cross industry perspectives on emerging innovations...
TRANSCRIPT
Cross Industry Perspectives on Emerging Innovations, Shifting
Geographical Risks and the Government’s Role in CSR
Nate Herman Vice President of International Trade
Intertek Ethical Sourcing Forum, April 8, 2016
The Dynamic Has Changed 1) No longer good enough to say, “We are
compliant.” 2) Need to reduce cost of compliance
• Collaboration and cooperation
3) Need to go “Beyond Compliance” • “Principals-Based Compliance” • We need to set the stage, drive the discussion • “Net Positive”
The Issues - Part I
1) Human Trafficking/Forced Labor • California/UK Modern Slavery/Maloney Bill • New Customs Law
2) Traceability/Transparency • Conflict Minerals • Uzbek Cotton
3) Worker Safety • Bangladesh Alliance/Accord
The Issues - Part II
4) Emerging Suppliers • Myanmar/Cambodia/Africa
5) Trade Agreements • Trans-Pacific Partnership (TPP)
6) Responsible Supply Chains • OECD/ILO • U.S. Natl Action Plan • Germany/Netherlands/France
Apparel/Footwear Industry Response
1) Bangladesh Alliance/Accord 2) Greater advocacy
• US & foreign governments
3) Push industry collaboration to reduce cost of compliance • APSCA/SAC/SAHF
4) Go “Beyond Compliance” • AAFA Denim Working Group
Thank You
Nate Herman Vice President of International Trade
American Apparel & Footwear Association (202) 853-9351
Carmel Giblin, ICTI CARE Foundation Steve Pasierb, Toy Industry Association
Cross Industry Perspectives on Emerging Innovations, Shifting Geographical Risks and the Governments Role in CSR
Mark Robertson
ICTI CARE Foundation
Intertek Ethical Sourcing Forum 2016
ICTI CARE is the toy industry’s responsible sourcing program 100% committed to protecting and enhancing the lives of workers
Worker Engagement
Capability Building
Social Compliance Monitoring
Special investigations
The ICTI CARE Program includes: Over 1,500 brands and retailers using the ICTI CARE Program. This includes some of the worlds largest toy brands and retailers.
What is ICTI CARE?
Latest research & innovations Our core purpose
• Developing the ICTI CARE Program
– Mapping and benchmarking ICTI CARE Certification with other responsible sourcing codes program and standards
– Focusing on 1) Issues 2) Streamlining Processes & capability building 3) Value adds for Buyers & Factories
…. shifting from compliance to continuous improvement
From compliance to continuous improvement
Standards
Awareness Raising
Risk Assessment
Self-Assessment
Due Diligence / Monitoring
Assurance
Remediation
Purchasing Practices
Collaboration & Partnerships
Training
Impact Assessment
Evaluation & Learning
Proc
ess o
f Im
prov
emen
t Measure &
Re-M
easure
What are the greatest potential risks? Impacts?
Where is performance?
Capturing impact, lessons learned and applying best practice
How do you drive and manage progress in the company, supply chain and beyond?
Track and Report
Capacity Building
Continuous improvement model
Compliance Beyond compliance
…. Ultimate aim: audit for improvement, not just compliance
• Expanding worker helpline - greater promotion, new technology, more workers helped (100,000+ since launch)
• Special investigations team - uncovering ‘fake’ factories and investigating root causes
• Chinese Manufacturers Forum – Peer-to-peer development fostered through new pilot program
• e-learning tools for factories - to improve worker/management communications
Research and innovations
New Comic books help rural migrant workers adapt to city / factory life
Parenting skills workshops to support workers who have left behind children (61 million left-behind children in China; 40% are under age 5. 70% of these children do not get to see parents annually)
Factory Summer Programs – pilot to reunite families and improve mental health and wellbeing of workers and their children
Committed Brands PLUS - a powerful supply chain management services suite, to manage ethical risks, monitor and report on progress, and drive standards.
Research and innovations
Introduce TIA Shifting risks / changing environment
Toys are more commoditized / cheaper / evolving China:
– Rising labor costs (wages, shortages, turnover) – Shifting aspirations, esp young workers – More temp & migrant workers – Consolidation of manufacturing base – More outsourcing, longer supply chains – New risks: ‘forced’ student labor, fake factories, migrant
workers – Workers seen as more of an asset, less of a commodity
Introduce TIA Shifting risks / changing environment
Shift from China to other countries - India, Vietnam, Cambodia, Burma
Higher risk of child/forced labor/ bribery / worker safety issues
Opportunity to get things right from the start Legislation (UK Modern Day Slavery / US Trade
Enforcement and Trade Facilitation Act)
Introduce TIA Government role CSR promotion
• Raising Awareness/provide information • Enforce the basic floor and encourage higher
ceilings, encourage progress • Promote Transparency (e.g. UKMSA ,CA Supply
Chain Act, new US Customs provisions) • Walk the talk (do what is asked via public
procurement and/or increase CSR transparency in own operations)
Introduce TIA
Thank you Mark Robertson [email protected] For more information on the ICTI CARE Program visit www.icti-care.org
The Business Social Compliance Initiative (BSCI)
Agenda
Cooperation Continuous Improvement Empowerment
• Latest Innovations • Shifting Risks • Government Role
Latest Innovations
Cooperation Continuous Improvement Empowerment
• Monitoring Advancements – Mobile – embracing mobile platforms to enhance
monitoring – Automated – Highly controversial monitoring methodology
• Data Analytics / Business Intelligence – “Layering” sustainability + other data on to business
decisions to reduce / prepare for / avoid risk • Ex: Water fragile sourcing • Ex: Labor conditions preparation
Shifting Risks
Cooperation Continuous Improvement Empowerment
• Frontier Sourcing – Sourcing moving to new markets:
• Avoiding inflation • Reducing single-market reliance • New consumer base
• “Near Shoring” – Closer-to-home sourcing
• Reduce transit time and cost • Often increases risks
Governmental Role
Cooperation Continuous Improvement Empowerment
• Emerging European National Models – Germany & Netherlands: Comprehensive programs – UK & France: Range of program “pillars”. Modern Slavery,
Due Diligence – Harmonization likely in the medium-to-long term
• Problematic for businesses looking for comprehensive solutions
ELECTRONIC INDUSTRY CITIZENSHIP COALITION©
EICC Perspectives
April 2016
Who we are
The EICC® is a coalition of the world’s leading electronics companies working together to improve efficiency and social, ethical, and environmental responsibility in the global supply chain.
www.eiccoalition.org
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EICC Vision and Mission
Vision:
A global electronics industry that creates sustainable value for workers, the environment and business.
Mission:
Members, suppliers and stakeholders collaborate to improve working and environmental conditions through leading standards and practices.
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EICC Membership Eligibility
EICC membership is open to companies that manufacture or contract the manufacture of
electronic goods or a product in which electronics are essential to the primary
functionality of the product, or supply materials used in the electronics of those goods.
Learn more at http://www.eiccoalition.org/join-us/
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Learn from leaders: Participate in
a vibrant community of practice of leading electronics companies from throughout the supply chain.
Get out in front: Ensure your company is out in front on emerging issues and risks in supply chain sustainability. With the resources and tools of the EICC your company can stay up-to-date on key developments from the electronics industry and beyond, including in the news media and with key stakeholders.
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Benefits of Membership
EICC Conference in Brussels March 2014
Benefits of Membership (continued) Access tools: Joining the EICC ensures your company is in line with the
industry-wide code of conduct and allows you access to tools and resources that puts your company on a path toward top supply chain sustainability performance. Key tools you have access to as a member company include our e-learning academy and in person trainings, our online sustainability data management and sharing system EICC-ON, our Validated Audit Process, our Responsible Electronics events and more.
Improve efficiency: Access shared social compliance audits from companies and their suppliers throughout the supply chain and ensure your company has the information it needs for continuous improvement in supply chain sustainability, while also lowering costs and increasing efficiency in sustainability programs.
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Focus areas of EICC programs
Assessment & Compliance Conflict Free Sourcing Initiative
Environmental Sustainability
Learning & Capability Building Vulnerable Workers
INITIATIVES & WORKING GROUPS
Chemical Management Indirect Spend
Membership Criteria
TASK FORCES & SPECIAL PROJECTS
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Median Line (50 Percentile)
Labor and Human Rights
Health and Safety
Environment
Governance and Ethics
Median Line (50 Percentile)
2015 EICC Sensing Assessment Heat Map
Importance to EICC Member Companies
Imp
ort
ance
to
Su
pp
ly C
hai
n S
ust
ain
abili
ty
EICC Role in Public Policy
As governments increasingly regulate CSR supply chain issues – there is a need to be proactive,
responsive and enhance public-private cooperation
EICC can be a “Hub” to: - Help implement new regulation(s) effectively and efficiently by
utilizing existing programs, tools, etc.
