by:
Nynke Douma
Strategy & Management
Sustainable tea sourcing - Brewing up progress?
Dutch tea companies and non governmental organisations have begun to discuss how to improve social and environmental performance in the industry.
 On May 16 some of the largest tea packers and distributors in the Netherlands, including Sara Lee International, Unilever and the supermarket branch Albert Heijn (part of Ahold), gathered in a first-ever round table conference with NGOs to discuss corporate social responsibility progress in the tea sector.
The meeting followed the release of the report on the subject, “Sustainabilitea: the Dutch tea market and corporate social responsibility”, produced by the Tea Initiative.
This alliance of several Dutch NGOs and trade unions is calling on tea retailers to improve the social, economic and environmental conditions under which tea is currently produced.
Although the precise content of the meeting was not disclosed, it was revealed that all parties agreed that improvements and focused research are needed, especially because a lot of information on how to manage sustainability in the global tea chain is still lacking.
As oversupply has caused a drop in the real price for tea, the report says, countries such as China, India, Sri Lanka, Indonesia, Kenya and Turkey have been particularly affected. The wages of plantation workers have dropped, child labour and bonded labour is still omnipresent and unions are often in weak negotiating positions.
NGOs say that overproduction also causes soil degradation, environmental damage and biodiversity loss through intensive use of pesticides and insecticides.
Gavin Bailey, executive director of the Ethical Tea Partnership (ETP), a tea industry body based in the UK, adds that “poorly framed or ill-defined legislation relating to social standards” in countries such as for example India and Sri Lanka, hamper progress.
Because Western tea companies increasingly buy from estates that pay attention to social standards, tea producers in countries with poor law or standards enforcement may become “economically handcuffed”, as Bailey puts it.
They could find themselves at a competitive disadvantage in comparison to countries with better law or standards enforcement practices.
Notably, he says, the presence of good laws alone does not necessarily mean that workers are well protected - in many nations, such as China, implementation of labour law, although similar to that of the EU, is often poor.
Looking for solutions
Most international tea companies have started to tackle these ‘problem areas’ through joining alliances such as the Fairtrade Labelling Organisation that, together with the international Fair Trade movement, certifies ethically produced tea.
Perhaps best known is the ETP, with 18 mostly Western tea packers as current members.
In total the members invest annually $2.7 million in ETP.
This money is largely used for monitoring of plantations by PriceWaterhouseCoopers.
Through the use of questionnaires and interviews a judgement is made on the occurrence of freely chosen employment, freedom of association, the safety of working conditions, acceptable working hours and the absence of child labour.
Based on what is acceptable according to local laws, a plantation can become ETP approved on a scale of A (compliant) to F (some critical non-compliances).
This provides a general guideline for packers and producers. Plantation owners have to pay for improvements themselves.
In the 11 regions where ETP is currently active, 1,700 ‘selling-marks’ on over 1,600 estates have currently been monitored. A selling mark is the name, sometimes more than one, under which an estate sells its tea to ETP members.
For these 11 regions, ETP members have committed themselves to buying their tea from monitored plantations. They are also free to buy from regions that are not monitored by ETP.
According to Gavin Bailey the grading system is not a top-down imposition of Western standards. “It is rather a mechanism which helps producers understand and meet the expectations of their customers and those who drink their tea, often in markets many thousands [of] miles away”, he says.
In the UK, ETP covers 75% of the tea market. As for the Netherlands, ETP-member Sara Lee International, with a 65% Dutch market share, says that by 2007 it wants to purchase all of its tea from by ETP approved plantations.
World market leader in tea, Unilever, has also signed up to ETP and, in addition, has its own sustainable development programme for tea production.
Ahold, the second biggest player on the Dutch tea market, has not signed up to ETP but is member of the Business Social Compliance Initiative (BSCI), a business-led platform for the European retail industry that monitors social standards in producing countries against its code of conduct based on UN labour treaties. Ahold also conducts independent audits of their tea producers, says Albert Heijn press officer Els van Dijk.
