The Competition and Markets Authority (CMA) has published its first response to a request for informal guidance received under the open-door policy set out in the Green Agreements Guidance.
The guidance, published in October, explains how competition law applies to environmental sustainability agreements between businesses operating at the same level of the supply chain, to help them act on climate change and environmental sustainability. The CMA is operating an open-door policy where businesses, non-governmental organisations, trade associations and charities can approach the CMA for informal guidance on proposed agreements between businesses that promote environmental sustainability.
The Fairtrade Foundation request relates to its new Shared Impact initiative which aims to enhance sustainability and resilience in food supply chains. The food and drinks industry is responsible for nearly 10% of total emissions resulting from UK consumption. The initiative builds on existing participation by UK grocery retailers in Fairtrade initiatives.
One of the objectives of the proposed new scheme is to provide longer-term contractual stability that would enable producers the opportunity to invest in more environmentally sustainable farming practices, such as reducing monoculture. To achieve this, participating grocery retailers would agree to commit to purchase minimum additional Fairtrade volumes of bananas, coffee and/or cocoa from a pool of Fairtrade producers on long-term contracts.
The informal guidance confirms that, in the CMA's view, the Fairtrade Foundation's Shared Impact Initiative is unlikely to raise competition concerns.
This work forms part of the CMA's wider work on environmental sustainability, in line with its strategic priorities to help accelerate the transition to net zero and support and encourage businesses and markets for new environmental products and services to innovate to achieve sustainability goals, whilst also ensuring consumers are protected.
Sarah Cardell, CMA Chief Executive, said:
The Green Agreements Guidance enables companies to be confident they can fulfil their green potential without breaking the law. The agreement on which we're giving guidance today is the latest update related to our wider work on environmental sustainability and will help grocery retailers further improve the green credentials of the Fairtrade products they place on shelves.
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