Examination of Witnesses (Questions 160
- 179)
TUESDAY 13 MARCH 2007
MS JUDITH
BATCHELAR, MS
HILARY PARSONS
AND MS
EMMA REYNOLDS
Q160 Joan Ruddock: I think actually
you said, did you not, that Fairtrade was very well recognised?
Ms Parsons: It is.
Q161 Joan Ruddock: I think all the
evidence we have received is that, because it is so well recognised,
because there is consumer demand, if companies actually wanted
to increase their range and their volume it would be pretty easy
to do it?
Ms Parsons: You still have to
have the costs involved of launching the product and there has
to be a market for it. Certainly the research we did with Nescafé
showed that there were many consumers out there who were interested
in purchasing a Fairtrade coffee product but were not actually
purchasing at present, and who would be attracted to the idea
of doing that through the strength of the Nescafé brand.
The launch of the product was very much about bringing these new
consumers, who are interested and who have heard about Fairtrade
but are not purchasing the product currently perhaps, into the
market. That is the strategy behind the brand.
Q162 Chairman: We had a very powerful
evidence session with the Prime Minister of Dominica two weeks
ago, Roosevelt Skerritt, who gave us a very strong indication
of the benefit of Fairtrade bananas to his small island in the
Windward Islands. I wonder, first of all, how you can do what
you have done, which is to go entirely Fairtrade, and whether
there is a downside to that, because the evidence would suggest,
because you are buying Fairtrade, by definition, before you go
100% Fairtrade, you are buying something which is not fair trade,
and those producers who were supplying you presumably are no longer
supplying you. Whether it is your decision or that of others,
it has been suggested, for example, that there has been a complete
collapse of the banana market in Nicaragua as a result of people
switching to Fairtrade in the Windward Islands and elsewhere.
How do you explain that point, because clearly, when you launch
your Fairtrade products, everyone says "it is wonderful,
Sainsbury's all Fairtrade", but you are not going to tell
them that there is a downside to it: is there?
Ms Batchelar: First of all, I
think the point that you made about how we have moved supply bases,
we have not. One of the principles is that, in terms of Fairtrade,
we have always tried to work with, our existing suppliers to enable
them to achieve that standard. There is a principle, because if
you have got issues where they are not achieving a Fairtrade standard,
the principle is to work through it.
Q163 Chairman: You are bringing Fairtrade
into your supplier, rather than going to Fairtrade for a start?
Ms Batchelar: The existing supply
base, yes; because the whole principle is you do not walk away
from the problem, you face up to the problem and deal with it.
In this example, particularly in Costa Rica, not just from St
Lucia, where I think most of the comments come from, I think the
biggest issue was around union representation and how we negotiated
to get to that point.[7]
As a principle, we have not lost any of our existing suppliers,
we are taking our existing suppliers on that journey, and indeed
it is a journey, which will not be complete until the middle of
this year. I think the other point is that we have not expected
our customers to pay any more for Fairtrade bananas. To put that
in context, already 25% of what we have sold, in terms of bananas,
were Fairtrade before we chose to take that decision, so it was
quite an easy decision, from a customer point of view, to do that.
It was not quite such an easy decision to make financially, because
that required us making a £4 million investment, which is
basically the premium which is paid.
Q164 Chairman: It is a slightly tangential
question but to what extent do you think that the WTO challenge,
in the ending of the banana regime, has actually stimulated Fairtrade?
Mr Skerritt was saying to us that the banana trade in Dominica
collapsed and it has not got back to where it was. They had to
consider "What do we do now?"—and Fairtrade seems
to have been to where they have turned?
Ms Batchelar: For me, the whole
stimulus for all of this has been the customer demand, not any
other agenda, so the reason why we pushed this is essentially
because it is what customers want, the first point we made really.
Q165 Richard Burden: Can we go back
to clothing again, and this is specifically for Judith, I think.
Joan Ruddock asked Tesco about the issue of whether the purchase
of Fairtrade cotton extended through to other parts of the production
process, and I think, Emma, you said that, in relation to Tesco,
it went through the entire production process. In relation to
Sainsbury's, Labour Behind the Label has commended you for moving
towards the supply of Fairtrade cotton, but I think also they
have urged you to extend that to the manufacture and other parts
of the production process, and how do you respond to that?
