WFTO Guarantee System Approval and Sanctions How we

WFTO Guarantee System Approval and Sanctions How we can guarantee members

Guarantee System • Robust enough to carry a label? • Membership system - must ensure: – That members comply with the FT Principles – That we can remove non compliant members • Our reputation depends on all members

Risk and costs • Some members may present greater risk to our reputation – large FTO with many product lines all using the label – greater risk than an FTO not using label or a primary producer organization. • Initial risk assessment to determine monitoring schedule – preliminary assessment of high risk does not mean there is a risk – audit may discover that a potentially risky FTO is very compliant – while a seemingly low risk small FTO may have serious non compliances – therefore risk level for each FTO kept under review, especially after audits

Risk analysis tool Risk factors Preliminary analysis - significant factors plus category of member: • number of (producer) organizations from which products are purchased • number of different product lines • level of control of the product flow and supply chain • use of label • % of purchase of primary products (value) from non WFTO members or from non FT verified sources And later adjusted by adding: • Serious non compliance, results of audit, peer visit or issues raised through complaints.

Monitoring schedule Monitoring cycle for trading members Low risk Medium risk High risk Self Assessment Every 2 years Monitoring audit Every 4 years; after Every 4 years Every 2 years Peer visit Every 4 years; after Every 4 years Every 2 years 2 good audits/visits reduced to every 6 years (alternating with Peer visit) (alternating with Audit)

Monitoring frequency Assessment frequency for trading members Low risk Monitoring audit or Every 3 years; (after 2 successful initial Peer visit audits/visits) Medium risk High risk Every 2 years Every year

Approval cycle • Approval cycle follows monitoring schedule, looking at SAR alongside Peer or Audit report • Low risk approved every 3 years • Medium risk approved every 2 years • High risk approved every year

Approval process • Guarantee System Manager will set monitoring schedules • He/she will review SAR with latest external report • Recommend approval or refer to Standard and GS committee • GS committee recommend approval or sanctions to Board

Sanctions • Where non compliances are found: – Actions for Improvement plan – Corrective actions for more serious non compliance + time limit • If not corrected, sanctions procedure commences: – Step 1 Formal communication regarding problems and immediate corrective action required – Step 2 Notification of sanctions procedure – formal notice – Step 3 Sanctions may include, depending on severity: • • Temporary suspension of membership Restrictions on use of label Demotion to provisional membership Termination of membership.

Complaints There are 2 types of complaint: • Those about the Fair Trade compliance of a registered WFTO member. • Those complaining about the operation of the WFTO Guarantee System. – Complaints can relate to personel or WFTO services – Complaints relating to registration decisions of WFTO are covered in the Appeals procedure.

FT Accountability Watch • Complaints against members can be submitted through FTAW platform – allows all members, concerned stakeholders or the public to raise issues or concerns about a WFTO member’s compliance with the WFTO Standard in confidence. – The comments are stored in the online system and handled in a recorded way through the system. • Audit may be required and result in Sanctions procedure

Appeals • Right of appeal against Board decision regarding membership (i. e. temporary suspension or suspension, demotion to provisional membership, termination of membership), arising from the Guarantee System Approval or Sanctions procedures. • Appeals committee elected by the AGM. • Appeals committee decision is final.