The Fable Of The Label.

BlogConsumer goodsCorporate social responsibilityCSR PoliciesEnvironmentEthicsEuropeGlobal sourcingNorth AmericaReputational RiskRetailRiskSouth AmericaSupply chain management+-

Brands put ethical labels onto their products left, right and centre, which, on face value, points to a new age of ethical sourcing. But, in reality, these labels are often nothing more than a carefully executed marketing campaign.


Businesses are spoilt for choice when it comes to picking suppliers bearing various labels, trademarks, certifications and seals. For its part procurement is all too happy to work with these suppliers so that they can market their operations as ‘ethical’. 


‘Local farm food’, ‘organic’, ‘Fairtrade’: each of these phrases stir up a warm, fuzzy feeling in the heart and mind of the buyer that by sourcing such goods they are helping to ’do their bit’ on the CSR front. But, what do these labels actually mean about where the products are sourced from and should buyers be asking some more difficult questions of their suppliers?


What you may think a label means and what it actually means can be two very different things though.


Wal-Mart and McDonald’s recently committed to sourcing only cage-free eggs – a major step forward for the US’ food industry, where only 6% of hens are currently believed to be reared in a cage-free environment. Yet the concept ‘cage-free’ does not necessarily mean free of cages. For eggs to be labelled cage-free, the hens have simply been raised in a slight bigger cage. Suppliers can rear hens in cages marginally larger than the industry standard, or in large but overcrowded cages; living conditions can actually be no better than that of caged hens.


Similarly, for a product to be marketed as organic it must contain 95% organically produced ingredients, leaving manufacturers with a 5% leeway.


Businesses making efforts to source more responsibly down their supply chains is one thing, but it is important to delve deeper and understand what suppliers actually mean by these terms and labels - otherwise it is nothing more than just a label.


Even the established, more widely-regarded Fairtrade trademark has been exposed as having a potentially murky supply chain. An undercover investigation in March by Channel 4’’s Dispatches programme unearthed that Cadbury’s Dairy Milk chocolate bars, which bear the Fairtrade trademark, are not produced entirely from Fairtrade cocoa beans. The Fairtrade Foundation responded to the revelations by claiming it is not always possible to separate Fairtrade cocoa and non-Fairtrade cocoa along all stages of the supply chain, with manufacturing and shipping processes presenting opportunities to mix the two.


Businesses seemingly have very little guarantee that the products they are sourcing do truly bear the ethical credentials they believe them to. Yet, this isn’t stopping Cadbury’s and similar brands shouting from the rooftops about their sustainable, ethical supply chains in efforts to boost sales. Certifications, it seems, are not actually addressing the root of the problems in global sourcing.


In essence, labels, certifications, seals and trademarks are doing nothing more than putting a stamp over the issue that says to the business: ‘this supply chain has already been checked and made ethical so you don’t have to check’, and so businesses might not bother tracing the supply chain for themselves. Pull the fictitious label off and supplier practices and processes may not be quite be quite as squeaky clean as many thought. 


This article is a piece of independent writing by a member of Procurement Leaders’ content team.


Rachel Sharp
Posted by Rachel Sharp

Want to learn more? Please fill in your details to hear from us.