Ms Batchelar: I think, absolutely
right, so everybody is clear, the cotton that we are purchasing
is Fairtrade cotton; the processing of that and the manufacture
of the garments is not Fairtrade. The way that we operate is we
have our own socially responsible sourcing policy and code of
conduct, which applies to absolutely everything that we do throughout
the supply chain. That is based upon the ETI Base Code which we
use as our start point. In terms of the way that we deal with
the other parts of the supply chain, that is exactly the same
as it is for every single product which has got Sainsbury's name
on it. The obvious difference with the Fairtrade part of that
is that they are paid the social premium, so the only difference
for us will be that social premium, and again we would audit to
those standards.
Q166 Richard Burden: In terms of
the factories you use, which produce the garments which end up
in a Sainsbury's store, how is the monitoring of working conditions
in those factories done by Sainsbury's?
Ms Batchelar: In two ways. All
of our social audits are carried out by an independent third party,
so that was what normally would happen.
Q167 Richard Burden: Who would that
be?
Ms Batchelar: It would be a number
of organisations we would use which we outsource to, so SGS, ITS,
a number of people. I do not know specifically who it would have
been in this instance, but again we could give you that information.[8]
The second part though, and this is to put it in context, is that
we are a tiny clothing business, so, unlike most of our high street
competitors, our stores are smaller, most of them do not sell
clothing, and for us this is a fledgling business, we do not necessarily
have the scale issues that some of our competitors have because
we are, as I say, a small and growing, young business. We are
quite close to our supply base, and in this instance, I talked
earlier about having a colleague out in Africa for four months
to drive some of these projects, both before we initiated this
project and now, whilst out there she has been to visit the whole
supply chain and will continue to do so. I think that is one of
the, I suppose, differentiating factors for us, in terms of how
we are engaging with Fairtrade, because one of the key drivers
around Fairtrade, or what enables us to be confident about Fairtrade,
is being closer to those suppliers than normally we would be,
because of the nature of the claim that we are making around putting
the logo on the pack. It does drive some ways of working which
are positive.
Q168 Richard Burden: As you have
got the advantage of being compact in that and close to your supply
chain, how would you, for example, and how do you, proactively
promote, say, freedom of association in the factories you use?
Ms Batchelar: I think the biggest
thing for us is being close enough to those people by being more
familiar with them, that some of the things you might necessarily
not be aware of become apparent by being familiar. In a lot of
the ways that we deal with some of those things, the very geographic
nature of where these places are, how often you visit them, is
that you are not necessarily able to promote and support those
things in the way that you would if you were present physically
on a more regular basis. Being there physically, I think, is the
answer to that.
Q169 Richard Burden: Can you give
me an example at all of, say, any of the places where you have
operated, where you can say, "This is what Sainsbury's did
to promote freedom of association, collective organisation by
the workforce"? I realise it will be difficult in some places
but are there any examples of where Sainsbury's has done that?
Ms Batchelar: I cannot think of
any specific examples now, but I am sure there are some, so, again,
I will be happy to follow that up.
Q170 Richard Burden: If you could
give us a note on that, it would be helpful?
Ms Batchelar: Yes.[9]
Q171 Ann McKechin: This is one for
Emma. I am sure you will be aware, Emma, of War on Want's recent
report about factory conditions in Bangladesh, poor working conditions,
mainly a female, young workforce, long hours, low pay.[10]
I wonder what your response is to the allegations which were made,
that companies such as yourselves, because you are looking for
such low prices in comparison with the UK average, are actually
forcing those types of conditions on the factory owners?
Ms Reynolds: We were obviously
very concerned to hear the allegations that were made and investigated
them immediately, with unannounced visits from ourselves and with
third party auditors to the factories which supply us in Bangladesh.
We were not able to find any evidence to support the claims that
were made and neither were the third party assessors, in terms
of child labour or welfare standard and working conditions. There
was a point about age. Almost everyone that we spoke to was proven
to be 18 or above, there was one 16 year old but no evidence of
child labour at all, but we are continuing to work with our suppliers
on the ground. We have been training our suppliers there, in terms
of making sure that everyone understands the standards that we
require.
Q172 Ann McKechin: Has the third
party report been published?
Ms Reynolds: There is no published
report; it was third party assessors carrying out the audits.
