Ethical Manufacturing in a changing landscape
ICTI Ethical Toy Program Webinar
18th March 2020
Welcome
Today’s webinar will cover:
• Brief introduction to the Ethical Toy Program
• Update on COVID-19 (Coronavirus) and our measures to support the toy industry to manage through the crisis
• Minimizing risks, maximizing opportunities in your supply chain
• Regulation, legislation and standards – how to respond to evolving regulation on ethical manufacturing
• Q&A
Presenters
Carmel Giblin
President & CEO
Mark Robertson
Senior Vice President
What we do
• Set the standard for ethical toy manufacture
• Social Audits and Toy Factory Certification
• Factory Training and Capability Building
• Programs for Worker Well-Being
• Worker Helpline and Support
• Collaboration to reduce duplication and tackle key challenges
Ethical Toy ProgramThe leading ethical sourcing program for toy, play and entertainment industries
factories in the program
1,200+workers covered
700,000+1,000+15year’s
experiencebrands and
retailers
Where we work
Already established in 13
countries and regions
New regions include: Europe,
UK, USA, Mexico
1200+ factories
What we cover
Toys & Entertainment (wooden, plastic, plush,
electronic, educational, stationery, board games, model)
Printing & packaging (books, magazines, packaging, cards,
puzzles)
Juvenile & Baby (prams, bikes, baby seats, garments, early education,
walkers crib)
Sports (bicycle, trampoline, skateboard, jump rope, balls, inflatable pools)
Hard goods (promotional items, pets, costume, gifts, furniture electronics)
Some of the brands we work with…
… and retailers
Covid-19 (Coronavirus)
Our Objective: to support the global toy industry and promote business continuity whilst ensuring our primary objective of ensuring workers’ rights are respected
• COVID-19 presents unprecedented challenges for our industry
• Production resuming in China, but progress undermined by the global spread of virus
• IETP has introduced the following special arrangements:
- Certification extensions and support for those factories whose onsite audit is delayed
- Self Declaration Process enables factories to voluntarily report issues and request exemptions ahead of audits
- Increased promotion of our Worker Helpline
- Responsible Recruitment Guidance issued to all factories
Minimizing risks, maximising opportunities
• Manufacturing costs rising in China and other countries, we support toy factories to increase business effectiveness and achieve efficiencies
• Labour intensive processes are moving to other countries, we offer global coverage and support in emerging centres for toy production
• Increasing legislation on human rights and sustainability, our program is continually updated to support compliance across these areas
• Growing demands for transparency for investors, customers, retailers, consumers, civil society, we offer reporting tools and support to meet stakeholder needs
Regulation, legislation and standards
Regulation, legislation and standards
• Raft of new legislation, regulation, and frameworks on modern slavery, human rights and business ethics
• Growing pressure from governments, civil society, media and investors to address these issue
• Beyond legal requirements and stakeholders expectations, there’s a clear business case for addressing these issues
01/2012California Transparency in Supply Chains Act
2010 20132011 2012 2014 2015 2016 2017 2018 2019 2020
Timeline Corporate Social Responsibility & The Law
07/2010Dodd-Frank Wall Street Reform andConsumer ProtectionAct
03/2015United Kingdom Modern SlaveryAct
03/2017Corporate Duty of Vigilance
01/2018Non-Financial Reporting EU Regulation
01/2019AustralianModern Slavery Bill
01/2020Dutch Child Labour Due Diligence Law
Coming soon?
