New report unveils key insights into business models that put people and planet first
A major new report from World Fair Trade Organization (WFTO), Traidcraft Exchange, University of York and Cambridge University challenges leaders gathering in Davos and beyond to foster business models that put people and planet first.
The report unveils key features of such mission-led business models and provides a direct contrast with profit-primacy businesses. The report, titled ‘Creating the new economy: business models that put people and planet first’ challenges government, business and finance leaders to foster mission-primacy business models in order to kick-start the new economy. A broad range of senior voices from academia and international organizations have already expressed support. Roopa Mehta, the president of WFTO, says: “The new economy is already here. Fair Trade Enterprises are joining forces with the broader social enterprise movement and others to demonstrate that business can truly put people and planet first. We all need to embrace this revolution in business.” Based on a recent study of Fair Trade Enterprises (WFTO members), the report unveils pivotal governance, management and profit reinvestment models that are already working across the world. These models ensure that business is focused on benefiting society and the planet. These are also more resilient enterprises and are better able to pioneer sustainability efforts. Key insights about Fair Trade Enterprises include:
- 92 per cent reinvest all profits in their social mission;
- 52 per cent are led by women;
- 4 times less likely to go bankrupt;
- 85 per cent report actively sacrificing financial goals to pursue social or environmental goals, while retaining commercial viability.
The report concludes that these characteristics give Fair Trade Enterprises an ability to prioritize social and environmental goals in their investments, practices and impacts.
Case studies of Fair Trade Enterprises and the peculiarity of their business models are featured in the report.
For instance, Miquelina in Colombia (a high-performance garment manufacturer) deploys a foundation-ownership model that locks in the social mission, and Mahaguthi in Nepal (mostly focused on fashion manufacturing) has formally locked-in a 100 per cent profit-reinvestment model to ensure any surplus from trading goes back into supporting marginalized communities. Gebana in Switzerland has deployed a similar model in food and agriculture.
While practicing a radical model of Fair Trade (Fair Trade across their operations and with their suppliers), these enterprises also pioneer ecological practices.
For example, Prokriteein Bangladesh has built a business model that upcycles waste fabrics into bags and baskets.Chile’s Green Glasscollects discarded bottles and transforms them into drinking glasses, while Chakoin Zanzibar turns waste glass into light fittings. Cambodia’s Village Works makes bags from various waste bags and produces reusable bamboo straws. As enterprises built on mission-primacy, they have prioritized initiatives like minimizing plastic use many decades before strong market demand emerged (e.g. the 1980s ‘Jute not Plastic’ campaign of European WFTO members, including EZA in Austria).
Erinch Sahan, the Chief Executive of WFTO and co-author of the report, says: “Profit-primacy as a business idea is outdated and is hurting people and planet. While leaders in Davos explore the concept of stakeholder capitalism, 364 Fair Trade Enterprises representing over EUR 750 million in turnover already made this a reality. One million people already benefit. Now is the time for action to spread such enterprise models far and wide.”