Alternative trading for peace on Earth and goodwill to all nations: Roland Howard on Traidcraft, which pays dividends to society before shareholders

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NOT EVERY firm is trying to extract the last penny from consumers this Christmas. For some, a touch of compassion goes with the commerce. Traidcraft is one such firm, a radical Christian company that says it is 'trading for a fairer world'.

It offers consumers the chance of having their cake and eating it. You can buy from Traidcraft's glossy brochures in your living room, you can enjoy exotic products from flying dragons to batik boxer shorts to coffee tables; and most importantly, you can experience the sort of warm glow normally associated with a visit to the bottle bank, knowing that your purchase will help Third World producers. It claims that goods sold this Christmas will help tens of thousands of people in the developing countries.

Founded in 1979, Traidcraft has an unusual history. Its leading light was Richard Adams, who had been running the marketing arm of Tearfund, a Christian charity. He was keen to buy handicrafts (Bangladeshi jute angels among others) at fair prices from producers, regardless of their religious beliefs. Tearfund policy had been to buy only from schemes run by evangelical Christians. The jute angels broke the camel's back and Mr Adams left with like-minded colleagues for Newcastle, where they tried to register as a charity. They encountered various problems with this plan so they decided to set up a business based on Christian principles.

Richard Evans, external affairs director, said: 'The challenge of the gospels is to bring good news to the poor and oppressed and to strengthen the weak. What better way to try to do this than through trade, which is so often the heart of the problem and which has such power to transform lives?'

Known as an ATO (alternative trading organisation), Traidcraft turns over pounds 4.5m a year through mail order business, its own representatives and shops. Despite the charitable concern, Phillip Angler, managing director, is quick to point out that Traidcraft is not a charity or a development agency - as a company it operates within the commercial constraints of the market place and holds producers accountable for the goods they supply. But he adds: 'As Christians we are trying to bring love and justice into business.'

Getting the right balance between the Messiah and the market can be tricky. So much so that two years ago the company invited Alan Sudgate of the University of Durham to be theologian in residence for a year to add a religious perspective to the decisions taken at business meetings.

In practice, bringing justice into business means paying fair prices (above the going rate) for products and dealing only with those producers who pay fair wages, involve workers in the decision-making process, and take care of the environment.

In emergencies, the company also goes the extra mile for those who are experiencing suffering - after the 1988 floods in Bangladesh, Traidcraft paid most of its producers there twice the agreed price for their goods in order to help replace lost equipment and materials.

Mr Angler talks of long-term partnership, which he admits may not make complete business sense in the short term. 'We empower them to meet the requirements of the export market. Handicraft producers are often exploited by export buyers because of their vulnerable economic situation. We chose not to do that; we'd rather develop a positive relationship with them.'

Traidcraft displays a similarly radical approach to its employees and customers back in Britain. There is a company rule that is enough to make the captains of industry shudder - the highest-paid employee must not earn more than three times the salary of the lowest-paid employee. This year it has started work on a social audit, which evaluates the impact of the company in areas other than the financial: these include relationships with customers and shareholders, their effect on the environment and the company's 'spiritual impact'.

None of this comes as too much of a shock to Traidcraft's 4,000 shareholders, who should be used to the idea of investing with a conscience. In 1984, when shares were offered to the public, it was on the clear understanding that dividends would be modest but that the money would be used to help producers in the Third World. Eight years and only two dividend payments later, no one is complaining.

This radical approach appears to be paying off because the volume of sales and the number of Traidcraft representatives have increased every year. For the first time this year they have produced four brochures rather than one.

Traidcraft now has different priorities - to fight its way out of the hessian-inspired 'right-on' corner of the market, and to encourage people to consider the sustainability of their purchases. It maintains that only when these concerns extend beyond the liberal intelligentsia can real changes come about. As a Christmas marketing message, it is a refreshingly different one.