As a child, Nick Savaidis saw first-hand the raw deal many sewing machinists get while putting together our favourite garments. His mother was like many immigrant women of the 60s, setting up her machine in the lounge room to earn a meagre wage (she’d earn just a few cents for garments that would go on to sell for much more). He knew it was unfair, but as child was powerless to do anything about it. As an adult, he decided to make a change.
The former teacher came across Paul Hawken’s The Ecology of Commerce, which explored the impact of business on the environment.
“Business doesn’t always have to have a negative impact,” Savaidis explains. “Just as business has caused a lot of the environmental problems that we are experiencing around the world, it could offer the solutions as well.”
Learning from his work setting up businesses in remote Aboriginal communities, Savaidis launched ESP (Environmentally Sound Products) in 1996, producing a range of waste-reducing dental care products. When the dollar took a nosedive a few years later, he worked on his next business idea.
“I read publications such as The Internationalist, which used to print reports of the use of child labour in producing sports balls,” he explains. “As a teacher, I used to coach kids in soccer and often asked myself what the chances were the kids I was coaching were playing with soccer balls made by kids in Pakistan, India or China, who couldn’t afford to play soccer?
“And I was trying to buy clothing that I knew would be sweatshop or child-labour free, and it was impossible to find anything,” he says. “It’s pretty hard to do anything about it, if you don’t know anything about the choices. So I thought, why not create the alternative; why not give people the choice?”
Savaidis dipped his toe into the anti-sweatshop market by taking on the licence for the Australian arm of No Sweat, a brand started in the US by Jeff Ballinger, the man responsible for exposing big name sports brands that used child labour. But when he found it too challenging working from the other side of the world, he decided to go it alone.
“I was more interested in putting back into the communities and the environmental impact of what we were doing,” he says. “So I started developing the whole Etiko concept.”
Etiko is essentially Greek for ethical, and this is exactly what Savaidis had in mind for his business. Running since 2005, Etiko produces fair trade certified sports balls, sneakers and clothing sourced from manufacturers who are certified fair trade or certified sweatshop free, or worker-owned co-operatives. The sports balls and footwear are also the first non-paper, non-timber products to be certified to the global Forest Stewardship Council (FSC) standard, and the clothing range is certified organic.
Savaidis also works with two other companies, Respect from the US and the UK’s Athletic, and together the trio of like-minded businesses use the same supply chains to get goods produced.
As part of Etiko’s fair trade accreditation, Savaidis and his international counterparts have to give back to the community. “So we pay a 15 per cent premium on top of the cost of the products and that money goes into a trust account that the workers themselves manage. And they have to do something to help themselves and the community.”
The workers chose to set up a healthcare system for themselves and their immediate families, and fund a micro credit program. In 2007, over 9000 treatments were provided through the healthcare program. And since 2005, the credit program has helped 343 micro businesses get off the ground, with the average enterprise set up for around A$300.
“There’s a lot of pride in what they are doing and I think there’s a lot of relief that they don’t have to stitch balls for living – whether you’re a child or not, stitching balls for a living is hard work.”
Although he and his US- and UK-based colleagues visit the factories regularly, Savaidis says the regular audits that come with the accreditation process ensures what his suppliers are doing is totally ethical. “But it’s always wise to have backup systems. With that in mind, in Pakistan we work with an Independent Monitoring Association for Child Labor (IMAC). We also work closely with the unions who represent the workers, so we do get reports and have discussions with them about any issues they have.”
Like a lot of small businesses, Savaidis risked the family home to get started. As the business develops, and thanks to an investment into the supply chain, Etiko is ready to increase production and supply. This requires more money, so Savaidis says he is trying to raise some equity investment.
And with the rise of ethical investments, you’d be forgiven for thinking he had a slew of investors lining up at the door. “We haven’t been able to find any that invest in non-listed companies,” Savaidis laments. “We can develop a lot more products now we have our supply chain in place, but it all requires capital.”
While he is on the lookout for an equity partner, he also knows he would face a moral dilemma if an investor with non-ethical principles or connections showed interest.
“The reality is we can’t do what we want to do without getting serious equity investment,” he says. “At the same time, we’re working with people that support, directly, about 600 or 700 people at the moment in different parts of the world, and indirectly thousands of people, so we have a moral obligation to them as well.
“We’re not all about greed and making money,” he says. “We’re looking for people interested in getting a return on their investment but also want to have a positive impact on people around the world.”
Understandably, the margin on his products isn’t as high as the non-ethical brands he competes with in the marketplace, so Etiko is run as a pretty lean machine. “We know we pay a lot more for our products than the non-ethical alternatives do but we have to keep the prices at a level where people can afford to buy them. I don’t want to see ‘fair trade’ as being an elitist concept,” he says, “because nothing is going to change unless it becomes mainstream.”
Not only are the products ethical, Savaidis also stands by the quality. “We think [consumers] are getting exceptional value – we’re offering a good quality product that’s made ethically, for the same price. You have to ask yourself, why wouldn’t people buy them?”
‘Why’ often comes down to awareness. One of Etiko’s toughest challenges in making the products widely accepted has been getting support from mainstream retailers. “Firstly, many aren’t convinced consumers care enough about this issue. Secondly, there are retailers who have expressed concerns that what we are doing raises questions about other brands in their stores – their bread-and-butter brands. Because how do we promote what we do without raising questions about other brands?”
Instead, they work with retailers who believe in what we’re doing, like Oxfam and Friends of the Earth, and try to build awareness of their brand for retailers and consumers. “Nothing’s going to change until the consumers change, and the consumers can’t change until the retailers start carrying the products.
“At the same time, it’s easy to point the finger at retailers and say they are doing the wrong things, but what about schools that talk to kids about sustainability and social justice and then do nothing about it, apart from buying the cheapest possible products they can, without asking what makes them so cheap.”
Savaidis tries to tackle this issue by communicating with schools and sending out education kits he created with the Global Education Centre in Adelaide.
“Our main challenge is to get people to live by their values, and I’m sure it’s a challenge faced by all companies involved in sustainability and social justice.”
The growing awareness of climate change has helped bring these ideals to the fore, but it’s also helping grow the ethical promise of the brand.
“We mainly set up to address the issues of the use of child labour and sweatshop labour, but we’re also making everything as eco-friendly as possible.”
To do this, he has stripped back product packaging to the absolute minimum, and uses sea freight whenever possible.
Despite the ongoing challenges, Savaidis and his team of four are obviously doing something right, if the awards are anything to go by.
“It’s great to get some recognition for what we’re doing, especially from such important organisations like the Banksia Environmental Foundation and the Premier’s Sustainability Awards, Victoria. It’s also helped us get access to other businesses, especially large corporations interested in sustainability. We get invited to attend and talk at a lot of different events now that I don’t think we would have the opportunity to do, had we not won those awards.”
And who knows, that perfect investor might be just around the corner.