Glossary of Ethical and Sustainable trade

Sources: Wikipedia and other sources online.

Biomimicry

A method of design that seeks sustainable solutions by mimicking nature. The goal is to create products and services that are well adapted to life on earth over the long-term. 

Business model

The underlying structure of how a company creates, delivers and captures value. In its most simplistic form, it is how a business makes money. 

Carbon footprint

Emissions of greenhouse gases (in carbon equivalent) for an activity or organisation over a given period of time.

Carbon neutral

Achieving net zero carbon emissions by balancing carbon emitted with an equivalent amount sequestered or offset, or buying enough carbon credits to make up the difference.

Carbon offsetting

Reducing emissions of greenhouse gases by purchasing credits through emissions reduction projects or carbon trading schemes.

Carbon sequestration

The capture and storage of carbon from the atmosphere, for example by planting trees.

Circular economy

An alternative to a traditional linear economy (‘make, use, dispose’) in which resources are kept in use for as long as possible, the maximum value extracted from them whilst in use, and then products and materials recovered and regenerated at the end of each service life.

Closed loop

The most sustainable economic system, where the inputs used to create a product are the same as its end-of-life outputs. It is a zero waste system that completely reuses, recycles or composts all materials.

Collaborative consumption

A system whereby consumers share access to products or services, rather than having individual ownership. Examples include Rentaholic, where people can rent items like spare rooms or lawnmowers instead of having to own them all themselves.

Collective Impact

Cross-sector coordination to bring about large-scale social change; the concept that the competitiveness of a company and the health of the communities around it are mutually dependent.

Community

One of the Sustainable Business Network’s four transformation areas, ‘building thriving communities’  requires strategic business investment in the localities in which they operate. As well as ensuring good working conditions for all, businesses should look at all parts of their operations to make sure they are creating products and services that build, rather than erode, communities.  SBN’s definition of a business’ role in the community looks at employment, supply chain, products and services, site location and community investment strategies.

Community footprint

The impact of a business in the community where it is located. The Community Footprint programme, developed by Business in the Community (UK) and piloted in NZ by the Sustainable Business Network, uses online tools as part of a wider programme to enable businesses to understand and manage their community impact.

Conscious capitalism

A form of capitalism that seeks to benefit people and the environment.

Conscious consumerism

Consumers voting with their wallet – purchasing products and services that are produced responsibly.

Corporate Social Responsibility (CSR)

A management concept whereby companies integrate social and environmental concerns in their business operations.

Cradle to cradle

Using the end use product (‘waste’) for the source of a new product: a circular economy. All products can be designed for continuous recovery and re-utilisation.

Cradle to grave

Accounting for the impact of producing a product, from creation to end use. It is a linear flow: ‘take-make-throw away’.

Crowd funding

The joint effort of individuals who network and pool their money, usually online, to support a wide variety of activities including start-up company funding, disaster relief and campaigns. For many social enterprises the traditional funding models no longer exist, so crowd funding is a mechanism to establish or fundraise for a host of social/environmental activities.

Crowd sourcing

Obtaining services, ideas or content by inviting contributions from a large group of people, especially an online community. It’s often used to fundraise start-up companies and charities. See crowd funding, above.

Differential pricing

Charing varying amounts to sell the same product to different groups of customers. Lower prices are usually charged to people with fewer financial resources or in disadvantaged situations like mental or physical disabilities.

Environmental management systems

A set of processes and practices that enable an organisation to measure and ultimately reduce its environmental impacts.  The most commonly used framework is the one developed by the International Organization for Standardisation (ISO) for the ISO 14001 standard.

Ethical consumerism

(Alternatively called ethical consumption, ethical purchasing, moral purchasing, ethical sourcing, ethical shopping also associated with sustainable and green consumerism) is a type of consumer activism based on the concept of dollar voting. It is practiced through the buying of ethically-made products that support small scale manufacturers and local artisans while protecting animals and the environment, and boycott‘ products that exploit children as workers, are tested on animals, or damage the environment.

