ETI

Key Takeaways

• The Ethical Trading Initiative (ETI), founded in 1998 in the UK, is a leading alliance of companies, trade unions, and NGOs dedicated to protecting workers’ rights across complex global supply chains, with around 90 company members collectively reaching nearly ten million workers worldwide.
• The ETI Base Code, grounded in International Labour Organisation conventions and other international labour standards, includes nine core principles that address critical issues such as forced labour, child labour, and harsh or inhumane treatment.
• ETI promotes freedom of association and collective bargaining as enabling rights, and expects member companies to pursue continuous improvement rather than treating compliance as a one-off exercise.
• Practical implementation relies on social audits (like SMETA), worker voice mechanisms, and responsible purchasing practices to translate ethical trade principles into tangible workplace change.
• ETI’s influence spans garments, food, farming, and fisheries globally, and is closely linked to emerging mandatory human rights due diligence regulations in the UK and EU.

Introduction: What Is the Ethical Trading Initiative and Why It Matters

Global supply chains in garments, electronics, and agriculture can conceal serious labour abuses-from forced overtime in factories to child labour on farms. Since 1998, the Ethical Trading Initiative has offered a practical response to these risks, bringing together businesses, workers’ organisations, and civil society to drive real change where it matters most.

Ethical trade, in concrete terms, means businesses taking responsibility for the human rights and employment conditions of the people who grow or make their goods, going well beyond minimal legal compliance. ETI is a “tripartite” alliance bringing together companies, trade unions, and NGOs to set common expectations and tackle abuses across complex global supply chains. The Ethical Trading Initiative promotes respect for workers’ rights in global supply chains by aligning its framework with the UN Guiding Principles on Business and Human Rights, ILO core conventions, and the OECD Guidelines for Multinational Enterprises.

This article covers ETI’s Base Code, how it protects workers’ rights-including freedom of association and protection from harsh or inhumane treatment-how companies implement it in practice, and how ETI supports continuous improvement across industries.

The ETI Alliance: Mission, Governance and Global Reach

ETI’s mission is to improve working conditions for workers worldwide across global supply chains. Over more than 25 years, that mission has evolved from basic code-of-conduct promotion to tackling systemic issues like human rights due diligence, gender equality, and climate-resilient supply chains. The Ethical Trading Initiative ETI is an alliance of companies, NGOs, and trade unions, and ETI has been active for 20 years promoting ethical trade across sectors and geographies.

ETI’s membership model includes categories for companies (brands, retailers, suppliers), trade unions, and NGOs. Members commit publicly to the eti base code, and ETI members must report annually on ethical trade progress. ETI members must produce annual reports on ethical trade progress, ensuring transparency and accountability. Governance features a Board with a senior management representative from each constituency, supported by advisory groups tackling living wages, gender, and responsible purchasing practices.

ETI has been particularly active in garments in South Asia, horticulture in East Africa, and seafood in Southeast Asia. Its influence extends beyond the UK through collaboration with local partners-for example, in Bangladesh, where the garment sector employs approximately four million workers and contributes over 80% of the country’s export earnings. ETI promotes collective action to address systemic labor issues affecting multiple companies or industry sectors.

Key milestones include the first Base Code in 1998, supply chain pilots in China, South Africa, and Zambia in 1999, and the launch of Strategy 2030 in 2026 focusing on human rights due diligence, worker voice, and resilient supply chains.

The ETI Base Code: Foundation for Ethical Trade

The ETI Base Code-sometimes called the ETI basic code-is the central reference for members and many non-member companies worldwide. It is an internationally recognized code explicitly grounded in ILO conventions. The ETI Base Code is founded on ILO conventions that represent the global consensus on labour rights. ETI collaborates to implement the ILO’s international labour standards through this framework.