German Human Rights Due Diligence law
EU legislation on Human Rights Due Diligence
01/2015
Modern Day Slavery / Human rights due diligence requirements
The Trade Facilitation & Trade Enforcement Act
Modern Slavery
Low skilled labor such as toy manufacturing is at risk
Slavery is illegal in almost every nation, but risks persist almost everywhere
21 million people
victims of forced labor
Vast majority of victims are exploited by businesses
56% are in forced
labor in their home country
Over half of victims of slavery are female
UK:Modern Slavery Act
• Applicable to any commercial organizations, based inside or outside the UK, and carry on business within that supply goods or services
• Threshold: £36 million (annual turnover) in United Kingdom (including part of a business)
• Covered business activities: any part of own business and any part of supply chains
• Minimum reporting requirements: “steps taken to ensure that slavery and human trafficking is not taking place, if any”
• Reporting period: Financial year, reports recommended within 6
months after fiscal year end
Effective since 2015
US:Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015
TFTEA key points:
• Bans imports of goods suspected of being made using forced/child labour
• Gives the US Customs and Border Protection (CBP) the authority to issue Withhold Release Orders (WROs) which prevent goods suspected to have been made with forced labour from entering the US.
• The CBP has defined a list of countries/product categories which are high risk for modern slavery and child labour. Toys made in China are on that list.
• Toy companies risk having their goods impounded at the border if produced in a “high risk country” but are unable to demonstrate they
were produced in a forced/child labour free environment
Enforcement: • 13 WROs issued by US
Customs and Border Protection since 2016
• Some of these target specific factories, others target entire regions
Toy example: • March 2018, the CBP
issued a WRO against toys manufactured by Huizhou Mink Industrial Co. Ltd, China
UN Guiding Principles on Business and Human Rights
All business regardless of size are expected to conduct human rights due diligence
1,200+
1,000+
15
Actioning the UN Sustainable Development Goals (SDGs)
IETP supports businesses to achieve progress in implementing SDGs across a number of areas, including:
Safe Working Environment
Worker Well-Being Programs
Worker Helpline
Workplace Safety
Human Rights
Empowerment
No Discrimination
Gender Focus on Checklist
Empowerment Programs
• Freedom
Choice
Pay, hours & benefits
Collaboration
Partnering
Influencing & Sharing
3 GOOD HEALTH AND WELL-BEING
4 QUALITYEDUCATION
5 GENDER EQUALITY 8 DECENT WORK AND
ECONOMIC GROWTH 17 PARTNERSHIPSFOR THE GOALS
Employer Pays Principle No worker should pay for a job – the costs of recruitment should be borne not by the worker but by the employer.
Responsible Recruitment: Employer Pays Principle
Migrant Worker Recruitment Fees - the increasing debt burden
The Employer Pays Principle and IETP
New IETP audit checklist requirements regarding recruitment fees:
• Edits to existing checkpoints prohibiting the charging of recruitment fees
• Additional protections for directly-recruited workers• New requirements governing the use of labour brokers• Factories required to declare if they use labour brokers• Recruitment fees must be reimbursed to directly hired
foreign migrant workers
Vast majority of workers are recruited directly by the factory
Data from 688 Progress Visits conducted between October 2018 and Sept 2019
96%
3% 1%
Direct recruitment
Labor broker
Dispatched labor
Source: Ethical Toy Program
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Recruitment paths
Majority of toy production workers are female
42%
58%
17%
83%
34%
66%
ChinaVietnam Indonesia
This split varies geographically
Source: Ethical Toy Program 2019
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Workforce composition
SN
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PO
RT
Worker well-being
Focus on worker well-being
• Factories are seeing workers as an asset not a commodity
• Recruitment & retention is a priority• Factories focussed on creating better
environments for workers• Workers are more aware of their rights
and won’t tolerate bad working environments and look for positive benefits such as childcare.
Looking ahead: future updates to IETP
Redesigning certification
model in 2020:
Maintain the Standard
Improve Accessibility
Grow participation & acceptance
Improve standards at factories
Expansion Beyond China Ensure program globally
available: Vietnam & India
expansion / UK & EU
Extension to new sectors Adjacent to toys
New ServicesEnvironmental Module, Social
Impact Assessment, Supply
Chain Reporting Tool
Thank you,
Contact us to find out more about how Ethical Toy Program
membership can benefit your business: