1. The Contribution of Fair Trade to Social Enterprise Dr Alex Nicholls MBA University Lecturer in Social Entrepreneurship Fellow of Harris Manchester College Alex.Nicholls@sbs.ox.ac.uk

2. Three Societal Fields

3. Community Profit-Non Profit Economy Private-Public Economy Formal-Informal Economy Private Sector Public Sector Boundary Spanning

4. The Big Idea, huh?

5. Competitive Strategy Now Old thinking: competitive market analysis contextualized by PESTLE as risk factors New thinking: switch the background and the foreground Context = market, not simply a frame of reference Opportunities lie in better understanding embededness of markets Creating new institutional arrangements

7. Age of Empire

8. Age of Trade

9. Age of Common Threats

10. New market opportunities

11. BoP

12. FDI

13. Changes in consumption patterns

14. Supply chain transparency

15. Rolling back of Commodity Fetishism

16. Decoupling of enterprise and business

18. Political Drivers 1980s Neo-conservative monetarism Free market deregulation/privatisation Rolling back taxation and state provision ‘Enterprise culture’ Individualism/entrepreneurial revolution 1990s ‘Third Way’ New Public Management Quasi-markets and welfare reform 2000s New welfare consensus Bankruptcy of public finances

19. Reinventing Government Increased privatisation of government and public services Search for better quality/efficiency/legitimacy Reduction in taxation Formats: Outsourcing contracts Voucher schemes PFIs/PPPs

20. Sustainable Business Enhanced CSR Triple Bottom Line strategies Pressure to act as corporate ‘citizen’ Role in solving social problems Role in social institution building BoP opportunities

21. Social Sector Effectiveness Move towards more ‘efficient’ business models in social sector For-profit subsidiary ventures Cross sector partnerships/hybrids Drive towards ‘sustainability’ Better responsiveness

22. Social Entrepreneurship Public Sector Private Sector Private-Public Partnerships Reinventing Government 2.0 Corporate Social Responsibility 2.0 Social Entrepreneurship Social Enterprise Policy New Mutuality ‘Big Society’ Community

23. Nicholls and Cho (2006) Defining Features Sociality Context; process; outcomes Innovation Spectrum of change Blurring institutional logics Market orientation Accountability and performance focus

24. Sociality

25. Innovation Schumpeterian notion of change agents Creative destruction Resourcefulness: bricolage approach Innovation in institutional structures Reconfiguring (social) needs, wants, demands

27. Carbon trading

28. Fair TradeDisruptive To change the cognitive frames of reference around markets and issues Social movements Microfinance

29. Market Orientation Performance focus Impact measurement Stakeholder accountability Competitive strategy Combines value creation and strong values

30. Market Orientation Addressing Market Failures Private/Commercial Market Failure Free Rider/Capturing Full Economic Value Public/Government Market Failure Collectivity/Democracy Social Sector Market Failure Resource dependency Supplyside bias

31. Spectrum of Social Entrepreneurship Institute For One World Health FB Heron Foundation Greenpeace Benetech Grameen Phone cafedirect Social Movements Corporate Hybrids Charities Social Business Social Change Social Enterprise

32. A business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or the community, rather than being driven by the need to maximise profit for shareholders and owners DTI (2002) Social Enterprise

33. Key Characteristics Purpose is social/environmental Vehicle is business Generate earned income Not necessarily profitable Create blended value Social + financial (accounting) Agnostic about legal form Method not the means Strong market orientation Performance measurement

34. Social Change Social movements Groups, organisations, networks Individuals? Acting in a coordinated way to change Policies Social structures Distribution of goods and services

35. Social Movements They are a kind of grievance machine for creating and aggregating demands for change Davis et al (2005)

36. Frame Analysis Social movements mobilise cognitive frames Positioning advocacy in an existing frame (eg ‘social justice’) Developing a new frame (‘environmentalism’) Diagnostic frames Identify and contextualise issue Prognostic frames Offer solutions

37. http://www.youtube.com/watch?v=pumcD7bB2hU

38. FT Defined Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainabledevelopment by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the south. Fair Trade Organizations, backed by consumers, are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade www.fairtrade.net/about_fairtrade.html