The ETI Base Code includes nine core principles related to labor standards. Those nine guidelines for labor practices cover:

1. Freely chosen employment (no forced or bonded labour; workers free to leave after reasonable notice)
2. Freedom of association and the right to bargain collectively
3. Safe and hygienic working conditions, including safety training and sanitary facilities
4. Prohibition of child labour
5. Living wages that meet or exceed national legal standards or industry benchmark standards
6. Reasonable working hours that comply with applicable law
7. Non-discrimination on the basis of race, national origin, gender, sexual orientation, political affiliation, marital status, union membership, or other protected characteristics
8. A recognised employment relationship established through regular employment, not evaded through labour only contracting or misuse of fixed term contracts
9. No harsh or inhumane treatment, including no physical abuse, verbal abuse, sexual or other harassment, threats, or disciplinary measure that degrades the worker concerned

The code constitute minimum standards. Companies may go beyond them-for example, by committing to living wages above the legal minimum-but cannot undercut them. The ETI aims to encourage businesses to exceed mere legal compliance and uphold internationally recognized labor standards.

The relationship between the Base Code and national law is clear: companies must always follow whichever is higher. If national law sets overtime limits at 10 hours per week but the Base Code is stricter, the Code prevails-and vice versa. The Base Code is used in contracts, supplier codes of conduct, and social audit protocols as a benchmark for ethical trading performance. Workers must receive written and understandable information about their conditions before they begin employment, and benefits paid must comply with social security laws and regulations arising from the recognised employment relationship.

Key Labour Rights Protected: From Child Labour to Freedom of Association

ETI’s work is rooted in protecting workers rights at specific points of vulnerability. The ETI Base Code prohibits forced and child labor, setting clear expectations for remediation.

On child labour, the Base Code defines a “child” and “young worker” in line with ILO Convention 138. Work that interferes with quality education or is hazardous is strictly prohibited. Where children are found working, companies must support their return to schooling and may need to provide income support for families. ETI requires remediation, not just termination, of the child’s role. New or reassigned workers under 18 must not be placed in hazardous roles.

Freedom of association and collective bargaining are treated as enabling rights. Workers have the right to join or form trade unions of their own choosing, and employers must adopt an open attitude towards trade unions. The employer facilitates independent and free association and respected workers’ representative functions. Where genuine unions are restricted by national law, ETI expects alternative forms of worker representation that are legitimate and independent.

On harsh or inhumane treatment, ETI prohibits physical abuse, threats, sexual or other harassment, and mental or physical coercion. These are non-negotiable violations demanding immediate corrective action for the worker concerned.

Non-discrimination protections prevent bias based on gender, race, caste, migrant status, national origin, sexual orientation, political affiliation, marital status, union membership, age, disability, or other protected characteristics-including equal access to promotion and such training opportunities.

From Standards to Practice: Implementing the ETI Base Code in Supply Chains

Adoption of the ETI Base Code is only the first step. Meaningful ethical trade requires systematic implementation, monitoring, and continuous improvement across often multi-tiered supply chains. ETI promotes good practices in implementing labor codes and expects members to assign responsibility for ethical trade practices at senior management level.

Companies integrate the Base Code into their own codes of conduct, contracts, and supplier onboarding processes, including expectations for labour agencies and labour providers. Workers representatives must be informed and consulted, and procurement teams must align purchasing with ethical trade principles.

Typical implementation tools include:

• Risk mapping of countries and sectors
• Supplier self-assessments
• Confidential worker interviews
• Grievance mechanisms accessible to all workers
• Time-bound remediation plans developed collaboratively with suppliers

The ETI emphasizes continuous improvement and transparency in addressing labor rights issues. Rather than immediately cutting ties with non-compliant factories, members work with suppliers on corrective action plans that address root causes. For example, reducing excessive overtime in garment factories might involve production planning changes by buyers, while improving health arising from poor conditions in packhouses supplying European supermarkets might mean investment in clean toilet facilities, food storage, and a hygienic working environment based on prevailing knowledge of industry hazards.

Auditing and Verification: SMETA and Other Social Compliance Tools

Social audits play a key role in verifying compliance with ethical trade standards, though ETI sees audits as one tool within a broader human rights due diligence approach. ETI conducts pilot schemes for effective monitoring and verification, testing what works across different contexts.

The SMETA audit is widely used for ethical verification. SEDEX Members Ethical Trade Audit (SMETA) is explicitly based on the ETI Base Code and national law. Audits come in two formats: 2-pillar (covering labour standards and health and safety) and 4-pillar (adding environment and business ethics).

