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oMaquila Solidarity Network.....................................................................................

Number 16, January/February 2004.....................................................................................

2003 Y2003 Y2003 Y2003 Y2003 Year end rear end rear end rear end rear end review:eview:eview:eview:eview:EmerEmerEmerEmerEmerging trging trging trging trging trends in codesends in codesends in codesends in codesends in codesand their implementationand their implementationand their implementationand their implementationand their implementationDevelopments and Trends in 2003 .......................................................................................................... 2

Increased Cooperation .............................................................................................................................. 3

Slow Growth ................................................................................................................................................. 4

Convergence in Standards ....................................................................................................................... 5

Advances in Transparency ........................................................................................................................ 6

Increased Commitment to Training ........................................................................................................ 8

Complaints Processes ............................................................................................................................ 10

Engagement with Local Governments ................................................................................................ 13

International Institutions ........................................................................................................................ 15

Re-examining First Principles ............................................................................................................... 16

Beyond Audits ............................................................................................................................................ 17

Labour Rights Training and Worker Empowerment ........................................................................ 19

The Business Case ................................................................................................................................... 20

Civil Society and Worker Involvement ................................................................................................ 22

Transparency and Reporting ................................................................................................................. 24

To Certify or Not to Certify? ................................................................................................................... 25

Finding the Right Regulatory Mix .......................................................................................................... 25

New Resources ........................................................................................................................................ 28

Endnotes ..................................................................................................................................................... 31

Why a Codes Memo?This periodic memo is sent in Spanish to groups in Latin America in an effort to shareinformation on developments and resources circulating in English about codes of conductand monitoring. We also share the English version of the memo with our network.Comments, criticisms and suggestions are always welcome: info@maquilasolidarity.org.

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In our 2002 Year End Review, MSNexamined the limitations andunresolved issues plaguing emergingnon-governmental regulatory systems.These included:

• The proliferation of voluntarycodes of conduct with varyingstandards and requirements;

• The poor quality of workplaceaudits by commercial auditfirms;

• The limited capacity of manysouthern NGOs to play asignificant role in labourstandards monitoring andverification;

• The lack of transparency incorporate reporting on labourstandards performance;

• Inadequate mechanisms forworkers and interested third-parties to register complaintswhen workers’ rights areviolated; and

• Slow progress in achievingsustainable improvements inworking conditions and labourpractices.

In 2003, there were a number ofpositive developments in voluntarycode of conduct initiatives, thoughmany of the implementation challengesdescribed in our 2002 Review continuedto plague companies and civil societyorganizations involved in thoseinitiatives.

In prIn prIn prIn prIn preparepareparepareparation fation fation fation fation for our “2003 Yor our “2003 Yor our “2003 Yor our “2003 Yor our “2003 Year End Review,” Mear End Review,” Mear End Review,” Mear End Review,” Mear End Review,” MSSSSSN consulted with a number ofN consulted with a number ofN consulted with a number ofN consulted with a number ofN consulted with a number ofkey business, labour and NGO leaders and academics about recent developmentskey business, labour and NGO leaders and academics about recent developmentskey business, labour and NGO leaders and academics about recent developmentskey business, labour and NGO leaders and academics about recent developmentskey business, labour and NGO leaders and academics about recent developmentsand trends in voluntary codes of conduct and their implementation.and trends in voluntary codes of conduct and their implementation.and trends in voluntary codes of conduct and their implementation.and trends in voluntary codes of conduct and their implementation.and trends in voluntary codes of conduct and their implementation.

WWWWWe asked them to share asked them to share asked them to share asked them to share asked them to share their views on possible future their views on possible future their views on possible future their views on possible future their views on possible future dire dire dire dire directions fections fections fections fections for theseor theseor theseor theseor theseemerging non-governmental regulatory systems and possible alternative strategiesemerging non-governmental regulatory systems and possible alternative strategiesemerging non-governmental regulatory systems and possible alternative strategiesemerging non-governmental regulatory systems and possible alternative strategiesemerging non-governmental regulatory systems and possible alternative strategiesand methods that might make them more effective tools to improve workingand methods that might make them more effective tools to improve workingand methods that might make them more effective tools to improve workingand methods that might make them more effective tools to improve workingand methods that might make them more effective tools to improve workingconditions and labour practices in global supply chains.conditions and labour practices in global supply chains.conditions and labour practices in global supply chains.conditions and labour practices in global supply chains.conditions and labour practices in global supply chains.

