Sainsbury’s has been accused of undermining the Fairtrade movement by experimenting with dropping the ethical mark for its own label tea.

A series of shareholders and campaign groups criticised the supermarket group for dropping Fairtrade at its annual meeting in London on Wednesday, in an increasingly fraught exchange with the company’s board. Outside the event, protesters carried placards expressing their concern at the development.

The protests follow Sainsbury’s recent pilot in which it no longer labels its own-brand teas as Fairtrade, badging them “fairly traded” instead. The company said it was running a pilot with its tea products – but those opposing the change fear it will be extended to other products, including bananas and coffee.

Anne Lindsay, a private-sector analyst from Cafod, the Catholic charity, said to the board: “I am concerned that after years of being an extremely valuable champion of Fairtrade, Sainsbury’s is starting in a direction that could undermine Fairtrade and lead to a plethora of different standards by different companies and confusion for consumers.”

Another shareholder said: “I have seen the publicity about the proposed change from Fairtrade to ‘fairly traded’ tea. I have come across the term fairly traded when I have shopped in budget chains. I don’t know what it means and I don’t think most people who shop in Sainsbury’s do either.”

She said information on how Sainsbury’s scheme would work was “sketchy” and that it was not clear who would decide how the premium paid for ethically traded goods would be distributed to farmers and communities.

Some other shareholders, who nearly missed out on asking questions as Sainsbury’s chairman David Tyler tried to bring the meeting to a close, accused the company of trying to stifle debate. At least one campaigner was not able to ask a question at all.

“Are you now reasserting the power of the retailer against that of the producer – taking back control – and putting developing world producers back in the subservient role that Fairtrade redeems them from?” said Douglas James, an independent shareholder.

He said recognition of the Fairtrade mark outshone that of any other ethical mark and was “the envy of the marketing world, the gold standard”. “What do you hope to achieve by giving up the moral high ground and the kudos you currently enjoy and going it alone as yet another self-defining brand?”

Mike Coupe, Sainsbury’s chief executive, defended the change at the AGM, saying the company was “trying to bring clarity to a very complicated environment”, which encompassed many different ethical standards and labels.

He said the changes being made on tea products were a pilot and Sainsbury’s was committed to a transparent review of how well it worked with the seven producer groups involved.

“We are committed to the standards Fairtrade currently apply but we have to move on to ensure we cover social, environmental and economically sustainable standards around the world.”

He said Sainsbury’s “didn’t want to mark its own homework” and would work with independent groups to verify its practices. But he suggested Fairtrade had become outdated.

“It might have been fit for purpose 25 years ago, but we’re in a new world with new technology,” he said.