Tesco commits to paying the living wage gap to banana producers

22 October 2021

Giles Bolton
Responsible Sourcing Director

Customers want the peace of mind that the products they buy from us are sourced with respect for the people who help make them.

Since 2017 all our bananas sold in the UK and Ireland have been sourced from certified farms – either Rainforest Alliance or Fairtrade. However, certification does not guarantee that workers earn a living wage, a benchmark wage that is enough to meet their family’s basic needs including food, housing, education, healthcare, transport, and clothing.

That’s why, we are pleased to share a new approach and new commitments to close living wage gaps in our UK banana supply chain.

1. As of January 2022, Tesco commits to paying the living wage gap to banana producers (equivalent to the volumes we source).
2. Tesco shall ensure that producers have in place a timebound commitment to pay all workers a living wage.
3. We will reward suppliers who continue to make progress on closing living wage gaps with higher volumes as part of a balanced scorecard.
4. Our ambition is that from January 2024, we will only source from banana producers who pay a living wage to all workers no matter the volumes sourced by Tesco.

Gaining visibility of living wage gaps in our supply chain

 To develop our new approach, we first set out to better understand workers’ current earnings and how these compare to living wage benchmarks.

Alongside industry partners such as the World Banana Forum and IDH, we have worked hard to establish living wage benchmarks in all major banana-producing countries and support the development of tools for suppliers to measure living wage gaps.

This then allowed us, in collaboration with our suppliers, to collect information on the cash wages, bonuses and benefits-in-kind workers in our supply chain receive.

The latest set of data show us that half of our suppliers already pay a living wage to all workers. For our remaining suppliers, living wage gaps were found to range between 2% and 18%, but in many cases, it is only a small proportion of workers earning below the living wage benchmark.

Our commitment to support banana suppliers close living wage gaps

We believe helping all workers achieve a living wage is a responsibility shared across the entire supply chain. That’s why we are committed to embedding living wages into our purchasing practices and working together with our long-term supplier partners to eliminate living wage gaps over time.

We will also continue to measure progress annually and recognise this as part of our balanced scorecard which combines quality, cost and responsible sourcing when we review suppliers.

We call on others to do the same

Our 2024 ambition, which is about ensuring that all banana workers earn a living wage, requires suppliers to make investments into wages that go beyond Tesco volumes. Tesco only represents a small proportion of global banana production, and many of our suppliers also sell bananas to other retailers and buyers, so we’re calling on other buyers across the sector to join us and support suppliers to increase wages for the lowest paid workers.  

Footnotes

1. Living wage should be seen as a floor and not a ceiling.

2. Freedom of association, collective bargaining and social dialogue in the workplace are important rights that also support improvements in wages towards a living wage and beyond. Suppliers will be expected to engage worker representatives in the development of wage improvement plans.

3. The IDH Roadmap on Living Wages supports companies to take the next step in this shared ambition and help secure decent wages for men and women in supply chains. More information here: https://www.idhsustainabletrade.com/living-wage-platform/