As well, in NovAs well, in NovAs well, in NovAs well, in NovAs well, in November 2003, Member 2003, Member 2003, Member 2003, Member 2003, MSSSSSN participated in two EurN participated in two EurN participated in two EurN participated in two EurN participated in two European confopean confopean confopean confopean conferererererences, theences, theences, theences, theences, thefirst first first first first enenenenentitled “Corportitled “Corportitled “Corportitled “Corportitled “Corporate Social Responsibility and Devate Social Responsibility and Devate Social Responsibility and Devate Social Responsibility and Devate Social Responsibility and Development: Telopment: Telopment: Telopment: Telopment: Towarowarowarowarowards a Newds a Newds a Newds a Newds a NewAgenda,” which was hosted by the UAgenda,” which was hosted by the UAgenda,” which was hosted by the UAgenda,” which was hosted by the UAgenda,” which was hosted by the UN ResearN ResearN ResearN ResearN Research Institute fch Institute fch Institute fch Institute fch Institute for Social Devor Social Devor Social Devor Social Devor Social Developmentelopmentelopmentelopmentelopment(U(U(U(U(UNNNNNRRRRRIIIIISSSSSD) on NovD) on NovD) on NovD) on NovD) on November 1ember 1ember 1ember 1ember 177777-1-1-1-1-18 in Geneva, and the second on “L8 in Geneva, and the second on “L8 in Geneva, and the second on “L8 in Geneva, and the second on “L8 in Geneva, and the second on “Labour Standarabour Standarabour Standarabour Standarabour Standards andds andds andds andds andHuman Rights,” sponsored by Ethical Corporation in Brussels on November 19-20.Human Rights,” sponsored by Ethical Corporation in Brussels on November 19-20.Human Rights,” sponsored by Ethical Corporation in Brussels on November 19-20.Human Rights,” sponsored by Ethical Corporation in Brussels on November 19-20.Human Rights,” sponsored by Ethical Corporation in Brussels on November 19-20.

The conferences provided an opportunity to interview a number of activists,The conferences provided an opportunity to interview a number of activists,The conferences provided an opportunity to interview a number of activists,The conferences provided an opportunity to interview a number of activists,The conferences provided an opportunity to interview a number of activists,academics and company compliance officers. Many of the observations in the reviewacademics and company compliance officers. Many of the observations in the reviewacademics and company compliance officers. Many of the observations in the reviewacademics and company compliance officers. Many of the observations in the reviewacademics and company compliance officers. Many of the observations in the reviewbelow are taken from those interviews or from conference presentations.below are taken from those interviews or from conference presentations.below are taken from those interviews or from conference presentations.below are taken from those interviews or from conference presentations.below are taken from those interviews or from conference presentations.

TTTTThis rhis rhis rhis rhis review also dreview also dreview also dreview also dreview also draws heavily upon thraws heavily upon thraws heavily upon thraws heavily upon thraws heavily upon three ree ree ree ree recent studies by the Wecent studies by the Wecent studies by the Wecent studies by the Wecent studies by the World Bank onorld Bank onorld Bank onorld Bank onorld Bank oncodes of conduct and challenges inhibiting their effective implementation.codes of conduct and challenges inhibiting their effective implementation.codes of conduct and challenges inhibiting their effective implementation.codes of conduct and challenges inhibiting their effective implementation.codes of conduct and challenges inhibiting their effective implementation.

Developments and Trends in 2003

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While the vast majority of companiescontinue to implement their individualcodes primarily through their ownseparate monitoring programs,anecdotal evidence points to increasedinformation sharing and cooperationamong some companies using thesame suppliers. These leadingcompanies, most of which are large USor European brand merchandisers orbrand-sensitive retailers, are alsoincreasingly willing to engage with NGOcritics on how to address reportedworker rights violations in specificsupply factories.

In 2003, MSN was involved in twointernational campaigns – Gina FormBra in Thailand and Tarrant in Mexico –in which major US brand-namecompanies sourcing from the samesuppliers were willing to engage withlocal and northern NGOs and consultand cooperate with other buyers onhow to address specific labour rightsviolations in shared supply factories.1

Interviews with compliance officers ofmajor US brands seem to confirm thispositive trend. Lakshmi Bhatia, GlobalPartnerships Manager for Gap Inc.,describes increased collaborationbetween her company and other brandssourcing from the same factories inIndia: “We have created a workinggroup in India. Some buyers using thesame factories are sharing informationon audit findings. We are also trying todevelop consistency in our dealings with

common suppliers. There are now 15companies involved, and we are invitinggovernment, inspectors, and suppliersinto these discussions.”

A recent World Bank study foundthat a number of buyers have eitherlaunched or are interested in launchingmonitoring “cooperatives.” According tothe study this is taking place informallyas well as through multi-stakeholderinitiatives. However, the study alsonotes that while field staff of thecompanies “assert frequently andconvincingly that buyers in practice areaware of each others’ suppliers, manyheadquarters staff continue to believethat sharing factory information risksthe surrender of business sensitiveinformation, and is therefore too risky.”2

Increased cooperation anddiscussion of possible collaborationamong the major multi-stakeholderinitiatives (MSIs) was also an importantdevelopment in 2003. A series ofdiscussions among the MSIs – FairLabor Association (FLA), SocialAccountability International (SAI),Ethical Trading Initiative (ETI), Fair WearFoundation (FWF), Clean ClothesCampaign (CCC), and Worker RightsConsortium (WRC) – led to thedevelopment of a joint trial project toidentify areas of common ground andbest practices in the various aspects ofcode implementation.