- Link members and supply chains to capacity building and learnings
- Educate/raise awareness amongst policymakers
- Assist members in meeting and shaping compliance requirements
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EICC Public Policy Vision
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Identify regulatory issues that EICC should focus on, at an early stage
Focus on core areas to significant impact on CSR issues for the electronic supply chain
Create a space to discuss and respond to emerging CSR supply chain issues
Create effective and durable interactions with governments – including public-private
partnerships
Leverage existing EICC tools, policies and practices to promote greater harmonization
Industry-led implementation
of policy objectives
Critical Issues
Student Workers
FAR Implementation
UK Modern Slavery Act
TPP
Extractives (child labor)
Business and Human Rights
EU Conflict Minerals
Safe use of chemicals
Public Procurement
EICC CURRENT WORK ON FORCED LABOR
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How to Combat Forced Labor? a multifaceted approach
1. Update EICC Code of Conduct – 2015 change v5.1 for 2016
– Definition of fees
2. Tools and Programs
3. Training and Capacity Building
4. Public Policy
5. Stakeholder Engagement
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EICC Code of Conduct 5.1
No unreasonable restrictions on workers freedom of movement.
Must be provided with written employment agreement in their native language prior to departing from country of origin
Shall be free to leave work at any time or terminate their employment
May not hold passports
Workers shall not be required to pay employers or agents recruitment fees (see definition of fees) or other related fee for their employment.
Programs
EICC Workplace of Choice – grievance mechanism (Pilot in Malaysia)
Development of
Supplemental VAP Forced Labor Audit for factories
Development of Employment Agency Audit and Certification
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Combating Forced Labor
Stems from CoC
Foreign Migrant Workers EICC Workplace of Choice Program
Worker Survey
•Understand worker expectations, challenges and perception of current workplace practices.
•Helps inform effectiveness of Worker-Management Communication, grievance and other efforts.
•Forms the baseline of the program and can demonstrate impact over time.
Worker – Management Communication
•Build and improve worker-management communication systems including grievance handling, training and education efforts, upstream communication efforts, and the establishment of worker representative structures.
•Provides technical support to enhance efforts to become a Workplace of Choice.
Suara Kami – Our Voice
•Establish an effective, independent worker helpline for local and foreign workers in electronics factories.
•Helpline staffed by diverse team of trained counselors capable to support workers on a range of issues of concern.
•Calls are tracked and managed in partnership with factory management, the EICC and brands (where applicable)
Worker Education
•Provide model worker educational materials and resources to be provided to workers in their home country as well as during their orientation training in the factory.
•Education resources include a Train the Trainer program for factory and worker representatives to support their training of workers and the inclusion of the Suara Kami Helpline.
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Federal Acquisition Regulation (FAR)
• New regulations require federal
contractors to certify that they have
made a good faith effort to
determine whether forced labor or
child labor was used in their supply
chain, and maintain a compliance
plan.
• The EICC provides tools such as
supply chain risk assessment, audit
protocols, member aids that
addresses labor standards, all of
which can be used as part of a larger
effort to comply with the FAR
requirements.
New human trafficking rule imposing compliance obligations on all government contractors and sub-contactors
President Obama issues Executive Order 13627, which
orders FAR Council to strengthen protections against
trafficking in persons in Federal contracts
2012
The Department of Labor (DOL) maintains a “List of Goods Produced by Child Labor or Forced Labor,” which includes electronics manufactured in China and Malaysia. Federal contractors for those items must certify child labor is not used. The FAR includes specific provisions on Forced Labor and Child Labor. The EICC has tools to help you with due diligence.
History
An amendment to Federal Acquisition Regulations (FAR) is
proposed to implement the policies from EO 13627 2013
2015
Contractors to the US federal government are required to assess their supply chain for forced &
trafficked labor, among other things.
Federal Acquisition Regulation (FAR) (cont’d)
FAR Implementation
Complexity of supply chain
Reasonable expectation and timing for due
diligence?
Challenges and unintended
consequences of notification.
Uncertainty on how to
demonstrate compliance
Ongoing dialogue
with government
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A Shifting Risk Landscape
Hub for public-private
collaboration around best
practices
2015 public policy highlights
Launch of EICC Public Policy Advisory Group and strategy; Several events with U.S. and Malaysian governments around forced labor; Engagement with the U.S. government to help shape implementation of FAR
regulations on human trafficking; Discussions with European Commission around proposed conflict minerals
legislation – stressing role of CFSI for downstream industry; Lead industry response on UK Modern Slavery Act; Engagement with Chinese government around emerging CSR Guidance; Recognition of EICC as a leading industry body on CSR issues at several global
forums, including UN Forum on Business and Human Rights, International Labour Organization (ILO) work on supply chains and UN Global Compact Business and Sustainable Development Goals Forum.
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Accomplishments to Date