The term “ethical consumer”, now used generically, was first popularised by the UK magazine Ethical Consumer, first published in 1989. Ethical Consumer magazine’s key innovation was to produce ‘ratings tables’, inspired by the criteria-based approach of the then emerging ethical investment movement. Ethical Consumer’s ratings tables awarded companies negative marks (and from 2005 overall scores) across a range of ethical and environmental categories such as ‘animal rights’, ‘human rights’ and ‘pollution and toxics’, empowering consumers to make ethically informed consumption choices and providing campaigners with reliable information on corporate behaviour. Such criteria-based ethical and environmental ratings have subsequently become commonplace both in providing consumer information and in business-to-business corporate social responsibility and sustainability ratings such as those provided by Innovest, Calvert Foundation, Domini, IRRC, TIAA–CREF and KLD Analytics. Today, Bloomberg and Reuters provide “environmental, social and governance” ratings direct to the financial data screens of hundreds of thousands of stock market traders. The not-for-profit Ethical Consumer Research Association (ECRA), operating under the brand name Coporate Critic, continues to publish Ethical Consumer and its associated website, which provides free access to ethical ratings tables.

Although single-source ethical consumerism guides such as Ethical Consumer, Shop Ethical and The Good Shopping Guide have proven to be popular, they suffer from the drawback of incomplete coverage. User-generated ethical reviews are more likely, long-term, to provide democratic, in-depth coverage of a wider range of products and businesses.

Ethical or sustainable investment

Investment in activities that have a positive social and/or environmental impact. It includes screening positive characteristics in, or negative characteristics out, of an investment option. It can also include using assessment criteria like environmental, social and governance criteria or strategic sustainability criteria.

Ethical trade

The term “ethical trade” first gained currency in the mid-1990s, where it was used as a term for socially responsible sourcing. Ethical trade addresses the ethical aspects of organisations including worker welfare, agricultural practice, natural resource conservation, and sustainability of the environment. Since then, numerous multinational organisations have adopted ethical trade policies by outsourcing to auditing companies to monitor the conditions of workers in their supply chains. The leading alliance of these companies, trade unions and non-governmental organisations is the Ethical Trading Initiative. to support business

Fair trade

An alternative approach to conventional trade, based on a partnership between producers and purchasers of products. A fair trade commodity price ensures that farmers and workers get a fair share of the benefits of trade, allowing them to plan and be economically safe. A percentage of the commodity price goes into community development projects in the farmers’ community.

The concept of fair trade applies in general to trade operations which strengthen the economic position of small-scale producers and landowners in order to ensure that they are not marginalised in the world economy.

It mainly relates to developing countries and, under the present communication, covers two main aspects: · ensuring that producers, including employees, receive a share of the total profit commensurate with their input; · improving social conditions, particularly those of employees in the absence of developed structures for social services and worker representation (trade union representation for instance), etc.; This concept has long-term development in mind. Participation in initiatives on fair trade is voluntary for both sellers and consumers.

It is important to note that the concept of ‘fair trade’ is not the same as that of ‘ethical trade’. ‘Ethical trade’ usually relates to the operating methods of companies present in the country (codes of conduct, for example).

Fair Trade Certification

A product certification within the market-based movement fair trade. The most widely used fair trade certification is FLO International‘s, the International Fairtrade Certification Mark, used in Europe, Africa, Asia, Australia and New Zealand. Fair Trade Certified Mark is the North American equivalent of the International Fairtrade Certification Mark. As of January 2011, there were over 1000 companies certified to the FLO International’s certification and a further 1000 or so certified to other ethical and fairtrade certification schemes around the world.

The Fairtrade International certification system covers a wide range of products, including banana, coffee, cocoa, cotton, cane sugar, flowers and plants, honey, dried fruit, fruit juices, herbs, spices, tea, nuts and vegetables. These commodities have different locations of production and number of farmers and workers covered for production and distribution.

Integrated reporting

A new approach to corporate reporting that integrates financial information and non-financial (e.g. environmental and social) information into a single document to show how a company is performing.

Intrapreneur

An entrepreneur within a large organisation; an employee who is given freedom and financial support to create new products, systems or services.