NGO criticism
However, critics of BSCI, such as the Clean Clothes Campaign, an alliance of European NGOs, say that it does not ask for strict enough code compliance or push hard enough for systemic change on the ground in tea producing countries.
Also, say NGO critics, its monitoring system rests on self-assessment via paid consultants, rather than monitoring partnerships involving NGOs that include producers and workers. This, they say, would result in more credible and legitimate results.
In a 2005 recent assessment of the BSCI, the Clean Clothes Campaign said that “stakeholders have a marginal role and are not equally represented…stakeholders were not been involved in the design of the system, while at the governance level, their role is reduced to an advisory council that convenes twice a year”.
The UK’s Ethical Trading Initiative, a collection of companies, NGOs, and Union focused on improving standards using a multi-stakeholder, more inclusive process, is seen by many NGOs as a more credible model.
Aside from a lack of multi-stakeholder inputs, BSCI is generally focused on the clothing sector, meaning that for some NGOs, the ETP, despite its flaws, is a better bet.
This view is shared by the NGOs behind the Sustainabilitea report. They say ETP is “the only CSR initiative of any standing in the tea sector.” Yet, they feel ETP’s strategies are not effective enough.
Little attention is paid, they say, to environmental damage or overly onerous purchasing policies. Also says the Dutch Tea Initiative, ETP’s members are only tea packers while producers and workers also ought to be involved in discussion on CSR related issues and improving overall standards.
Pauline Overeem, spokesperson of the Dutch Tea Initiative, recognises ETP is making an effort to improve its records. But she also criticises ETP’s audits. “Visits are short, their audits expensive and not externally verified. Also, the findings or the names of producers that have been audited are not available to the public”, she says.
ETP’s Gavin Bailey says ETP reports are not shared because they represent a snapshot in time, are work in progress, and require careful interpretation.
“There have been instances with other schemes where similar information made public without context has done considerable damage…By quickly blaming tea companies or only focussing on the negative aspects nobody is helped”, Bailey says.
But, arguably, being open about deviations or alarming conditions found on tea plantations may increase ETP’s legitimacy. For example clothing and footwear companies who have shared audit results, like Gap and Nike, have recently been praised for doing so, at least in some sections of the Western press.
Challenges, challenges
As the process of change takes time, both ETP and the Dutch Tea Initiative are stressing their ongoing efforts for positive change.
ETP is currently working on a global code of conduct for the tea sector. It is also moving into new countries and has set up a network of regional managers to expand its capacity. It is also seeking partnership with international development organisations such as DFID, to improve the social conditions on plantations.
Similarly, the Dutch Tea Initiative began setting up training sessions to build local capacities for undertaking research into the global tea industry.
In cooperation with Dutch tea packers, it is also conducting research on the social and environmental conditions on plantations in Indonesia and Africa. The group says it will pursue its contacts with ETP in order to make suggestions for improvements.
One priority, say some commentators, is to improve the ongoing dialogue between tea producers, tea packers, retailers, workers, trade unions and NGOs.
And in the Netherlands, with the round table meeting in May, a first step towards multi-stakeholder collaboration has been made. Many involved hope that the next meetings, scheduled for October and November, will bear further fruit.
Like tea, CSR initiatives usually need to steep for a while before reaching their full flavour.
Useful links:
www.ethicalteapartnership.org
www.bsci-eu.org
Tea margins
The process of cultivating, picking, drying and sifting tea leaves costs €1,25 per kilogramme, of which €0,51 goes to the workers’ wages. When marketed, transported and put in the familiar tea bags, that same kilogramme is worth €8,51. Eventually, retailers charge customers on average €18,10 per kilogramme of tea.
(Source: Sustainabilitea report, available at www.indianet.nl/sustainabilitea.html)
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Landelijke India Werkgroep - August 11, 2006