In practice, SMETA audits involve:

• Document review (contracts, payroll, the pay period concerned records)
• Site tours (checking sanitary facilities, safety equipment, food storage)
• Confidential worker interviews
• Closing meetings with management

Audit findings feed into corrective action plans and continuous improvement tracking. Buyers use the resulting reports to inform sourcing decisions and monitor ethical trading performance across each pay period and reporting cycle.

Independent verification is essential for credible labor practices. However, audits have limitations. “Audit fatigue” can set in when suppliers face multiple audits from different buyers, and superficial compliance-preparing for audits rather than making genuine improvements-remains a risk. ETI encourages members to complement audits with worker voice tools, long-term partnerships, and better purchasing practices that don’t squeeze suppliers into cutting corners on labour practices.

Fair Wages, Working Hours and Decent Work in Practice

Decent work, as defined by the ILO, connects directly to ETI’s focus on fair wages, reasonable working hours, and secure regular employment. Wages must meet national legal regulations or higher standards. Under the ETI Base Code, wages for a standard working week must at least meet relevant ilo standards, national law, or industry benchmark standards-whichever is highest. But the long-term goal is living wages that cover basic needs plus some discretionary income. Practical steps include wage gap analysis, social dialogue on pay structures, and ensuring all benefits paid and deductions are transparent for each pay period concerned.

Working hours should not exceed 48 hours per week regularly, with limited, voluntary overtime. Production planning, lead times, and forecasting by buyers can help prevent routine overtime abuses. Companies must ensure overtime is compensated in accordance with applicable law and that workers receive reasonable notice of schedule changes.

Regular employment must be provided and labour protections should not be evaded through labour only contracting, misuse of fixed term contracts, or bogus self-employment arrangements. The ETI Base Code requires a regular employment relationship with proper written contracts that explain terms in a language workers understand-a recognised employment relationship established through transparent documentation.

A practical example: a member business might collaborate with suppliers and trade unions to introduce overtime controls while maintaining workers’ earnings through wage restructuring and improved production efficiency, ensuring no loss in take-home pay.

Freedom of Association, Social Dialogue and Collective Bargaining

ETI and the International Labour Organisation regard freedom of association and the right to bargain collectively as “enabling rights” that help workers secure all other forms of workplace protection. The ILO’s MNE Declaration, first adopted in 1977, emphasizes freedom of association as foundational. The ETI Base Code includes provisions for collective bargaining as a core principle.

Member companies must ensure workers can form trade unions without intimidation, that elected workers representatives can carry out their representative functions freely, and that management maintains an open attitude towards union membership and social dialogue. Workers have the right to join or form unions of their own choosing.

Collective bargaining delivers practical improvements: wage increases, safer working conditions, and better grievance procedures in sectors like food processing, apparel, and fishing. Over 1.3 billion people work in the agri-food sector globally, making freedom of association in these industries especially significant.

ETI works with tripartite partners-companies, unions, and NGOs-to promote social dialogue in specific industries, including engagement on ILO discussions around just transition in the food and beverage sector.

For businesses operating in contexts where independent unions are restricted by national law, ETI expects respect for alternative other forms of worker representation while continuing to advocate for full freedom of association. The employer facilitates legitimate channels even where legal constraints exist.

Beyond Compliance: Human Rights Due Diligence and Continuous Improvement

Human rights due diligence (HRDD), as defined by the UN Guiding Principles, is an ongoing process of identifying, preventing, mitigating, and accounting for adverse human rights impacts connected to business operations and circular supply chains. ETI provides guidance to help businesses integrate human rights due diligence into their operations, moving beyond tick-box audits.

ETI helps companies align practice with ILO instruments, including the Tripartite Declaration and the 1998 Declaration on Fundamental Principles and Rights at Work. Strategy 2030 themes-advancing human rights, strengthening due diligence systems, improving worker representation, and building resilient, responsible business supply chains-link directly to continuous improvement expectations.

