Responsible Purchasing Practices assessments mark next milestone for the Banana Retail Commitment on Living Wages

While efforts to improve labor conditions have traditionally focused on production-level interventions, purchasing decisions made by retailers directly influence suppliers’ and producers’ ability to invest in decent working conditions and fair wages. Irresponsible purchasing practices can create pressures that cascade throughout the supply chain, ultimately affecting workers and their livelihoods. Assessing purchasing practices is therefore becoming an increasingly important part of human rights due diligence, helping companies identify and address unintended negative impacts within their own sourcing practices.

“Responsible purchasing practices are fundamental to building resilient and sustainable supply chains. Assessments such as these provide valuable insights into how purchasing decisions can influence working conditions and business outcomes. We hope the findings will help drive continuous improvement, strengthen collaboration across the sector, and support meaningful progress for workers and suppliers.” - Tesco

First steps of retailers towards more responsible purchasing practices as solution to close living wage gaps

21 European retailers from the UK, Netherlands, Belgium, and Germany committed to promoting living wages and reducing existing living wage gaps for workers in their banana supply chains either by 2025 or 2027. These commitments have been formalised in the German Retailers Working Group on Living Income and Living Wages coordinated by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)'s Sustainable Agricultural Supply Chains Initiative (SASI), and the national Banana Retail Commitment on Living Wages for banana supply chains in Belgium, the Netherlands, and the UK, coordinated by IDH.

As part of these commitments, retailers have been exploring different approaches to closing living wage gaps in their banana supply chains. As an important short-term measure, the German Retailers’ Working Group agreed in 2021 to introduce voluntary contributions to close living wage gaps, which started being implemented in 2022. In 2023, all retailers under the other European commitments followed suit and alignment was reached on this approach. Today, 16 retailers contribute to closing living wage gaps for at least part of their sourcing volumes, either through independent financial contributions or via the Fairtrade system. In 2025, the German Retailers’ Working Group reached its jointly agreed target of purchasing at least 50% of their respective banana volumes as Living Wage Bananas, through analysing and verifying wage data as well as paying voluntary contributions to farms with prevailing gaps.

At the same time, retailers acknowledge that alongside collective bargaining and national wage setting mechanisms, responsible purchasing practices are essential for creating the commercial conditions that enable sustainable, structural wage improvements. By promoting a more balanced distribution of value and risk across the supply chains from producer to retailer and consumer, they provide the foundation for long-term progress towards living wages.

Against this background, 12 participating retailers from the different national commitments completed a first Responsible Purchasing Practices self-assessment in 2024 to evaluate their current maturity in implementing responsible purchasing practices and identify opportunities for improvement. The exercise fostered valuable internal dialogue between buying, sustainability and human rights teams within participating companies. However, self-assessments reflect only the company's own perception of its purchasing practices, while the perspectives of supply chain partners directly affected by these practices remain unaccounted for.

Adding the supplier perspective

To complement the retailers’ self-assessments and develop a more complete understanding of how purchasing practices affect supply chain partners, members of the German Retailers’ Working Group,  as well as selected retailers from the Belgian, Dutch and UK living wage commitments,  partnered with the Ethical Trading Initiative (ETI). Together with ETI, the participating retailers carried out an evaluation of their current purchasing practices, combining self-assessments with comprehensive feedback of their supply chain partners. In total, 12 retailers and 34 Tier 1 and Tier 2 suppliers participated in these assessments, resulting in 111 supplier responses, as several suppliers evaluated multiple retail partners they work with. Together, the participating suppliers represent approximately 100.000 workers in banana supply chains.

Based on ETI’s Common Framework for Responsible Purchasing Practices, the assessment combined surveys among retailers’ buying and human rights teams with supplier surveys and in-depth interviews. The process examined five key principles of responsible purchasing: Internal Integration (P1), Equal Partnership (P2), Collaborative Production Planning (P3), Fair Payment Terms (P4) and Sustainable Costing (P5). The graphic below shows how suppliers scored retailers against Principles 2-5. Principle 1 was not included in the supplier scoring, as it focuses on retailers’ internal processes and structures, which suppliers are not in a position to assess.

By comparing retailer and supplier perspectives, the assessment aimed to identify opportunities for improvement while providing participating retailers with valuable peer benchmarking.

Source: Banana supply chain: How purchasing practices influence outcomes for producers, exporters, and workers. Group report. (ETI, p. 5, fig. 5)

Results highlight differences in supplier and retailer’s perception

The findings clearly demonstrate that retailers’ purchasing practices have a significant influence on labour conditions and workers’ rights throughout banana supply chains. Across all assessment areas, a consistent pattern of divergence emerged: While retailers generally expressed confidence in their purchasing practices, suppliers often described a different reality regarding planning, pricing, payment terms and audit requirements. At the same time, the benchmarking exercise revealed considerable variation between participating retailers, creating valuable opportunities for peer learning and strengthening internal discussions on responsible purchasing practices.

“Closing living wage gaps requires more than financial contributions. Open dialogue with suppliers and a critical review of our purchasing practices are equally important. This assessment helps us identify opportunities for continuous improvement and drive lasting progress towards living wages.” - REWE Group

From the suppliers’ perspective, the assessments highlighted six key areas requiring further attention:

-Power imbalances and commercial pressure

-Prices that do not sufficiently cover the real cost of production

-Audit fatigue

-Diverging technical specifications across markets

-Pressure resulting from low retail prices and claims management practices

-Challenges in implementing living wage commitments.

These findings underline that purchasing decisions can have far-reaching consequences beyond commercial relationships, influencing suppliers’ ability to invest in better working conditions and wage improvements.

“It was gratifying to see an initiative like this, validating what happens across the whole supply chain, from the reality at origin all the way through to how it is received and handled by fruit buyers at European supermarkets. There is a lot behind every box that retailers don't always see, and at times it can feel like they ask without truly putting themselves in the shoes of the banana industry in the country of origin. At the same time, there are also retailers with genuinely good practices, and that deserves recognition too. What matters most is that every client-supplier relationship works towards a real win-win, and initiatives like this help make that possible.” - Uniban

"As a supplier in the banana sector, we welcome that this research turns attention to purchasing practices - an area that has so far received less focus than the production end of the chain. Over time, commercial decisions made along the supply chain have consequences that can reach all the way down to working conditions on the ground. In our view, a transparent and ongoing dialogue between retailers, suppliers and growers is the foundation for achieving lasting improvements together." - Dole Europe GmbH

Retailers, in turn, identified strong internal alignment between buying and human rights teams as a key prerequisite for more responsible purchasing practices. Leadership commitment and closer cross-functional collaboration were recognised as essential for embedding responsible purchasing practices across the company.

Evidence-based recommendations as starting point for structural improvements

Building on these findings, the report provides practical recommendations, including strengthening supplier dialogue and feedback mechanisms, improving production planning and forecasting, ensuring a fairer distribution of commercial risks, reviewing payment practices and contract terms, and developing pricing approaches that better reflect responsible production costs and support progress towards closing living wage gaps.

“The research and a report from ETI are important to develop guidelines for purchasing teams and to have the whole supply chain act in the same interest, with the same goals. Only then, the banana supply chain can operate in a sustainable way in the long term.” - Agrofair