El Puente – A pioneer in Fair Trade and an innovator of inclusive governance
El Puente began as a vision for an alternative trading system. What’s remarkable is that the governance model has successfully evolved to integrate all parts of the supply chain. This made the entire chain direct beneficiaries of the business’s success. They are a pioneer of the Fair Trade movement – working with over 140 trading partners in 40 countries in Africa, Asia and Latin America.
As a 100 % Fair Trade importer, El Puente has been distributing food and handicrafts since the 1970’s. Their work reaches beyond these trading relationships as they are a strong protagonist advocating and educating on the issues of Fair Trade.
The company stands out through its inclusive governance model and its support to trading partners. One exceptional aim of El Puente’s governance model is to integrate all stakeholders as shareholders. The company includes all employees and trading partners as shareholders. This way, El Puente aims at guaranteeing that all are involved in the strategic decision-making of the company. Today, five shareholder groups shape El Puente as a limited company:
- World shops and action groups
- The registered association El Puente e.V.
- Individual members of El Puente e.V., world shops and action groups
- CoCo e.V., the registered employee association
- and PaCo e.V., the trading partner association.
Every shareholder group holds a company share of 20%. A supervisory board – made up of representatives of each member group – controls the two general managers of El Puente, Stefan Bockemühl and Martin Moritz.
CoCo e.V., one of the five shareholder groups of El Puente Ltd., is the association of El Puente employees who hold a 20% part of the share capital of El Puente Ltd. They have extended employee determination rights with regards to the company’s business policy. The members work on the supervisory board of El Puente, which includes the right to vote, and participate in the annual shareholders’ meeting. The business policy of the limited company is discussed and shaped in regular meetings.
Additionally, at the Fair Trade meeting of IFAT (today: WFTO) in 1997, PaCo e.V., El Puentes trading partner association, was founded. Since then, more than 20 producer organisations from Africa, Asia and Latin America have become shareholders of El Puente. This enables producers to have a real voice empowering them in the business, making them direct beneficiaries of El Puente’s success.
El Puente shows that an innovative business model, in which decisions are made deliberately and under agreement of various actors, is achievable.
Core to their business model is to go above and beyond standard credentials of Fair Trade. A dedicated Project Partner Committee (PPA) was created in the autumn of 1983 from an initiative of volunteers. The PPA decides on the acceptance of new trade partnerships as well as the continuation of existing ones, if they are not externally verified as Fair Trade Partners. As an independent body, it is made up of employees of world shops and members of the El Puente Association. The PPA makes its decisions based on a catalogue of criteria. Among other things, this considers the basic objectives and the economic situation of the new trading partner, the situation and origin of the producers as well as the potential sales opportunities of the products on offer. The trading partner must identify with the idea of Fair Trade and, together with El Puente, ensure that Fair Trade standards are implemented locally.
It is structures like these which make El Puente manifestly different from mainstream business. This is reinforced by their strong commitment to transparency. El Puente operates a 100% transparent supply chain in which they can physically trace the path of each product. This means that for each of their 5,000 articles in the product range, they can prove which small farmers and cooperatives produced the individual product. This is also why for El Puente, mass balance is not an option. Further, the minimum proportion of Fair Trade ingredients in mixed products, such as cookies or chocolate bars, is aimed to be 50% and higher. Only in a few exceptions the proportion lies below 50%.
Transparent structures like these are essential for the company, not only in the relationship with partner organisations, but also with costumers. El Puente provides its customers with all business- and content-related information: in their annual report, through travel reports in their blog, information on their trading partners, company tours, etc. Price calculations for each individual product are available on request.
Being a pioneer in its field, El Puente shares the attitude that minimum wages are only the starting point of Fair Trade. Their approach is to go far beyond that. Therefore, their payments usually exceed the minimum prices set by labelling organisations, which represent the minimum for El Puente. The company pays fair prices calculated by the producers. The basis of the prices for their products is always the price calculation of the trading partners. The reason lies in the fact that farmers and artisans know best the steps and costs involved in manufacturing their products. They calculate their prices based on local production and living costs. On this basis, El Puente calculates the recommended retail prices. Additionally, the company guarantees all trading partners up to 100% interest-free pre-financing, e.g. for seeds and material. The advantages of this are many: The partners cover running costs, are independent of expensive loans, can build up reserves, plan independently and make necessary investments.
In addition to supplements for organically grown coffee and quality coffee, El Puente pays a Fair Trade premium which is used for social community projects. The members of the cooperative decide together on the use of these funds. For example, they improve the health care and infrastructure within their communities. El Puente works exclusively with small farmers in the coffee sector who have formed cooperatives with democratic structures. El Puente supports this form of organisation with a structural premium. As one of the oldest Fair Trade import organisations, El Puente has committed itself to the principle of “not for profit”. They form reserves with possible profits or reinvest them. The El Puente development fund was therefore developed to establish a reliable basis for El Puente’s development policy commitment. It provides funds to trading partners, through which they provide training and capacity building.
They build their business activities on a core mission, but also on concrete action points which shape the values of the organisation. El Puente recently published their first gender policy as a binding document for all employees. Also, with regards to their aim of improving the sustainability of their activities, the company plans to develop an environmental policy.
This way, El Puente proves that commercially viable businesses which distribute profit for many, not only a few, are possible.