Key issues that will be investigated ina joint MSI pilot project in Turkey

Increased Cooperation Anecdotal evidence points to increased information sharing and cooperationAnecdotal evidence points to increased information sharing and cooperationAnecdotal evidence points to increased information sharing and cooperationAnecdotal evidence points to increased information sharing and cooperationAnecdotal evidence points to increased information sharing and cooperation

among some companies using the same suppliers.among some companies using the same suppliers.among some companies using the same suppliers.among some companies using the same suppliers.among some companies using the same suppliers. Increased cooperation and discussion of possible collaboration among theIncreased cooperation and discussion of possible collaboration among theIncreased cooperation and discussion of possible collaboration among theIncreased cooperation and discussion of possible collaboration among theIncreased cooperation and discussion of possible collaboration among the

major multi-stakeholder initiativmajor multi-stakeholder initiativmajor multi-stakeholder initiativmajor multi-stakeholder initiativmajor multi-stakeholder initiatives (Mes (Mes (Mes (Mes (MSSSSSIs) was also an important devIs) was also an important devIs) was also an important devIs) was also an important devIs) was also an important development.elopment.elopment.elopment.elopment.

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include labour standards provisions,monitoring and external verification,education and training with workersand management personnel,consultation with and involvement oflocal stakeholders, complaints andremediation mechanisms, andreporting. “We aim to develop commonguidelines on different aspects of code

implementation,” says ETI ExecutiveDirector Dan Rees. “If we can do that, Ibelieve the MSIs will be far moreinfluential in the global debate andcould help develop strongerinternational consensus on corporateresponsibility in promoting internationallabour standards.”

Slow Growth

Despite increased cooperationamong the MSIs, an ongoing problemis the relatively small number ofcompanies that have committedthemselves to formal membership inone or more of the multi-stakeholderinitiatives.

The Fair Labor Association (FLA)includes twelve “ParticipatingCompanies,” most of which are majorbrand merchandisers, such as Nike,Reebok, adidas-Soloman, and LizClaiborne. The involvement of morethan 175 US and Canadian universitiesin the FLA has resulted in theparticipation of over 1,100 collegiatelicensees, but most of these arerelatively small companies. In 2003,Levi-Strauss left the FLA and CanadianT-shirt manufacturer Gildan Activewearbecame an FLA Participating Company.With the possible exception of Gildan,university suppliers and the high-endretailer Nordstrom, the FLA has not yetmade major inroads withmanufacturers or retailers.

Although SAI is a factory certificationinitiative, it has created a specialSignatory program for companies that

commit to seeking SA8000 certificationfor their wholly owed and/or supplyfactories, and to reporting on progress.However, as of December 31, 2003,there were only 10 SAI SignatoryCompanies, two of which were buyingagents. As of November 1, 2003, therewere 310 SA8000-certified factoriesaround the world, compared to 190 atthe end of 2002.

ETI has been more successful thanits US counterparts in attractingcorporate members. It currently has 35member companies, most of which areUK-based apparel and food retailers,including Sainsbury, Marks andSpencer, Pentland, Safeway Stores, andTesco. Levi Strauss is also an ETImember, and in 2003, Gap Inc appliedfor ETI membership.

Littlewoods’ decision to withdrawfrom the ETI in 2003 was seen as amajor loss to the initiative. According toRees, Littlewoods’ abrupt departurefrom the ETI, which happened shortlyafter new owners with a differentphilosophy took over the company,shows the fragility of voluntaryinitiatives. However, the decision of this

The lack of critical mass remains a central issue for all theThe lack of critical mass remains a central issue for all theThe lack of critical mass remains a central issue for all theThe lack of critical mass remains a central issue for all theThe lack of critical mass remains a central issue for all themulti-stakeholder initiatives.multi-stakeholder initiatives.multi-stakeholder initiatives.multi-stakeholder initiatives.multi-stakeholder initiatives.

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founding member to abandon the ETIdidn’t dissuade other “high-street”retailers, including WH Smith and Boots,from joining that same year.

ETI’s relative success in attractingcorporate members might be explainedby the fact that ETI is more a learninginitiative than a code enforcement body,and is therefore less intrusive in itscorporate members operations.According to Rees, ETI is also attractiveto companies because it provides asafe space for peer review andengagement with critical NGOs andunions. He also notes that ETI is amulti-sectoral initiative, attractingcompanies from the food as well as thegarment sector.

