Ethical trade (initiatives that seek to improve the social and environmental impacts of global supply chains), is growing because of perceived shortcomings in globalisation and in traditional forms of state regulation. This paper analyses and categorises stakeholders, incentives and mechanisms of ethical trade. On the basis of current (limited) evidence, it summarises the impact of ethical trade via six performance measures: existence, extent, expedience, effectiveness, efficiency, and externalities. The mixed picture of impacts is analysed and understood from two perspectives: a design focus, and an institutional focus. The former sees impacts as guided by design-reality gaps in planning and implementation of initiatives. The latter identifies key institutional elements affecting impacts: underlying stakeholder interests, regulatory incentives, asymmetries of power and information, and trust. The paper concludes by looking at regulatory changes and challenges arising from globalisation; by critiquing current recommendations for ethical trade improvement; and by identifying ongoing research issues.
Manchester, UK, CRC Working Paper, No. 53, 37 pp.