39. Fair Trade Mission Discourses

41. Market-driven ethical consumption

42. A new supply chain model

43. Reconnects producer and consumer

44. Reconfigures value across the supply chain

45. Two elements:

46. Social enterprise action

47. Development through trade

48. Social change advocacy

49. Trade justice

51. FT Labelling Organizations Rooted in social movement developing alternative economy beyond neo-liberal market hegemony Original institutional actors were alternative trading organizations (ATOs) (Tallontire 2000) 1988: first FT label = Max Havelaar 1997: FLO established Association of 24 organizations: 19 national labelling initiatives, three producer networks, and two associate members 15 European countries, Canada, the USA, Japan, Australia, and New Zealand

52. FLO Certification Sets standards Typically for commodity products Third party annual audit FLO-Cert Fee system Producers Labellers 2002: international FT Certification mark launched

53. FLO Certification: Coffee Floor price: US$1.25 per pound (Arabica, washed) Organic premium: US$20 cents per pound Fair Trade Premium: US$10 cents per pound Small farmers must be organized in organizations which they own and govern (co-ops) Democratic decision making is required Everybody has equal right to vote No use of agrochemicals Pre-export lines of credit up to 60 % of the purchase price

54. FT Coffee Price: Arabica

55. FT Coffee Price: Robusta

57. Launched 2001, Garstang, Lancashire

58. Now >800 in 17 countries

59. FT places of worship(UK)

60. >4,000 churches

61. >40 synagogues

62. FT universities and colleges (UK)

63. Launched by Oxford Brookes 2003

65. Social Enterprise Action Fair price Locally determined Long-term contracts Advance payment Minimum labour standards No child labour Capacity building/technical assistance Additional premium (10% of contract) Community development Marketing assistance

66. UK Certified FT Sales (£m)

67. Social Enterprise Action 2009: global certified sales £2.2bn (+47%) Total FT sales > £3bn Engages with >6 million producers in 60 countries >750 certified producer organizations >3000 certified products 2009: > £200m extra income to FT producers Cafedirect >£16m

68. Social Enterprise Action Mainstreaming Marks and Spencer cotton 9.5m units (2009) Tate & Lyle switch own label retail sugar (2009) Benefits >6,000 farmers in Belize Fair Trade premiums c £2 million p.a. Cadbury switch all Dairy Milk chocolate bars (2010) X3 volume of FT cocoa from Ghana £45m investment Nestle Kitkat (2010)

70. High Margin Typically premium products High value added for customer Strong brand statement Opportunities for range development Own label FT ‘value’ products

71. High Value Customer Typically AB demographic Female 30-45 High degree of loyalty Capture younger ‘radical’ customers

72. Strategic Value Fashionable ‘Ethical Halo’ High levels of consumer trust Part of a broader brand strategy Organic products GM free etc

73. WFTO Certification (FTO) Principles based Countries with no national labelling initiatives FT organizations in non-commodity markets Self-monitoring and self-reporting No fees Sustainable FT Management System (version 2)

74. WFTO 10 Standards of FT Standard One: Creating Opportunities for Economically Disadvantaged Producers Standard Two: Transparency and Accountability Standard Three: Trading Practices Standard Four: Payment of a Fair Price Standard Five: Child Labour and Forced Labour Standard Six: Non Discrimination, Gender Equity and Freedom of Association Standard Seven: Working Conditions Standard Eight: Capacity Building Standard Nine: Promotion of Fair Trade Standard Ten: Environment

75. WFTO: ‘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 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. Fair Trade marketing and importing organizations support capacity building as required to producers, to enable them to set a fair price

76. FT As A Social Movement? Consumption as political choice Rise of ‘ethical consumption’ Rewinding commodity fetishism ‘In and out of the market’ ATOs and mainstreaming Boundary blurring: market-driven ethics Cognitive reframing of the relationship between supply-chain and value chain Creating new social capital FT Towns

77. Fair Trade Mission Discourses

78. Mainstreaming Or Fairwashing?

79. Mainstreaming Or Capture?

81. Encapsulates whole social entrepreneurship spectrum

82. But these are in tension

83. Institutionalization may result in dilution, capture/co-option or mission drift