I can give you more information about it, definitely, if that
would be useful.[11]
Q173 Ann McKechin: That would be
helpful. I notice, in your written submission, perhaps you can
clarify this, in terms of your principles of corporate social
responsibility, you said you set clear standards, audit them to
ensure they are complied with and support producers, "we
can help raise the bar in developing countries" including
safe working conditions, fair wages, reasonable working hours
and the right to join a trade union, often for the first time.
The War on Want report points out an advertisement, admittedly
in the United States but in your US arm, in May of last year,
where the job specification included maintaining union-free status
and union-avoidance activities.[12]
Could you say whether that is consistent with your corporate social
responsibility?
Ms Reynolds: I am not familiar
with that. We are opening stores in the US this year, but from
May last year, I am not familiar with what that would be referring
to.[13]
Q174 Ann McKechin: That was quoted
in the Financial Times article on 26 May last year; are
you not familiar with that article?[14]
Ms Reynolds: No. We are opening
up stores in the US this year; we have not got any stores open
in the US as at this time.
Q175 Ann McKechin: Forgive me; if
that is true then people may find your contention that you are
encouraging people to join a trade union, often for the first
time, is not particularly convincing. The War on Want report said
they found only one person, in all the factories that they examined,
who was a member of a trade union. Could you possibly confirm
to us, of the audit that you carried out, how many were trade
union members and what the level of representation was with the
employers?
Ms Reynolds: I do not have the
figures. As I said, I am very happy to go back and get the details
of the third party assessments that were done and share those
with you. I am more than happy to do so.
Q176 Ann McKechin: Can you confirm
what the trade union representation was, from your studies?
Ms Reynolds: Yes; absolutely.[15]
Q177 Ann McKechin: Also, if you could
come back to us about the US advertisement, that would be helpful
and if you could clarify whether you agree with it or not?
Ms Reynolds: Absolutely.[16]
Ann McKechin: Thank you very much.
Q178 Chairman: I would just say that
I had a meeting addressed by Christian Aid, actually in my own
constituency, where I asked the question about whether or not
a £4 shirt available in Tesco, made in Bangladesh, had helped
reduce poverty or increased poverty. The reaction I got was that
"I wouldn't buy anything in Tesco anyway". The point
on that I would make to you is that really it is in your interests
to be able to answer those kinds of questions, because if people
make allegations which are not true but you do not rebut them
then people do not actually know. What we are trying to do in
this report is make a contribution to helping people make informed
decisions and obviously the more information we can get from you
the better able we are to do that.
Ms Reynolds: On the point of Bangladesh,
the information I have is that all the accusations that were made
we have investigated and found nothing to substantiate them. We
are still working with people on the ground and are undertaking
supplier training and auditing. We have got the ETI Base Code
as a minimum, in terms of the standards that we look for from
all our suppliers, and we are committed to enforcing those and
working with our suppliers to do so. We think the economic benefit
that we bring through trading relationships in Bangladesh—
Q179 Ann McKechin: Can I interrupt,
because I think it is important. When you make these inspections
generally do you provide notice or do you just make on the spot
inspections? I think one of the general comments has been that,
quite genuinely, your inspectors arrive and they look at the books
and they say everything seems to be fine, but because you have
given advance notice you have given them the opportunity to come
out with a second set of books, the books for the inspectors,
to send away the younger workers and to tell people what they
should say when the inspectors ask them any questions. I am wondering
if someone has the right to go in without any warning and make
an on-the-spot inspection or to question people when they come
out of the factory anonymously and try to get some information
from them?
Ms Reynolds: There is a combination
of both; some are pre-arranged audits, we have ethical audits
and technical audits, some are unannounced visits, so hopefully
you will be able to address those concerns through that process.
7 Ev 117 Back
8
Ev 116 Back
9
Ev 116 Back
10
http://www.waronwant.org/fashion+victims+13593.twl Fashion Victims:
The true cost of cheap clothes at Primark, Asda and Tesco,
War on Want, December 2006. Back
11
Ev 124. Back
12
http://www.waronwant.org/fashion+victims+13593.twl Fashion Victims:
The true cost of cheap clothes at Primark, Asda and Tesco,
War on Want, December 2006. Back
13
Ev 141 and Ev 187. Back
14
"Tesco's US Stores could be union-free" Financial
Times 26 May 2006. Back
15
Ev 125 Back
16
Ev 125 Back
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