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MarketWatch: ‘Fair Trade’ labeling extends beyond coffee and chocolate and into the world of fashion
07/07/2015 - 2:40 PM

Fair Trade coffee and chocolate have become commonplace. Get ready for Fair Trade fashion.

Two years after the collapse of a Bangladesh garment factory called Rana Plaza killed more than 1,100 and put a spotlight on fashion-industry working conditions, Fair Trade apparel is gaining ground. That incident also inspired a documentary that aims to foment change in the fashion industry, in much the same way the food industry was disrupted when documentaries including “Food Inc.” helped fuel rising demand for organic alternatives.

The volume of Fair Trade Certified — the phrase is trademarked — apparel and home goods has grown rapidly in the past two years and jumped almost fivefold in 2014 alone, according to the nonprofit certification group Fair Trade USA, which in 2012 introduced more than 334 compliance criteria for textile factories. Globally, that growth could be even more dramatic, as other groups have set their own certification standards.

A range of factors are measured for Fair Trade certification, including a factory’s environmental impact, its overall working conditions and the rights afforded workers. As a baseline, workers must be guaranteed local minimum wages. Brands also are required to make additional payments, based on how much they buy from factories, directly to workers in what’s called a Fair Trade Premium.

The total cost to the brands, including third-party factory auditing, worker training and the Fair Trade Premium, is, on average, about 1% to 5% of what brands pay to factories, said Maya Spaull, director of Fair Trade USA’s apparel and home goods category.

“What happened at Rana Plaza spearheaded the growth,” said Spaull. “It’s a wake-up call for the industry.”

Ethics forward

Fair Trade USA’s apparel certification now appears on 20 brands, up from just a handful before Rana Plaza. The factories certified are expected to increase to at least 25, in countries from India to Colombia, by the end of 2015, up from fewer than five in 2012. Patagonia, Williams-Sonoma Inc.’s WSM, +0.54%  West Elm and Bed Bath & Beyond Inc. BBBY, +0.61%  are among retailers that began selling Fair Trade Certified apparel or home furnishings in the past two years, according to Fair Trade USA.

Fair Trade USA, according to a West Elm representative, is the only group certifying production facilities for home and apparel manufacturers involved in large-scale production. “Traditionally,” spokeswoman Abigail Jacobs said, “certification has been limited to raw materials or outputs.”

Fair Trade USA — founded in 1998 to certify coffee production — now certifies in 30 categories, ranging from furnishings to flowers to spices to, this year at Safeway, what it claimed was the world’s first Fair Trade Certified seafood.


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