ETI influences global policy and shapes legislation on human rights and ethical business practices. It actively supports mandatory human rights and environmental due diligence legislation in the EU (including the Corporate Sustainability Due Diligence Directive) and the UK, and calls for stronger modern slavery reporting requirements. ETI’s membership does not guarantee that a company has eliminated labor abuses, but it signals a commitment to responsible business conduct and international labor standards.

For companies wanting to deepen ethical trading performance:

• Embed ethical trade into corporate governance at Board level
• Integrate ETI principles into purchasing decisions and supplier selection
• Report transparently on progress and challenges, not just successes

How ETI Supports Businesses, Unions and NGOs in Practice

ETI is not just a standard-setting body. It is a support platform that helps members implement ethical trading commitments effectively, serving as a leading alliance of organisations committed to protecting workers rights.

Resources include Base Code guidance documents, sector-specific briefings (for food, farming, and fisheries), and practical tools on topics like migrant labour and gender-based violence. ETI conducts pilot schemes to improve labor practice implementation and feeds lessons from in-country programmes back into updated guidance.

Training and capacity-building take the form of workshops, webinars, in-country programmes, and peer-learning forums. In Bangladesh, for example, ETI has co-researched green energy transitions in the garment sector alongside BRAC University, connecting labour rights with environmental sustainability. With 1.3 billion people working in the agri-food sector globally, sector-specific support in food and farming is especially critical.

Collaborating through ETI allows members to pool leverage-making it easier to influence suppliers, governments, and investors for systemic improvements in international labour standards and responsible business practices across workers worldwide.

Conclusion: The Ongoing Role of ETI in Protecting Workers’ Rights Globally

ETI’s Base Code, tripartite structure, and commitment to continuous improvement together create a robust framework for ethical trade across global supply chains. Protecting workers’ human rights-ending child labour, preventing harsh or inhumane treatment, and enabling freedom of association and collective bargaining-is both a moral obligation and a business necessity.

ETI’s relevance is increasing as governments introduce mandatory HRDD and modern slavery regulations, and as investors and consumers demand credible proof of responsible sourcing. The ethical trading initiative remains central to this shift, providing the tools and collaborative structures that make responsible business practical.

Companies that treat ethical trade not as a compliance burden but as an opportunity to build resilient, sustainable business models will be best positioned for the decade ahead. The question is no longer whether to invest in protecting workers rights globally-it is how quickly and how deeply you can embed these principles into every layer of your supply chains.

Frequently Asked Questions about the Ethical Trading Initiative

Is ETI membership mandatory for companies that use the Base Code?

No. Many companies apply the ETI Base Code in their own codes of conduct and supplier contracts without being formal members. However, formal membership entails public commitment, participation in ETI governance, annual reporting on ethical trade progress, and access to peer learning and collaborative programmes that non-members do not receive.

How does ETI differ from certification schemes and product labels?

ETI is not a product label or consumer-facing certification. It focuses on improving company systems, accountability, and collective action across supply chains rather than awarding on-pack logos. Certification schemes like Fairtrade provide consumer-facing labels, while ETI drives upstream change through corporate policy, procurement, and tripartite engagement.

What happens when serious violations like forced labour or child labour are found?

ETI expects companies to take immediate protective action for affected workers, develop time-bound remediation plans, and engage with trade unions or local NGOs to address root causes. Silent disengagement-simply dropping a supplier-is discouraged because it can leave workers worse off. Membership can be suspended or revoked if a company persistently fails to address serious issues.

How can small and medium-sized enterprises (SMEs) engage with the ETI Base Code?

SMEs can use the Base Code as a reference for supplier contracts even without formal membership. Starting with high-risk supply tiers, using ETI’s free guidance documents, pooling resources with other businesses, and focusing on priority issues like wages, discrimination, and grievance mechanisms are practical first steps for smaller firms.

Does ETI membership guarantee that a company has eliminated all labour abuses?

No. ETI membership signals a commitment to continuous improvement, transparent reporting, and collaboration-not a claim that all labour abuses have been eliminated. The value lies in the process: identifying risks, taking corrective action, and working with suppliers, unions, and NGOs to drive lasting change in employment conditions over time.