Corporate Social Responsibility in the Tea Sector Tea is produced in 36 tropical and semi-tropical countries but four countries

(China, India, Kenya and Sri Lanka) produce three quarters of the worlds tea. Most of the tea produced in China and India is consumed locally, while Kenya is the worlds leading exporter and the main importer of tea is the United Kingdom (Fairtrade Foundation 2010). The social, ecological and economical impact of tea production and processing has been assessed by a number of research studies. Worth mentioning is the study, Sustainability Issues in the Tea Sector 2008 by SOMO which presents a comparative analysis of social, economic and ecological conditions in the tea sector in six major tea-producing countries: India, Sri Lanka, Vietnam, Indonesia, Kenya and Malawi. The research was based on an extensive field study and the report presents an overview of trade, production and stakeholders in international tea supply chains. The study found that working conditions of plantation workers are often poor, with low wages, low job and income security, discrimination along ethnic and gender lines, lack of protective gear and inadequate basic facilities such as housing and sometimes even drinking water and food. Trade unions are ineffective or absent and/or are not representing the workers because most of them are temporary workers. The environmental impacts of the industry are significant on biodiversity. The industry converts high biodiversity areas such as forests to tea plantations. Along with habitat conversion, logging for firewood to process tea, in particular, has caused extensive deforestation in countries such as Kenya, Sri Lanka, Malawi and India. Energy consumption for tea processing is also high which is aggravated by often inefficient and outdated machinery. In some countries, such as India, Sri Lanka and Vietnam, abundant application of pesticides is also negatively affecting the local and the wider environment (water pollution, reduced soil biodiversity).

The Tea Supply Chain

The tea supply chain is a vertically integrated production chain with companies controlling various upstream and downstream production stages. Unilever (brands Brooke Bond and Lipton) and Tata Global Beverages Ltd (brand Tetley), are key players in the consumer market. They dominate the trade; have a strong influence on transport companies, and source part of their supplies from their own plantations. Tea is usually exported at a relatively early stage in the supply chain. Plucking and primary processing (withering, rolling, drying, grading, bulk packaging) is carried out in producing countries, while blending, packaging and marketing, the most lucrative part of the tea trade, is mostly carried out by the tea companies in buyer countries.

In the downstream supply chain, 90 percent of the Western tea trade is controlled by seven multinationals companies; 85 percent of world production is sold by these multinationals (Somo 2010). At the global level, four companies dominate the tea trade: Unilever (Brooke Bond, Lipton/Unilever Trading Company UTC, UK the Van Rees (trader/blender, supplying many packers, part of Deli Universal Corporation, Netherlands) James Finlay (trader, producer, packer, UK) Tata Tetley/Stansand (producer, trader, packer, UK)

Concentration is also high in the retail market at the national level. The top three packers, for example, have a 60% share of the tea market in the United Kingdom, 67% in Germany and 66% in Italy. In the Netherlands, Sara Lee, controls 65 percent of the market (Somo 2008). Major tea blenders and packers worldwide include: _ Unilever (Lipton is a very strong brand with a world market share of 10%) _ Tetley (Tata Group) _ R. Twinings (Associated British Foods) _ Ajeepay Group (Typhoo tea) _ Ostfriesche Tee Gesellschaft OTG: major German company which also has activities outside Germany.

_ Teekanne: major German company, one of the oldest German traders _ Sara Lee International (Pickwick is the main brand on the Dutch market) The market leaders try to maintain market share and stimulate demand through innovation and advertising and operate on the basis of their high degree of flexibility, their buffer stocks and their speculative transactions. The flexibility of the companies is enhanced by deliberately reducing differences in quality. To a certain degree a degeneration and adaptation of tea qualities has been going on all over the world. Many tea qualities have become interchangeable and are bought where they are cheapest30: a typical English tea blend for instance can contain teas from many different sources (producers) in more than 6 different countries. There is however also a growing market for speciality and higher-quality teas (e.g. single country blends, white and green teas, special pyramidal packaging, organic and fair trade teas) that the same market leader often try to give.

