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The negative effects of fair-trade labelling can be tackled, according to new research from Rotterdam School of Management, Erasmus University.

The report says that the negative effects, such as pushing young people into prostitution by banning child labour in third world countries, are often hard to anticipate. This is because it is difficult to monitor and regulate all the social and environmental effects during production processes in foreign countries.

Dr. Frank Wijen says: “A European certificate issuer might target the elimination of child abuse in order to protect a vulnerable group and mandate a ban on child labour. However, farmers in countries like Cameroon will react with bemusement: they often view the deployment of their children in a family enterprise as akin to routine domestic chores, and therefore not abuse.”

To minimise the negative effects of sustainability labelling, Dr. Wijen suggests that:

1. Standard setters should develop and enforce rules in a comprehensive way, considering in advance all direct and indirect consequences. They should also not feel pressured by a potential public outcry and rush procedures.

2. Rules set for one country or area may not be applicable for another. Therefore, each country or region will need its own, niche, set of rules, incentives and practices on top of a universal basis for all adopters.

3. Setters of standards should encourage intrinsic motivation—for instance, through regular training sessions—so that producers carrying a label have their motivations aligned with those of standard setters.

Labels such as Fairtrade, Green Seal and Utz, claim that a product was produced in a socially and environmentally sustainable way. However, producers might deliberately not live up to the duties being imposed, or simply not understand how to comply and therefore the above points become crucial to minimising the negative effects.


For more information or to speak to Dr. Wijn, contact Alexandra Dobocan at or call +44 (0)1582 790 709

Note to the editor:

This research is explained in a four minute video on the RSM Discovery platform. The platform aims to disseminate top tier research from Rotterdam School of Management to business and society. By accessing the website, you will gain access to research in areas such as finance, small business, management, strategy, leadership and sustainability. All research here is stripped of the jargon and explained in a practical way so anyone interested has something to gain from reading it.

Rotterdam School of Management, Erasmus University (RSM) is a top tier European business school and ranked among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in the Amsterdam Zuidas business district and in Taipei, Taiwan.

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