Meanwhile, less rigorous industryinitiatives, such as the WorldwideResponsible Apparel ProductionCertification Program (WRAP), havecontinued to monitor and certifythousands of supply factories aroundthe world, with little or no public

scrutiny. While WRAP lacks credibilityamong labour and civil societyorganizations, it continues to be theprogram of choice for US apparelmanufacturers and discount retailchains, southern garment industryassociations, a number of southerngovernments, as well as the current USadministration.3

One positive development for theMSIs in 2003 was Gap Inc’s decision toapply to join ETI and to become moreinvolved in SAI. According to SeanAnsett, Senior Manager for GlobalPartnerships for Gap Inc, his companyhas learned through the process oftrying to go it alone on implementing itscode how important collaborationamong companies and withstakeholders is in achieving effectiveimplementation.

However, the lack of critical massremains a central issue for all the multi-stakeholder initiatives.

Convergence in Standards

As numerous industry analysts havenoted, the proliferation of voluntary codesand monitoring and verification programshas caused considerable confusion andresentment among southern supplierssubjected to multiple audits and demandsby competing buyers.

A second World Bank studyestimates that approximately 1,000

voluntary codes of conduct, withvarying standards and requirements,have been adopted by individualmultinational companies, most of whichare based in Europe, North Americaand Australia.4

However, the World Bank study alsopoints to a gradual convergence in codeprovisions and language among leading

There is a gradual convergence in code provisions and language amongThere is a gradual convergence in code provisions and language amongThere is a gradual convergence in code provisions and language amongThere is a gradual convergence in code provisions and language amongThere is a gradual convergence in code provisions and language amongleading companies and multi-stakeholder initiatives on at least the core labourleading companies and multi-stakeholder initiatives on at least the core labourleading companies and multi-stakeholder initiatives on at least the core labourleading companies and multi-stakeholder initiatives on at least the core labourleading companies and multi-stakeholder initiatives on at least the core labourrights convrights convrights convrights convrights conventions of the International Lentions of the International Lentions of the International Lentions of the International Lentions of the International Labour Orabour Orabour Orabour Orabour Organization (Iganization (Iganization (Iganization (Iganization (ILLLLLO).O).O).O).O). But inconsistent application of code provisions could be a greater source ofBut inconsistent application of code provisions could be a greater source ofBut inconsistent application of code provisions could be a greater source ofBut inconsistent application of code provisions could be a greater source ofBut inconsistent application of code provisions could be a greater source of

confusion than inconsistency in the content of standards themselves.confusion than inconsistency in the content of standards themselves.confusion than inconsistency in the content of standards themselves.confusion than inconsistency in the content of standards themselves.confusion than inconsistency in the content of standards themselves.

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companies and multi-stakeholderinitiatives on at least the core labourrights conventions of the InternationalLabour Organization (ILO).5

Over half the corporate respondentsto the second World Bank surveyidentified ILO core conventions, as wellas ISO 14000, as standards that wereamong the most influential on theircompanies.6

The new collaborative projectinvolving the major MSIs could alsoresult in increased harmonization ofstandards among those competinginitiatives.

“Within the range of the multi-stakeholder codes, a number of themonly differ in wording and could beharmonized without losing keyelements in each,” says Neil Kearney,General Secretary of the InternationalTextile, Garment and Leather Workers’Federation (ITGLWF) and a labourrepresentative on the governing bodiesof the Ethical Trading Initiative (ETI) andSocial Accountability International (SAI).“The downside of harmonization is if wego for the lowest common denominator

or water down the best features ofeach. Instead, we should combine thestrongest elements of each of the MSIcodes.”

It is worth noting, however, that mostrespondents to the World Bank study,including some suppliers, sawinconsistent application of codeprovisions as a greater source ofconfusion than inconsistency in thecontent of standards themselves. “Inthe eyes of participants, codeconvergence would not in itselfguarantee greater uniformity oreffectiveness, since implementationpractices today vary even amongcompanies using identical codes.”7

Suppliers also complained of beingsubjected to up to 30-50 audits peryear, sometimes by the same auditingcompanies on behalf of differentbuyers, which they claim disruptsproduction and planning processes. Atthe same time, some NGOs and buyersview multiple audits as having positivebenefits, since they increase pressureon suppliers and add up to betteroverall monitoring.8

Advances in Transparency

In June 2003, the Fair LaborAssociation (FLA) released its long-awaited first annual report. Aspromised, the report includes trackingcharts that provide detailed informationon the results of FLA external audits,including name of brand(s) sourcingfrom the factory, country/region where

the facility is located, product and sizeof facility, name of monitoringorganization, code or legal violations,and corrective action taken.9

While the tracking charts revealmajor inconsistencies in audit practicesand findings among different FLA-accredited auditing organizations and

Although the lack of transparency in corporate reporting on socialAlthough the lack of transparency in corporate reporting on socialAlthough the lack of transparency in corporate reporting on socialAlthough the lack of transparency in corporate reporting on socialAlthough the lack of transparency in corporate reporting on socialperformance remains a major issue in 2003, there were some importantperformance remains a major issue in 2003, there were some importantperformance remains a major issue in 2003, there were some importantperformance remains a major issue in 2003, there were some importantperformance remains a major issue in 2003, there were some importantadvances in tradvances in tradvances in tradvances in tradvances in transparansparansparansparansparencencencencencyyyyy.....

