Welcome back to the Small business, Big impact case study series, featuring people and planet-positive small and medium Australian businesses and startups. These look behind the scenes at the sustainability practices of these businesses and how these have driven growth and profit. In this second instalment, we spoke to Nick Savaidis, Founder and CEO of Etiko.
Etiko was the first fashion brand in the southern hemisphere to become Fairtrade certified in 2006. It has also since been recognised as B Corp and Social Traders certified and won multiple awards including the Victorian Premier's Sustainability Award for Small Business in 2008, the Banksia Award for Business Sustainability in 2008 and the Australian Human Rights Award for Business in 2016. Etiko is also the only fashion brand to achieve an A+ rating in every Australian Ethical Fashion Report since it started in 2013.
Who is Etiko
With the brand name being derived from the Greek word for ‘ethical’, it’s clear that ethical practices are at the core of Etiko’s business. Etiko goes beyond 'do less harm' to 'do as much good as possible' by committing to a fair price and working with suppliers that invest in the wellbeing of their workers and communities.
Etiko is focused on respecting and promoting human rights in every step of its supply chain from the cotton growers and rubber tappers to the people stitching its apparel, sports balls and footwear.
Etiko also makes sure all its materials are as sustainable and ethical as possible, from organic cotton, natural FSC certified or recycled rubber, and no animal glues to the FSC paper and cardboard packaging. Nick proudly says Etiko’s superpower is in providing products that tick three boxes - Fairtrade, organic and vegan.
What is Fairtrade?
Fairtrade is a certification that indicates a system of equitable trade and a better life for farmers, workers and their families. The certification ensures that a fair price is paid for goods, that workers are paid appropriately, environmental standards are also met, and that a price premium is paid to the local workers cooperative to be invested democratically in local development and community services. The system also involves money going toward promotion of the Fairtrade label to raise awareness among consumers.
The Fairtrade system creates a trusted network of farms and factories that have been audited to verify they meet strict ethical and environmental standards. Nick points out that while some other labels may present similar ethical claims, they often use self-reporting rather than independent auditing, creating a lack of transparency and verification.
Nick quoted an analogy from Molly Harriss Olson, CEO of Fairtrade Australia, to explain the importance of Fairtrade certification over other products claiming to be ‘ethical’:
"We know that both Superman and Usain Bolt are incredibly fast. But we can only prove that Usain Bolt is fast because there is proof."
The certification is also overseen by a board that is made up of a majority of farmers and workers who decide what is fair compensation for their products - a system that gives the power back to the producer and balances the scales of globalisation.
Trusted suppliers, trusted buyer
Etiko has developed trusted relationships with key suppliers in India, Sri Lanka and Pakistan, working with ones such as Chetna Organic Farmers Co-operative in India since they started in 2005. These relationships, plus the transparency of the Fairtrade chain of custody, mean they are not only confident in the practices of their suppliers but also able to work with suppliers through any issues that arise and even innovate new products. Etiko’s commitment to its suppliers gives them the confidence to invest and improve.
Etiko has leveraged these relationships in the past to work with existing Fairtrade suppliers providing sports balls to expand their capabilities to produce footwear as well. They are now working with suppliers to develop new circular products, taking back sold footwear and clothing and returning these to the suppliers to be turned into new items, and potentially in the future being able to replace individual parts like the sole of a shoe.
Building a successful ethical brand
As a trailblazer in ethical fashion, Etiko has faced the challenge of getting consumers to shop with their values in mind. While shoppers have long claimed to prefer ethical and sustainable products and brands, Nick points out there is a difference between what people say and what they do when it comes to purchasing.
Nick has seen a lot of new ‘ethical’ brands succeed and fail, and says one of the biggest differentiators between them is the expectation that consumers will buy a product just because it is ethical. Instead, he offered four criteria an ethical brand needs to address in order for its products to succeed. They must be affordable, accessible, quality and have a ‘cool’ factor.
Affordability means they must be at least close in cost to their non-ethical competitors, even if that means the margin may be lower. Accessibility is thankfully getting easier with the adoption of online shopping.
Quality is a non-negotiable for customers, and is important to avoid not only waste but poor reputation of ethical and ‘eco’ products. For example, third-party audits have shown that Etiko’s footwear has a 25% longer wearing sole than its competitors, making it a higher quality for the same price.
And ‘cool’ is what really gets your customers on board and excitedly showing off their purchase. Mix great style with a cause people can get behind and you’ll have a loyal following of consumers and even celebrity influencers doing your marketing for you.
When asked for his top tip for small businesses, Nick expressed that “if you can build a team of people around you who share the same kind of vision, the same kind of passion it puts you in good stead.” Building a brand can be hard, so teaming up with other like-minded businesses and working together on common ground with all your resources pooled together, can be much more beneficial than struggling alone.