Fair Trade as CSR Tool

What is CSR?

CSR stands for the corporate social responsibility that was introduced in various terms such as triple bottom line, level playing field, sustainability reporting, trickle-down effect, socially responsible investing, community involvement, corporate citizenship and many other names that reveals the benefits of the CSR within an organization. The CSR is the starting point of the firms to publish the social and environmental reports, acquire an expert corporate consultants and stakeholders that can pro-long the life of the business (Slob, 2005).

Understanding the concept of sustainability is acknowledging the presence of true CSR. The firms’ that includes the practice of involving the stakeholders in every activity is a good indication of corporate citizen (Regil, 2007). The aim of corporate social responsibility or CSR is to have a positive impact upon the company’s integration on social and environmental concerns towards the commercial activities and having a good relationship with the stakeholders (Fontenenau, 2003). For the firms, having the CSR can help them increase the contribution to society and to have a sustainable development. Specifically, the CSR goes beyond the legal obligations or responsibilities in every corporate operations that involves the issues of health and safety of the workforce; employment policies and exercising the rights and; environmental protection (Noon, 2008). Recognizing the role of the CSR within the organization is also contributing in the development of the community in which the business operates. This norm of applying the responsibility is pushing the initiatives for the business to keep the business on-going and be a successful one in the nature of the business industry (Perigot, 2003).

What is Fair Trade?

Fair trade is identified through the nature of the commercial activity and significantly, there are a number of participants that process a raw material into a finished product and being compensated in form of their monetary currency. The basic idea is to bridge the distance between producers and consumers by eliminating all or at least some of the intermediaries in order to provide a more direct access to consumers with a better share in the value chain to the producer. The entities that actually bridge producers with retailers pay the higher price above the commodities market to then pass it on to consumers either directly or through their retail channel. Consumers in turn, knowingly and willingly, pay the premium retail price in support of a good cause and of a high moral standard, which is the fair transaction for the product of the producer (Regil, 2007). While there is a representation in being fair in a trade, the lack of awareness of labor rights might be abused by some corporate leaders. The idea of fair trade can add the value of the little awareness towards the right on the labor and in the industry (Quigley and Opal, 2006).

Fair Trade and Corporate Social Responsibility

The holistic concept of combining the two type of market strategy both seeks to generate the profit through the fair sustainable transactions. It presumably provides dignified livelihoods to all stakeholders involved. Because its distinctive characteristic is its fair and regulated environment for disadvantaged producers, it is assumed to be socially and environmentally responsible. Acquiring the fair trade as a tool in CSR is promoting a responsible practice. It guarantees the moral obligation to be responsible in adding every kind of practice for the business (Regil, 2007).

In summary, both CSR and fair trade must act as a whole to be a good corporate citizen. In a sustainable manner, the social, economic, and environmental dimensions in different activities in all countries should be in a comprehensive manner. The state of the fair trade in area of business activity falls under the category of CSR and together promotes sustainability. The idea of participation involved in the fair trade addresses the manner of fair transactions. Consequently, without a pre-existing culture of corporate social responsibility, it would be difficult for fair trade to have an impact without significant efforts to educate management, workers, and monitoring the standards or production within an industry (Quigley and Opal, 2006). The combination of the fair trade and the corporate social responsibility is a good strategy where a company can prove themselves in the market and gradually improve their business performance. Maintaining or sustaining the market positions are the available options of the company within the competition.

References:

Fonteneau, G., 2003. Corporate Social Responsibility: Envisioning its Social Implications. The Jus Semper Global Alliance, Living Wages North and South. [Online] Available at: http://www.jussemper.org/Resources/CSRsocialimplications.pdf. [Accessed 17 Dec 2009].

Noon, P., 2008. Corporate Social Responsibility. Negotiator’s Guide. [Online] Available at: http://www.world-psi.org/TemplateEn.cfm?Section=Home&Template=/ContentManagement/ContentDisplay.cfm&ContentFileID=23044. [Accessed 17 Dec 2009].

Perigot, F., (Pres.). 2003. Corporate Social Responsibility. An International Organization of Employers Approach: Adopted by the Management Board. [Online] Available at: http://www.ioe-emp.org/fileadmin/user_upload/documents_pdf/papers/position_papers/english/pos_2003march_csr.pdf. [Accessed 17 Dec 2009].

Quigley, M., & Opal, C., 2006. Fair Trade Garment Standards. Feasibility Study [Online] Available at: http://transfairusa.org/pdfs/FT%20Garment%20Standards%20Feasibility%20Study.pdf. [Accessed 17 Dec 2009].

Regil, A., 2007. How Sustainable is Our Latte? An Assessment of Trends and Standards in Fair-Trade. The Jus Semper Global Alliance: Sustainability of Fair Trade [Online] Available at: http://www.jussemper.org/Resources/Trade%20Activity/Resources/How_Sustainable_is_Latte.pdf. [Accessed 17 Dec 2009].

Slob, B., 2005., Civil Society Organizations and CSR: Joining Hands in Europe and Latin America. SOMO (Centre for Research on Multinational Corporations). [Online] Available at: http://www.eldis.org/fulltext/CSOsandCSR_Eng.pdf. [Accessed 17 Dec 2009].