, and that’s a reality we have to encourage and recognize. We need to be cognizant of the need to have much bigger impact. We want to take it to next level and make a much bigger dent in global poverty by bringing more people into system,” he said.


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