Published in Partnership with Reuters AlertNet and in advance of the 2013 Skoll World Forum. Watch the live stream April 10-12 by clicking here.

Today’s global supply chains are risky and highly vulnerable, especially in key agricultural product sectors.  At the same time today’s sustainability efforts are not effectively addressing one of the critical elements of supply chain security:  the human factor.  On-the-ground solutions that provide farmers and workers with financial security, capacity building and market access are the missing critical ingredients needed for creating more secure, resilient, transparent supply chains.

Fair Trade is a market-based approach that addresses these challenges by empowering farmers to fight poverty, improve lives, and protect the environment. Today more than 1.2 million farmers and workers in 70 countries participate in Fair Trade, and over 10,000 Fair Trade Certified™ products can be found in 100,000 retail locations across North America in an ever expanding range of categories.  For the past 14 years, leading brands, retailers, NGOs, conscious consumers and Fair Trade USA have partnered to deliver over $225 million in additional income to rural families around the globe, supporting community development and environmental sustainability.

While we are proud of these accomplishments, they pale in comparison to the magnitude of the problem.  Over 2 billion people still live in extreme poverty, and of those 65% work in agriculture. According to recent research by the International Food Policy Research Institute (IFPRI), smallholder farmers make up half of the world’s undernourished people, three-quarters of Africa’s malnourished children, and the majority of people living in absolute poverty.  For many of the farmers, workers, and communities that supply global brands, huge challenges around global poverty and environmental degradation continue to persist.

Fair Trade can and must do more. This conviction – that a successful, proven model can be more inclusive and more effective at a much greater scale – lies at the heart of Fair Trade USA’s innovation strategy, Fair Trade for All, and our vision for the future of supply chains which  we call Full-Impact Sustainability™.

Current State

There is a trend in business toward sustainability, and most companies admit they need to do more. However, they don’t necessarily have clear strategies to accomplish this.  Most solutions to supply chain sustainability are partial ones where the provider is advocating a narrow focus, which often doesn’t address the complex drivers of sustainability challenges.  Invisible risks lurk “beneath the tip of the iceberg” and many business people are not able to fully understand the implications all the way down to the producer level.  Historically, the focus has been on environmental sustainability; the social side of sustainability has been ignored.

Business faces major challenges around supply chain security.  For example, market failures in global supply chains result in major price swings in commodities.  While this creates problems for everyone in the supply chain, farmers are hit the hardest.  Farmers and workers are further marginalized by actors who have more information and power.  As a result, farmers often under-invest in capacity-building, worker and environmental programs, and community development.  This puts supply chains at risk and perpetuates issues such as environmental degradation, poverty, and community challenges around adequate schooling, healthcare, and housing.  While governments and NGOs continue to try to address such issues using traditional top down approaches, these are both ineffective and too slow given the magnitude of the challenges.  The solution lies in market based approaches, not aid.

Future State

We believe that companies and their global supply chains can both improve long-term security and effectiveness and play a key role in addressing the multi-dimensional challenges of sustainability. We envision market-driven, full-engagement, profitable solutions to supply chain security, sustainability and poverty alleviation.

Our vision for Full-Impact Sustainability requires that interconnected actors — international business, certifiers and other service providers, development funders & NGO’s, academics and consumers — work in concert to achieve, measure, and communicate meaningful impact. It is one where supply chains effectively serve the needs of business and truly foster economic, environmental, and social sustainability as indicated below:

–      EconomicInnovation and technology-aided performance and impact measurement enable streamlined, transparent, and secure supply chains.  Financial and non-financial benefits flow to supply chain participants commensurate to their added value.  Farmers and workers earn a decent living, are able to invest in their farms, and see farming as a viable and attractive livelihood.

–      Environmental – A shift to sustainable agriculture drives gains in farm productivity, profitability and climate change resilience as well as environmental conservation and biodiversity. This, in turn, makes supply chains more secure and reliable for global brands and retailers.

–      Social – Farmers, workers, their families, and communities lift themselves out of poverty through investment, empowerment, and capacity building in their businesses and communities.  The outcomes are better business partners; higher quality, consistent product supply; and more vibrant communities with enhanced education, healthcare and other important services.

In order to attain this vision, each of the following actors will play critical roles:

–      International business – Executives, employees and stakeholders value the positive impact their actions have on global sustainability and poverty alleviation, and this is a source of ongoing innovation and success within the core business. Business proactively anticipates consumer, employee, and environmental trends. Business also clearly sees, understands, and credibly communicates the difference they are making.  Through technology and social media, supply chains have “come to life” in ways that are meaningful to and understood by consumers, employees, and the full range of stakeholders; leadership efforts are rewarded.

–      Certifiers and service providers- Certifiers and related service providers have realized that they must join forces to enhance overall effectiveness, enhance credibility, and foster scale.  They now understand the multi-dimensional nature of sustainability and standards have converged, creating practical methods that cost-effectively address the full-range of important issues and opportunities.

–      Development funders and NGOs – Development funders and NGOs are fully engaged in market-based, empowerment approaches to capacity building and poverty alleviation as the most effective way for them to achieve development goals. They provide investment funds to amplify the impacts that could be achieved by the market alone.

–      Academics – Academic institutions are studying various approaches so there is shared learning on what works.

–      Consumers – Consumers are educated, informed, and engaged through a full range of innovative efforts including social media and community engagement.  They reward sustainability leaders with their purchasing dollars.   Consumers understand the various labels and certifications and favor those that they see as most credible and aligned with their values.

True sustainability for everyone in the supply chain

We dream of the day when Fair Trade has become the norm, rather than the exception.  In a world where well intentioned top-down approaches to poverty alleviation are proving ineffective, we believe that market based solutions are critical.  We seek to make poverty history and preserve the planet, and we believe Fair Trade USA’s vision for Full-Impact Sustainability can be a significant piece of the overall solution.