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raise serious questions about thequality of the FLA external audits, theyalso allow for increased public scrutinyof not only labour practices of FLAParticipating Companies, but also thepractices of the auditing organizationsthemselves.10

In July 2003, Chiquita BrandsInternational released its thirdcorporate responsibility report. Whilepublishing such annual reports isbecoming commonplace with majorcorporations, particularly thoseassociated with well-known brands, theChiquita report was unusual in thedegree of candour and detail inreporting on labour rights issuesidentified and corrective actioncommitments made by the company.11

According to George Jaksch,Chiquita’s Corporate Responsibility andPublic Affairs Director, his company’sdecision to publicly disclose auditreports has had entirely positive results.He notes that civil society and labourparticipants in a Chiquita’s supply chainmonitoring project were not required tosign confidentiality agreements.

Meanwhile in Europe, the Swissmonitoring pilot project initiated by theClean Clothes Campaign (CCC), incollaboration with three Swisscompanies, Migros, Switcher andVeillon, issued a detailed report on theprocess, findings and corrective actiontaken at two supply factories in China.12

In 2003, there was also increaseddiscussion and some action ongovernment policy to require orpromote more transparent social andenvironmental reporting by companieson their global practices.

The Region of Umbria in central Italyhas adopted government procurementregulations, giving preference forgovernment contracts to companies

operating in the Region that have beencertified as being in compliance withthe SA8000 Standard. The regionalgovernment is creating a dedicatedregistry of SA8000-certified companies,and those companies will be givenpriority for tenders for public works orfor supplying goods and services aslong as they meet cost and qualityspecifications. Under the law,companies are required to give noticeto the Regional Government within tendays of losing SA8000 certification, atwhich time they will be removed fromthe registry and no longer enjoypreferential treatment.13

In Canada, the federal governmentresponded to a two-year campaign forfactory disclosure regulations for theapparel sector by convening aconsultative process and a multi-stakeholder roundtable discussion on“Policy Options to Verify LabourStandards in the Apparel Industry.” TheEthical Trading Action Group (ETAG), anational coalition of faith, labour and non-governmental organizations, for whichMSN acts as the secretariat, presented afive-point proposal that includes a mix ofgovernment policies that would requireand encourage more transparentreporting on labour practices in globalapparel supply chains.14 However, giventhe strong resistance of the Canadianindustry to mandatory reportingrequirements, it is unlikely the Canadiangovernment will move quickly to bring insuch regulations.

While a number of European countrieshave adopted regulations requiringcorporate reporting on environmentalpractices, France is one of the fewcountries whose corporate reportingrequirements include labour practices.

In 2001, the French Parliamentapproved the Nouvelles Régulation

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Économiques (NRE), which requires allnationally listed corporations to reportto shareholders and stakeholders on arange of CSR issues, includingcorporate governance andenvironmental, community and labourissues. Article 116, paragraph 4,requires annual reporting by firms listedon the French stock exchange onsocial, labour rights and environmentalissues, including compliance with ILO

core conventions by subsidiaries andhow the firm is encouraging complianceby subcontractors.15

Since 2002 is the first year firmswere required to report on labour rightscompliance and other issues underArticle 116, it is still too soon to judgethe quality of reporting or how usefulthe reports will be to consumers,researchers, labour rights andenvironmental activists or government.

Increased Commitmentto Training A number of leading companies and multi-stakeholder initiatives putA number of leading companies and multi-stakeholder initiatives putA number of leading companies and multi-stakeholder initiatives putA number of leading companies and multi-stakeholder initiatives putA number of leading companies and multi-stakeholder initiatives put

increased emphasis on labour rights training for management personnelincreased emphasis on labour rights training for management personnelincreased emphasis on labour rights training for management personnelincreased emphasis on labour rights training for management personnelincreased emphasis on labour rights training for management personneland workersand workersand workersand workersand workers

Given the poor quality of audits,particularly by commercial auditingfirms, and the difficulties companies arefacing in obtaining accurate informationon labour practices in supply factories,in 2003, a number of leadingcompanies and multi-stakeholderinitiatives put increased emphasis onlabour rights training for managementpersonnel and workers with theobjective of strengthening thecommitment of factory management tocode compliance and workers’understanding of their rights.

