Sustained progress towards closing the living wage gap could only come if buyers were prepared to include some of the costs of increased wages into their Malawi tea contracts

Read stories from some coalition buyers

Sustainable Procurement Model

To support tea producers’ ability to run sustainable and profitable businesses capable of paying a living wage to workers over the long term, the programme designed the sustainable procurement workstream.

IDH and Oxfam partnered with Accenture Development Partners to develop a tool on sustainable procurement: the Sustainable Procurement Model. This facilitated the tea contracting process to link buyer tea pricing to worker remuneration without falling foul of competition law. Through the model, buyers can enter data on the quality level, the amount of tea they wish to purchase, and establish what price is needed to be paid to create enough value to potentially narrow the living wage gap by an agreed percentage. Based on the Model, Oxfam and IDH did trilateral assessments of buyers’ sustainable procurement practices.

See the IDH website for the Model

 

Buyers Assessment

Oxfam and IDH did trilateral assessments of buyers’ sustainable procurement practices . 11 companies (9 buyers, 2 retailers) were assessed based on the 2019/2020 season, through interviews with IDH and Oxfam, and based on data submitted via the Ethical Tea Partnerships. Retailers were not assessed on all questions: the assessment methodology was adjusted to reflect their position in the supply chain.

The 2020 assessments were done based on the Sustainable Procurement Model and the agreed ambition that coalition buyer contributions should enable the living wage gap to be closed by at least 20% during the 2019/20 season. 

Download the Buyer Assessment

 

Assessments

In the individual assessments, coalition buyers and retailers were asked six different questions related to sustainable procurement practices. Answers to the questions were scored using a ‘traffic light system’.  

The following additional criteria are important to further understanding the buyer assessments: 

  • Companies reported their data to Ethical Tea Partnership who shared it with IDH. Oxfam did not need to see the data. This did not include the retailers as they are not direct buyer of Malawi tea and therefore the Sustainable Procurement Model was not designed for themNor did it include one buyer which had sufficient stocks of Malawi tea and therefore its contribution could not be verified. 
  • The Sustainable Procurement Model was designed for the direct buyer of Malawi tea, so in the case of the two retailers, this involved the contract between suppliers and producers, which was in turn contracted by the retailers. 
  • A trader whose business model was different from the others was not included in the assessment process. 
  • Coalition members typically buy approximately half of Malawi’s tea production each year.  
  • For sourcing strategies related to continued sourcing of (increased) volumes, some buyers relied on supermarkets and other key customers to make such a commitment. 
  • Living wages are likely to be more sustainable where teas produced command a market price above the commodity price, which can be achieved by increasing quality. 

See below an example of an individual buyer assessment: 

Insights from conversations with buyers

Sustainable Procurement Timeline

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