21 September 2010

Fair Trade: The Board's Decision

Hi everyone,

I’m writing to expand a little on the post Dave made below about the Fair Trade Referendum and the steps the Board is taking to implement that Referendum.

As many of you might be aware, the issue was discussed at length at the USU’s Annual Policy Conference, and has been debated at the last two Board meetings. It’s really important to the Board that we act on this issue that’s obviously of huge concern to a number of our members, but it’s equally important that any progress on such a substantial commercial consideration be made with due consideration of all the legal and financial implications of a decision of this kind.

In light of that, the Board felt it was not in the best interests of the USU to accept the terms of the referendum exactly as they were expressed. I'll explain the steps we’re taking to make fair trade coffee available on campus, and then the issues the Board had with the referendum as it was put.

So first, what steps are we taking at the moment, or in the immediate future?

1. Following on from the clear interest in being able to buy fair trade products on campus that has been shown consistently, Parma cafe was required to supply Fair Trade coffee in the terms of their contractual arrangement with the USU. There was a short lapse in this supply when the outlet changed hands, but the USU has enforced the terms of the contract, and you're able to buy Fair Trade coffee at Parma again.

2. In line with the Referendum, we have established a Steering Commitee made up of Directors and Staff (more on this below) that will be working to adjust our selection criteria to take into account the Referendum result and make Fair Trade supply an important consideration in guiding tender selection when the current contract expires. We're doing research now to make sure that we'll receive high quality tenders and be able to make a smooth transition to Fair Trade.

In terms of what the Referendum required, all practical steps that the current Board had the ability to follow through on ARE being taken. Current directors will not have the opportunity to participate in the selection process for the next coffee contracts, and this Board does not have the ability to bind any future Board to any course of action or decision. While we could have made any number of token gestures, what's important to us is communicating with our membership about the financial and legal considerations that need to guide our decision making in line with our commitment to listening to our members. The more we can have a constructive dialogue with all of you about a compromise that will satisfy our social and ethical responsibilities in line with our commercial needs, the more likely we are to be able to reach a resolution that delivers the best results for all concerned.

That brings me to the components of the Referendum that the Board felt were a problem:

1. Fair Trade Certification with the Fair Trade Association of Australia and New Zealand (FTAANZ)

The biggest problem with certification is that USU doesn't have a monopoloy on coffee supply on campus - the University operates (and has recently outsourced) catering at the Darlington Centre, and we also have a number of tenants who supply coffee. One of these tenants - Parma - was required to supply Fair Trade coffee when that outlet went out to tender, but our other tenants have existing contractual arrangements with the USU that don't allow us to stipulate conditions on things like coffee supply.

Most of our tenants are small businesses, and the impact on them of making the switch to fair trade would be even greater than it would on the USU, which is a much larger business - this would be really unfair of us as land lords, and present significant legal issues. One option in terms of expanding the fair trade presence on campus is to negotiate Fair Trade supply with tenants renewing their leases, or in new spaces that become vacant for commercial use.

In addition to this, the Board was concerned about future compliance costs of certification which might not be apparent now. Changing standards for certification, and the risk involved with this, was something the Board was not prepared to commit future Boards to.

2. The Composition of the Fair Trade Steering Committee

Where the Referendum recommends the creation of a Steering Sub-Committee of the USU Social Justice Committee to oversee the implementation of the referendum, the Board passed an amended resolution that created a Steering Committee comprising the Board Executive, CEO, Operations Director and Finance Director.

Board Directors were concerned about the implications of including ordinary members on a specialist committee that dealt with highly sensitive financial and commerical information. The committee would necessarily deal with confidential information, and it would be highly unusual for any organisation like ours to include members not bound by the same standards as Directors on a committee like this. Not only would we be considering information that was sensitive from the USU's point of view, the committee would also deal with information about potential contractors that we have an obligation to protect.

Moreover, a series of changes to our committee structure were passed at the August Board meeting that mean the Social Outreach (/Justice) commitee will not be convened in 2011 - we'll be adding a blog post on these changes very soon.