In Cambodia, Gap Inc supportedtraining on labour rights and codes ofconduct for management personneland workers at five Gap Inc supplierfactories. The training was carried outby a local coalition of NGOs and labourorganizations, including the CambodianLabour Organization (CLO), Khemara,

and the Cambodian Human RightsTaskforce (CHRTF). According to GapInc’s Sean Ansett, a public report will bereleased on completion of the project inMarch 2004.

In China, Reebok, Nike and adidashave helped facilitate health and safetytraining by US health and safety expertsand Hong Kong-based NGOs for sportsshoe workers, supervisors andmanagers. That training programopened the door to the election ofworker representatives to health andsafety committees. Reebok has alsofacilitated worker rights training relatedto the election of local union leadershipat two sports shoe factories in China,and Nike has helped facilitate healthand safety training carried out by UShealth and safety experts and localNGOs for sports shoe workers inIndonesia.

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SAI is collaborating with the ITGLWFon a train-the-trainer program withgarment sector union leaders in 10countries in Asia, Latin America andAfrica on the use of voluntary standards,such as SA8000, to defend workers’rights. The training workshops areconducted in collaboration with ITGLWFlocal affiliates in the various countries. In2003, SAI piloted a training program inVietnam with a two-part course forworkers and managers. It also begandeveloping a worker/manager trainingprogram in China, in collaboration withthe ITGLWF, the Institute forContemporary Observation and theChinese Working Women’s Network.

SAI and the ITGLWF are currentlyworking with the GuatemalanCommission for the Verification of Codesof Conduct (COVERCO) to develop ajoint pilot project promoting multi-stakeholder dialogue and worker/management training in Guatemala. Thepilot will be developed in collaborationwith international and local companies,including Gap, Timberland, DevelopmentAlternatives Inc, and members of theGuatemalan Apparel and Textile Industryassociation (VESTEX).

The Swiss CCC pilot projectdescribed above also included a labourrights training component for workersin one of the factories prior to theworker interviews and the factory audit.

In 2003, a number of northern andsouthern NGOs also facilitated trainingprograms and workshops withsouthern civil society organizations tohelp increase their capacity toeffectively engage with northern-basedcodes of conduct and monitoring

systems. In December, MSN and theMexican women’s organizationMUTUAC co-sponsored a workshop oncodes, monitoring and brandcampaigns for representatives ofwomen’s and worker rightsorganizations from eight garment-producing centres across Mexico.COVERCO from Guatemala was part ofthe workshop planning andcoordinating team in order to share theCentral American experience in codemonitoring.

Over the past two years, UK-basedWomen Working Worldwide (WWW)has carried out a research, educationand action project on the rights ofworkers in garment industrysubcontracting chains in Asia andEastern Europe.16 The primary objectiveof the project was to provideinformation and develop educationalresources for use by local unions andother labour organizations to increaseworkers’ awareness of the linksbetween their workplace and overseasretailers and brand merchandisers onthe one hand and subcontract facilitieson the other.

Meanwhile, the Central Americanindependent monitoring groups –COVERCO (Guatemala), GMIES (ElSalvador), EMIH (Honduras), PASE(Nicaragua) – continued to meet on aregional level to share experiences,information and strategies for engagingwith companies and MSI’s. A numberof the Central American monitoringgroups are now or will soon be carryingout labour rights training for workersand management personnel as part oftraining projects initiated by US buyers.

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Fair Labor Association18

Under the FLA, anyone can file acomplaint if they have sufficientevidence that provisions of the FLA codeor local labour law are being violated ina factory producing for an FLAParticipating Company. Complaints canbe filed on a confidential basis. Based onthe evidence provided, the FLAExecutive Director determines whetherthe complaint should be accepted.

If the complaint is accepted, the FLAParticipating Company is given 45 daysto investigate the allegations and reportto the Executive Director on its findingsand progress in achieving remediation.Based on the company’s report, theFLA Executive Director can determineto send in an auditor or audit team toverify the findings and status ofremediation.

FLA Participating Companies arealso required to provide confidentialmechanisms for workers to makecomplaints to the company.

To date, the FLA has not developeddetailed procedures for third-partyinvestigations of complaints. The resultsof FLA investigative audits are availableto the Participating Company and thecomplainant. Summaries of the reportsare included in the tracking chartsposted on the FLA website.

In 2003, the FLA helped to mediate a

resolution to three disputes concerningworkers’ right to freedom of associationand collective bargaining – at theJaqalanka garment factory in Sri Lanka,two Choi & Shin garment factories inGuatemala, and the BJ&B cap factory inthe Dominican Republic. In theJaqalanka case, the FLA wasresponding to a third-party complaintfrom the Free Trade Zone WorkersUnion in Sri Lanka; in the BJ&B case,the complaint came from FLAParticipating Companies that weresourcing from the factory.

