Ethical Trade and Fair Trade: What’s the Difference?

Fairfactia focuses on ethical trade in India.  Ethical trade refers to the responsibility that retailers, brands and their suppliers take to improve the working conditions of the employees in their supply chains. It means that these organizations adhere to standards of conduct for promoting workers’ rights.

Fair trade is an organized movement whose goals are to help producers achieve better terms of trade and to promote higher social and environmental standards. Most fair trade efforts are focused on producers of raw commodities in developing countries (e.g., agricultural products, handicrafts, mined goods) with the aim of raising their standard of living while also improving environmental conditions.

Learn more about Fairtrade.


Fairfactia’s Ethical Trade Standards

Many ethical trade retailers in Europe set up codes of conduct and rely on social auditing organizations to ensure compliance with legal labor standards in the Indian factories where their products are made. 

However, these standards*generally provide only a basic floor to protect workers. Some include:

  • The right to free choice of employment
  • The right to collective bargaining
  • The elimination of forced or compulsory labor
  • The abolition of child labor
  • The right to just and favorable pay
  • The right to equal pay for equal work

Moreover, worker exploitation can still occur if partner factories subcontract work to second and third tier supply chain factories that are not audited for ethical trade standards. 

Fairfactia goes beyond the minimum legal standards of “ethical trade” in two significant, groundbreaking ways:

1. In our participatory model, employees are asked what improvements they wish to see in their working environment. Wherever possible, this forms the core of the CSR programs.

2. A portion of our profits are donated to support social projects for India’s poorer communities through our non-profit arm United for Hope. So, Fairfactia’s CSR programs benefit both garment workers directly while also supporting the needs of under privileged communities at large.

*Based on labor standards derived from ILO Conventions  and the UN’s Declaration on Human Rights.