3. The 100% Fair Trade Commitment

The final issue that concerned the Board was a commitment we were asked to make to exclude any suppliers that could not supply 100% Fair Trade coffee from our next tender process, by making 100% Fair Trade an essential criteria.

From our point of view, it would be quite unwise to limit competition in our tender process. In order for the Board to make the best possible decision for the USU when the coffee contract comes under review, we felt that it would not be appropriate to exclude competitive tenders from consideration. Coffee represents an important revenue stream for the USU to fund its student programs, and this Board felt that the risk that no Fair Trade tender would be able to adequately fulfil all of our other essential criteria was too high to limit our options in such a way - particularly given the difference between the fair trade and non-fair trade tenders in the last tender process.

That said, we are told that the Fair Trade market has grown and developed substantially since the last tender process. What this means is that in all likelihood, a 100% Fair Trade tender will be equally competitive in all essential criteria, and the adjustments that we are considering to our weightings in the 'desirable' category will mean that a Fair Trade tender will be more competitive in the terms of our tender than other options.

We'll be reporting back here, and on the USU website, on further developments on this issue.

Mel
(USU Vice President)

20 September 2010

An update from the USU Pres…

The past few months have definitely been a tumultuous time for the Union. Fair trade, elections, the White Paper and the University’s controversial plans around the student experience (Philips KPA report), to name a few, represent some very significant challenges facing the union board. At the same time, the Union is continuing to experience one of its best years: we’ve reached our highest membership level since VSU, we have a range of new on-campus partnerships, we celebrated our biggest Verge and O-week festivals yet and we have an in-principle agreement with the University around long-term funding.
In this piece, I would like to take this opportunity to inform the student body about the outcomes of the fair trade referendum and the elections.

On Fair Trade.
At the August board meeting, the referendum in its pure form was voted down. Does this mean that nothing will be happening on fair trade? Absolutely not. The board resolved to establish the Fair Trade Working Party (a clause in the referendum) to:
- Investigate making fair trade products readily available on campus by assessing the current/new fair trade options on the market – the current fair trade coffee market is mostly small boutique companies, but larger companies are looking to offer 100% fair trade options in the future – this will be something the Union will be following closely
- Revise and re-weight the current criteria used to evaluate coffee tenders so that fair trade suppliers aren’t as disadvantaged in trivial areas of the criteria such as promotional benefits and signage.
- Assess and troubleshoot the cost differential between 100% Fair Trade and non Fair Trade Coffee competitors when the coffee tender re-opens
This is not the referendum. However, fair-trade supporters shouldn’t view this as a loss either. This outcome is a positive translation of the referendum that represents a partnership between the Union and Fairly Educated as well as a commitment to ensuring that the Union can make the most sustainable and informed transition to fair trade coffee in 2013. Establishing the FTWP and elevating fair trade to a compelling factor in the tender means that the 2012 board, pending the quality of the tender applications against a new coffee criteria and the cost to the Union, would be foolish to act against the clear majority support given to fair trade on May 12, 2010.
We applaud the enthusiasm and effort of the Fairly Educated Team and I would like to thank them for their collaboration with the Union on this issue.
On Elections.
It is unfortunate that last week a former board director chose to violate the board’s rules of confidentiality on this specific issue – however it is important to clarify two things:
The former director was party to a request that the board seek independent legal advice regarding the candidates and the executive elections. We sought this independent legal advice, which the board followed. We also commissioned an independent consultant who recommended that no one be expelled from the board. In line with best practice the board formally received and adopted this report (and disciplinary actions contained within) in August.
Secondly, the Electoral Working Party began amending the electoral regulations this month so that future elections won’t be subject to the same problems. The returning officer and a representative from the Australian Electoral Commission will sign off on these changes that will come to board in October. These changes will be looking to dramatically increase the accountability of candidates, especially in relation to the spending cap, and increase the access of low SES students to the opportunity to run for board.
For more info stay tuned to our blog @ www.yourunionboard.blogspot.com. I appreciate your patience over these last few weeks and this opportunity to explain the board’s most recent decisions.