In December 2003, MSN, theCanadian Labour Congress and theIndependent Federation of HonduranWorkers (FITH) filed a joint complaintwith the FLA, alleging that CanadianT-shirt manufacturer GildanActivewear had violated workers’right to freedom of association at thecompany’s El Progreso factory inHonduras, and that there has been asystematic pattern of violations offreedom of association at the factoryover at least the past two years.

MSN proposed to the FLA that sinceGildan is the owner of the Progresofactory and factory management isdirectly responsible to Gildan, thecompany should not require 45 days toinvestigate the situation and shouldcooperate with an FLA investigativeaudit at the earliest possible date.

Complaints Processes Mechanisms for workers and civil society organizations to registerMechanisms for workers and civil society organizations to registerMechanisms for workers and civil society organizations to registerMechanisms for workers and civil society organizations to registerMechanisms for workers and civil society organizations to register

complaints when workers’ rights are violated are one of the mostcomplaints when workers’ rights are violated are one of the mostcomplaints when workers’ rights are violated are one of the mostcomplaints when workers’ rights are violated are one of the mostcomplaints when workers’ rights are violated are one of the mostunderdeveloped aspects of voluntary labour standards initiatives.underdeveloped aspects of voluntary labour standards initiatives.underdeveloped aspects of voluntary labour standards initiatives.underdeveloped aspects of voluntary labour standards initiatives.underdeveloped aspects of voluntary labour standards initiatives. In 2003, there was increased discussion and some limited progress on thisIn 2003, there was increased discussion and some limited progress on thisIn 2003, there was increased discussion and some limited progress on thisIn 2003, there was increased discussion and some limited progress on thisIn 2003, there was increased discussion and some limited progress on this

issue, particularly with the multi-stakeholder initiativissue, particularly with the multi-stakeholder initiativissue, particularly with the multi-stakeholder initiativissue, particularly with the multi-stakeholder initiativissue, particularly with the multi-stakeholder initiatives.es.es.es.es.1111177777

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However, the FLA determined thatwhile Gildan could voluntarily cooperatewith an earlier FLA audit, it could not berequired to do any more than any otherFLA Participating Company.

Social AccountabilityInternational

As with the FLA, anyone can make acomplaint alleging non-compliance withSAI’s SA8000 Standard or local labourlaws in a SA8000-certified facility. Acomplaint must be in writing andinclude “objective evidence” ofnoncompliance. It can be submitteddirectly to SAI Executive Director or tothe SA8000-accredited auditingorganization that certified the facility.Complaints can be filed on aconfidential basis.

SAI requires SA8000-certifiedfactories to have internal mechanismsfor workers to file anonymouscomplaints with the employer.

While SAI did not receive any newcomplaints in 2003, it continued to dealwith two outstanding cases. In the morecontentious of the two cases, an NGOfiled a complaint in December 2001with both the SAI and the certificationbody, SGS, alleging that a SA8000-certified factory in Indonesia hadimproperly fired workers involved inunion organizing, and had failed toreinstate those workers. SGS reportedto SAI that the factory was incompliance with the SA8000 Standard.

In March 2002, SAI’s auditorreviewed the records of the SGS auditand complaint investigation and foundthey were inadequate to make ajudgement on the case. In April, SAIrequested more information of the SGSauditor, who reported that the factorywas in compliance with the SA8000

Standard and with local court decisionsconcerning the reinstatement of theworkers.

The complainant has challenged thereliability of Indonesian courts, and SAIis currently investigating the allegedviolations of freedom of association.

The case has raised serious concernabout whether such a lengthy andcomplicated process could produceuseful and timely outcomes for theworkers involved, and seriousreservations about the practice ofhaving an auditing organizationinvestigate a factory certification inwhich it acted as the certifying body.

While full reports from SAIinvestigations into complaints are notavailable to the public, progress reportson complaints are available on the SAIwebsite.19

Worker Rights Consortium

The WRC is a complaints-basedmulti-stakeholder initiative that wascreated by US universities toinvestigate and remediate instances ofnon-compliance with their ethicalpurchasing and/or licensing policies forcollegiate apparel and other products.

Workers or interested third partiescan register complaints with the WRCExecutive Director, who thendetermines if the compliant merits aninvestigation based on whether there isreasonable cause to believe theviolation(s) occurred and substantialcause to believe the affected workerswant and will benefit from a WRCinvestigation.

If the Executive Director determinesthat the complaint meets these criteria,the WRC forms an investigative teamthat includes members of its staff orboard as well as members of local

12

labour or civil society organizations. TheWRC does not make use of theservices of commercial auditors.