International Labour Organization

The International Labour Organization (ILO) is a specialised agency of the United Nations dedicated to improving the standards of living of workers throughout the world. Established in 1919, the ILO have made significant contributions in addressing issues such as excessive working hours, unemployment, minimum age, and work for women. The tripartite structure of the ILO is unique in that it ensures employees and workers have an equal voice alongside governments in terms of addressing ILO’s policies and programs. They aim to adopt international labour standards in member states regarding the ethical aspects of business practices, including the abolition of forced labour, workplace discrimination, and the protection of migrant workers.

Mega efficiency

One of the Sustainable Business Network’s transformation areas, we define it as ‘maximising the use of all resources’, involving a shift away from traditional means of operation towards new business models of production, ownership and consumption. Examples of mega efficiency are collaborative consumption and the circular economy.

Microfinance

A source of financial services for individuals or small businesses lacking access to traditional banking services. It can be a sustainable means of poverty alleviation by empowering entrepreneurs to build businesses, support their families and transform their communities.

Natural capital

The world’s stock of natural assets, including geology, soil, air, water and all living things.

Rematerialisation

Repurposing what was once considered a waste material into a new resource for a product, service or process.

Renewables

Another of the Sustainable Business Network’s transformation areas, ‘enabling the use of renewable energy’ requires clever design, new technologies and greater collaboration between businesses. It includes the production and distribution of renewable energy as well as a revolution in transportation or mobility away from fossil fuels.

Resilience

The capacity of an organisation or individual to survive or even thrive in the face of unforeseen changes.  Sometimes used in place of ‘sustainability’, resilience looks for ways to manage in an imbalanced world, whereas ‘sustainability’ seeks to put the world back into balance.

Restorative

Our fourth transformation area, Restorative means giving back to – rather than simply taking from – the environment and community. It means ‘enhancing New Zealand’s natural capital’.

Shared Value

A management principle that seeks market opportunities for business to solve social problems. ‘Creating Shared Value’ was first introduced in the Harvard Business Review in 2011, based on the principle that the competitiveness of a company and the health of the communities around it are mutually dependent.

Social capital

The collective value of all social networks; the links and shared values in society that enable individuals and groups to work together.

Social enterprise

Organisations that operate to tackle social problems, improve communities or the environment, at the same time having their own mechanism for generating financial profit. They reinvest their profits back into the business or community.

Sustainability

Sustainability means ‘the capacity to endure’. A sustainable business is one that generates profit while improving societal and environmental conditions.

Sustainable design

Designing products, services or the built environment in keeping with principles of sustainability.

System innovation

A term coined by Forum for the Future, it is a set of actions that shift a system – a city, a sector, an economy – onto a more sustainable path.

The Green Stars Project

Promotes the idea of including ethical ratings (on a scale of 1-5 green stars) alongside conventional ratings on retail sites such as Amazon or review sites such as Yelp.

The Three Pillars of Sustainability

The three pillars of sustainability are social, Environmental and Economic trade, and they are a powerful tool for defining the complete sustainability problem. This consists of at least the economic, social, and environmental pillars. If any one pillar is weak then the system as a whole is unsustainable.

Transformation

Making bold and fundamental changes to the way business operates, rather than making incremental step changes to the status quo.

Triple bottom line

A phrase first coined by John Elkington in 1994, it describes the separate financial, social and environmental ‘bottom lines’ of companies. In principle it is designed for companies to value their social and environmental profits and losses, as well as the financial ones.

UN Guiding Principles on Business and Human Rights

In 2011, the UN Human Rights Council endorsed a set of principles known as the UN Guiding Principles on Business and Human Rights  in an attempt to address the issue of human rights in businesses. The principles were proposed by Professor John Ruggie from Harvard University after six years of research. They are based on 47 consultations and site visits in more than 20 countries, and involve governments, companies, business associations, civil society, and investors. They have been considered “an authoritative global reference point for business and human rights” by Oxfam and implement ethical trade by ensuring that governments and companies have a collective responsibility to protect human rights in business enterprises.

Value chain

A series of activities that a business performs in order to deliver a valuable product or service for the market.  It is similar to a supply chain in principle, but focuses on the key points that generate value for a business.

Value proposition

A promise of value to be delivered, applied to products, services or an entire organisation. For a growing number of organisations, sustainability is an important aspect of their value proposition.