1. WFTO Guarantee System Approval and Sanctions How we can guarantee members

2. Guarantee System Robust enough to carry a label? Membership system - must ensure: –T–That members comply with the FT Principles –T–That we can remove non compliant members Our reputation depends on all members

3. 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

4. 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.

5. Monitoring schedule Monitoring cycle for trading members Low riskMedium riskHigh risk Self AssessmentEvery 2 years Monitoring auditEvery 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 visitEvery 4 years; after 2 good audits/visits reduced to every 6 years Every 4 years (alternating with Audit) Every 2 years (alternating with Audit)

6. Monitoring frequency Assessment frequency for trading members Low riskMedium riskHigh risk Monitoring audit or Peer visit Every 3 years; (after 2 successful initial audits/visits) Every 2 yearsEvery year

7. 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

8. 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

9. 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.

10. 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.

11. 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

12. 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.