Corporate Social Initiatives in the Tea Value Chain The global tea industry has undertaken some initiatives in the field of corporate social responsibility to address social and environmental issues. Critical analysis of the quality and effectiveness of these initiatives, however, indicates that labour rights, social issues, environmental concerns and economic imbalances are not being adequately addressed. Although there is a clear trend of growing interest in food safety issues imposing higher standards on tea production for the sake of the consumer, health and safety concerns of workers in the tea industry are generally neglected. CSR initiatives do not offer more than a token involvement of stakeholders on an advisory level. Direct involvement of workers or workers organisations on an equal basis in remedying problems is very rare. Nonetheless, there is a growing public awareness in the West of the social hardships associated with tea cultivation. Various CSR initiatives seek to address these concerns. Codes of conduct of these initiatives require suppliers to meet standards on food safety, working conditions and environmentally

friendly production practices. Certified tea is commonly defi ned as tea that includes the three pillars of sustainability, namely economic viability for farmers, environmental conservation and social responsibility. Certifi cation entails the written assurance by an independent third party certifi cation body that the quality of the tea and the production process, have been assessed, and conforms to specifi ed requirements. This market-based approach to sustainable development of the tea sector gives producers many opportunities, for example, training, access to new markets, and enhanced efficiency and revenues. The adoption and implementation of the codes of conduct could directly improve and protect the economic, social and environmental conditions of a tea grower. However, full access to benefits, for those most in need, is restricted by various obstacles such as limited demand, investment and audit costs. Independent monitoring and certification are central to the four major tea production standards systems: Fairtrade, Organic, Rainforest Alliance and UTZ Certified. A fifth influential collective standard is the Ethical Tea Partnership (ETP). ETP was initiated by tea-packing companies to promote social responsibility and encourage gradual improvement where necessary.

All standards systems active in tea embody some combination of environmental, economic and social goals, and require suppliers to meet standards on food safety, working conditions

and environmentally friendly production. These standards systems can partly address the current critical issues in the main tea producing countries, like low level of farmer organization, low productivity and low prices, and the use of agrochemicals Only UTZ and Organic cover all the trading and blending/packing stages. Fairtrade has standards up to the trade level, whereas the standards of Rainforest Alliance and ETP are limited to the producer.

ETP is an alliance of tea packers who work together for a socially just and environmentally sustainable tea sector. The ETP monitors tea estates in its members supply chain based on the ETP standard which covers both social and environmental issues. Its fundamental principles are those of the Ethical Trading Initiatives Base Code. ETP also works with a range of partner organisations to develop projects that overcome the barriers to a more sustainable tea sector. While not a certification body itself, the ETP works closely with key certification bodies, including Fairtrade, Rainforest Alliance Certified, and UTZ CERTIFIED.

The Rainforest Alliance Certified programme entered the tea sector in 2006.Products from plantations that meet comprehensive environmental, social and economic criteria set by the Sustainable Agriculture Network (SAN), a coalition of grassroots conservation groups, are able to use the Rainforest Alliance Certified seal. The SAN standards specially emphasises on workers and wildlife.

UTZ CERTIFIED is an industry-producer partnership certification programme which operates in the tea sector. The UTZ CERTIFIED program aims to provide an assurance of responsible production and sourcing, through independent certification against the UTZ CERTIFIED code of conduct and a focus on traceability, using a Track and Trace system and Chain of Custody criteria.

Organic certification provides a set of standards defining guidelines on the farmers dos and donts, placing a strong emphasis on the protection of wildlife and the environment. Under organic certified farming, pesticides are severely restricted and artificial chemical fertilisers, animal cruelty, genetically modified feed and routine use of drugs and antibiotics are all disallowed. Tea is often dual certified, matching organic with other certification schemes.

Fairtrade is a strategy working on poverty reduction and sustainable development. Its purpose is to create opportunities for producers and workers who have been economically disadvantaged or marginalized by the conventional trading system. The Fairtrade mark is a registered certification label for products sourced from producers in developing countries that provides assurance that a set of standards approved by a global body, the Fairtrade Labelling Organisation have been met in line with Fairtrade principles.