Right Reality:
A Model of Fairness in Global Trade

David Batstone

by David Batstone

"A law of indiscriminate profit is being globalized, and by its application all too many corporations contribute to the abuse of human rights in poor countries."

This declaration sounds like it came straight off the podium of the anti-globalization protests that fill the streets upon the occasion of a World Trade Organization meeting. Actually, it was a CEO of a major corporation who shared this opinion with me: Riccardo Bagni, the chief executive of Coop Italia, one of the biggest commercial enterprises in all of Europe.

Coop Italia, with headquarters in Bologna, is made up of a group of cooperatives operating in the banking, insurance and retail sectors. The conglomerate operates around 50 superstores, 1000 supermarkets and 200 discount stores covering the entire country of Italy. Its total sales turned the tills for close to $10 billion for 2001.

The cooperative movement was born in Italy more than a 100 years ago to stimulate fair market conditions for workers who did not have ready access to capital. Taking up this legacy, Coop Italia launched in 1947 as an international buying office for the cooperatives that were still in business. Phenomenal growth over the years has pushed the company into constant organizational change. But the original ethos of the enterprise stands firm: "Coop Italia is a company comprised of people, not capital," Riccardo tells me.

Coop Italia's standout efforts to improve labor practices around the globe give his claim credence. The company purchases food and non-food products from nearly 2500 suppliers worldwide. In 2001 it bought nearly $50 million in goods from Asian countries alone; most of its textiles and rugs, for example, come from China, India, Pakistan and Bangladesh.

The company first began considering a code of conduct for its supplier network back in the mid-1990s. Riccardo had been appointed vice-chairman for the company's non-food products with a direct responsibility for private brand management and quality assurance. He made it a priority to set consistent labor standards wherever Coop Italia conducted business in the world. "I wanted to make sure that the respect of workers, especially for those belonging to the weaker ends of society, was a prime value at our company," he says.

Most Italians love soccer, so Riccardo could not think of a better venue than the World Football Championship in 1998 for introducing the concept of 'fair trade.' Coop Italia heavily promoted and stocked on store shelves the 'Ethics Ball,' made in Pakistan at a higher than normal production price to ensure a living wage. Coop Italia also made sure that no child labor was involved in the ball's production.

The Ethics Ball campaign never was intended to be a one-off marketing ploy. In 1998, the company established a system to oversee all of its international purchasing. It began working closely with second-party agencies to monitor and verify compliance. For suppliers found to be operating in violation of its code of conduct, Coop Italia provides intensive training on how they can adopt plans that will move them progressively toward compliance.

One such incident arose with a fruit supplier in Africa. Del Monte Kenya provides Coop-brand pineapples. Even though the corporate parent, Del Monte Foods Company, had signed off on Coop Italia's code of conduct, independent auditors inspecting its plantation in Kenya found major problems. The violations related especially to safety conditions and the workers' right to form a union. Del Monte Kenya at first denied the audit report, then resisted making changes. Local human rights organizations and the Kenyan government backed the workers and turned up the heat on the fruit producer to make changes. Coop Italia helped facilitate negotiations among all the parties, and Del Monte Kenya made corrective actions.

The globalization of labor is a matter of fierce debate these days. As happens in many debates, the extremes grab the spotlight - unrestricted free contract vs. sweatshop exploitation. Fortunately, a vanguard of corporations is showing how positive, long-term partnerships can be built with workers and the social sector to mutual advantage.

Contact David Batstone at:
batstoned@rightreality.com