09 August 2010

Fair Trade Statement

Dear USU Members,

In light of the referendum held on May 12 and the increasing attention being given to the USU Board’s role in implementation, I would like to outline the current situation and allay the concerns being expressed by members of the student body on Fair Trade.

As you already know, 89.3% of voting students on May 12 said yes to the referendum on Fair Trade. We are proud to be the only student run union left in Australia and we are gladly working with the Fairly Educated team on this issue. Basically, whilst the referendum was constitutionally non-binding and effectively a poll on student preference in the running of a particular aspect of USU’s commercial operations, we are committed to assessing how USU can viably transform the clauses of the referendum into meaningful, sustainable (cost-free) action on Fair Trade in order to be mindful of the clear support indicated by students.

As mentioned earlier, the board has been assessing how we can make the referendum work best for the Union and for students. As part of this assessment your student elected board directors are, like other company board directors, required to cover the series of checks and balances that apply with their financial and legal responsibilities. Likewise, the proposal to receive the referendum and the action plan for the implementable clauses will come out of this process and will be discussed with the Fairly Educated Team tomorrow.

We are determined to address all of the concerns and would like to assure you that the board has in no way ‘rejected’ this referendum, nor made any official position clear that should alarm the stakeholders of the Fairly Educated campaign. Rather, we are engaging in discussions with Fairly Educated in order to make sure the Board’s actions on Fair Trade are as meaningful and sustainable as possible. It is important to us that we remain accountable to our members, but also that our members are fully aware of the issues that demand full and proper considerations before important decisions are made.

In order to aid a more complete understanding of the complexity of this issue for the board, I would like to explain some critical factors for your benefit, that have been left out of the recent campaigns.

1) Clause d) of the referendum outlines that the sale of Fair Trade products in USU outlets and the use of Fair Trade products in USU’s administrative units cannot commence until the expiry of the current contracts. The current contract with Vittoria will not expire until the 31st of December 2012. Unfortunately, the commercial and financial reality of the USU means that we cannot buy out of the current contract and doing so would cost upwards of $1.5 million. This kind of unfeasible expenditure would deeply affect the level and quality of the services that the Union currently provides and would not be in the best interests of the Union or the student body that it serves.

2) The financial cost of transitioning to 100% Fair Trade in 2013. This is something that will be investigated by the USU Steering Committee (clause b) so that the cost of picking up Fair Trade is viable and sustainable when the tender re-opens. In 2008, the cost of this would have been approximately $200,000. However, we are determined to ensure that Fair Trade Coffee suppliers are fully aligned with the Union’s criteria for quality, infrastructure and maintenance, whilst simultaneously working through the important cost issues that need to be resolved in a financially viable manner.

Despite these constraints, we are very clearly determined to continue to work with the Fairly Educated team in order to make the referendum work. Moreover, the board has, before the referendum even occurred, been moving toward providing fair trade options on campus. When the EOI was sent out for Parma and Cucina CafĂ©, we required that the tenant that would occupy that space provide fair trade coffee – and the original successful tender did. When Parma changed hands six weeks ago, the new tenant did not provide fair trade coffee – so the board engaged discussion with the new owner and enforced the terms of the licence, which included providing the Fair Trade and Rainforest Alliance certified brand, Veneziana.

Even in the face of the aforementioned legal and commercial difficulties of the contract entered into in 2008, this board and its immediate predecessor has endeavoured to diversify the options for students on campus.

If you are interested in the USU’s policy positions please attend our Annual Policy Conference this Wednesday and engage with your Board of Directors on a range of policy topics including Fair Trade. The details can be found at http://www.facebook.com/event.php?eid=134246203284533&ref=ts

Thank you for engaging with us on Fair Trade and I hope this has allowed you to empathise with the Board on its role in implementing the referendum. Remember that the Board and myself are readily contactable if you have any more questions or would like to discuss this in more depth.

Kind Regards,

David Mann
President
The University of Sydney Union

30 March 2010

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