The PRICE Project – Ethical Finance and Fair Trade joining forces
By Francisco Fuentes, project manager of the PRICE Project
The objective of PRICE (Promoting Responsible Investments and Commerce in Europe) is to connect the dots between Fair Trade and Ethical Finance institutions so more Fair Trade Organisations use ethical services in their daily financial needs, and more Ethical Finance institutions invest in Fair Trade Organisations or producers. The PRICE project also promotes awareness in the role that individuals can play.
The PRICE project has provided up to date and comprehensive research and thematic guides on Ethical Finance and Fair Trade. It is disseminating this information among constituent groups in Europe, and promoting the active involvement of the consumer through a Fair Trade and Ethical Finance campaign. A final conference will be held during the WFTO Biennial Conference.
Promoting the natural synergies between Fair Trade and Ethical Finance should also be seen as a method of shifting the focus of development aims by attacking the root causes of poverty. The post-2015 development agenda needs to give a central role to fairness in trade. Ethical Finance should be given a key role in making this happen. Along with Fair Trade, it has great potential to affect power relations, so that the financial sector will not anymore serve only itself and the interests of the rich but also the interests of the rest of society.
When we think of the faults of the financial system many things come to mind, especially since the recent global financial crisis. However, most of the time we forget the position of the so called “non-bankables”. The financial system today, in general, does not reward attempts to move out of poverty unless it is accompanied by strong economic credentials, thus denying credit to those most in need. This can affect small producers, for example, who may be considered to be cash poor and therefore a risky investment.
Ethical Finance combats social exclusion caused by norms within the financial system by, for instance, providing credit without discrimination based on wealth, gender, ethnicity, and migration status. Transparency is also a core value of Ethical Finance and an important aspect of the difference between it and the conventional financial sector. Ethical institutions come in all shapes and sizes and include ethical banks, ethical finance cooperatives and microcredit cooperatives.
But where is the link between Fair Trade and Ethical Finance? Fair Trade is a market-based instrument which aims to redress the problems which are characteristic of traditional economic transactions. It aims to protect producers from market fluctuations and price speculation of raw materials and to ensure equitable distribution of profits from trade. Fair Trade is business, not charity. Ethical Finance is a strong ally for Fair Trade, as both put people, as opposed to profit, at the centre of the economy. Responsible investing, in a similar way to critical consumption, is a tool to change the economic system. Both give consumers greater choice in the products they consume; providing people with the power to contribute to the well-being of others and the environment.