WFTO Guarantee SystemApproval 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 scheduleMonitoring cycle for trading members

Low risk Medium risk High risk

Self Assessment Every 2 years Every 2 years Every 2 years

Monitoring audit Every 4 years; after 2 good audits/visits reduced to every 6 years

Every 4 years (alternating with Peer visit)

Every 2 years(alternating with Peer visit)

Peer visit Every 4 years; after 2 good audits/visits reduced to every 6 years

Every 4 years (alternating with Audit)

Every 2 years(alternating with Audit)

Monitoring frequency

Assessment frequency for trading members

Low risk Medium risk High risk

Monitoring audit or Peer visit

Every 3 years; (after 2 successful initial audits/visits)

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.