In contrast to the other initiatives, theWRC initiates investigations fairlyquickly after receiving complaints, andthe full reports from the investigations,including the names of the factories,are posted on the WRC website.

While universities, as institutionalbuyers, are represented on WRCgovernance bodies, the WRC hasdecided not to invite companies toparticipate on those decision-makingbodies. For that reason, access tofactories and factory records must benegotiated with brands and/or thesupplier at the time of eachinvestigation. As well, the WRC onlycarries out investigations of factorieswhere collegiate-licensed apparel orother products are manufactured orsuspected of being manufactured.

In 2003, the WRC carried outinvestigations of the Primo garmentfactory in El Salvador, the PT Dae JooLeports backpack factory in Indonesia,the PT Kolon Langgeng garment factoryin Indonesia, VF India and Reboundgarment factories in India, the Tarrantjean factory in Mexico, the PT Kahatexgarment factory in Indonesia, and theConfeccciones de Monclova T-shirtfactory in Mexico. Reports are not yetavailable from the latter twoinvestigations. The WRC has alsocarried out assessments of conditionsin four factories in Cambodia, which willbe the subject of a forthcoming reporton the effectiveness of the ILOmonitoring program in that country. Todate, the WRC has carried out a total oftwelve investigations.20

In the Indonesian and Indian cases,the WRC was successful in gainingmanagement and buyer cooperation

with the investigations and remedialaction. According to WRC ExecutiveDirector, Scott Nova, PT Dae JooLeports has implemented acomprehensive health insurance plancovering approximately 5,000 workersand family members. He notes thatthere are now democratic unions atboth of the Indonesian factories, andworkers and management are currentlynegotiating collective bargainingagreements. According to Nova, thereis also a serious remediation processunderway at Rebound and VF India.

In the Tarrant investigation in Mexico,management did not provide access tothe factory or factory records, but theWRC report, based primarily on workerinterviews, was a useful tool inpersuading buyers of the seriousness ofthe labour rights situation at Tarrant. Inthe Primo case in El Salvador, there wasonly limited cooperation from factorymanagement, and the buyer, Lands End,has so far been unwilling to cooperatewith remediation. However, according toNova, discussions are now underwaywith Lands’ Ends’ parent company,Sears Roebuck, which could lead to apositive resolution to the dispute.

Ethical Trading InitiativeUnder the ETI complaints system,

only ETI member organizations canregister a complaint. To be accepted,the complaint must be in writing andthe allegation(s) of noncompliance withthe ETI code in a facility supplying anETI member company must be “specificand serious” or “specific and ongoing.”Unlike the other MSIs, under the ETIsystem, the complaint is directed to thecompany, rather than to the ETI itself,although the ETI secretariat canbecome involved if the parties areunable to come to agreement.

13

As with the FLA, ETI membercompanies are also expected toprovide workers confidentialmechanisms to make complaints to themember company.

In 2003, the Central AmericanWomen’s Network (CAWN), a UK-basedmember of the ETI, filed a complaint withLevi Strauss about alleged violations offreedom of association at a jean factory inAjalpan, Mexico owned by the TarrantApparel Group.

The complaint resulted in a numberof discussions involving Levi’s, the

CAWN, and the Mexican WorkerSupport Centre (CAT), which wasadvising and assisting the AjalpanTarrant workers. However, Tarrantrefused to cooperate with a proposedaudit of its facilities, and Levi’s feltcompelled to end its relationship withthe company.

While the ETI complaints process didnot result in remediation of documentedworker rights violations, it did assist ingaining specific commitments fromLevi’s and facilitating dialogue betweenthe CAT and the company.

Engagement with LocalGovernments There is some evidence that many brand merchandisers and some of theirThere is some evidence that many brand merchandisers and some of theirThere is some evidence that many brand merchandisers and some of theirThere is some evidence that many brand merchandisers and some of theirThere is some evidence that many brand merchandisers and some of their

suppliers would prefer that local governments consistently enforced laboursuppliers would prefer that local governments consistently enforced laboursuppliers would prefer that local governments consistently enforced laboursuppliers would prefer that local governments consistently enforced laboursuppliers would prefer that local governments consistently enforced labourlegislation.legislation.legislation.legislation.legislation. LLLLLocal govocal govocal govocal govocal governments will need to see concrernments will need to see concrernments will need to see concrernments will need to see concrernments will need to see concrete incentivete incentivete incentivete incentivete incentives fes fes fes fes for labour rightsor labour rightsor labour rightsor labour rightsor labour rights

enforcement before they will view labour standards compliance as a competitiveenforcement before they will view labour standards compliance as a competitiveenforcement before they will view labour standards compliance as a competitiveenforcement before they will view labour standards compliance as a competitiveenforcement before they will view labour standards compliance as a competitiveadvantage.advantage.advantage.advantage.advantage.

While the strongest pressure on localgovernments by foreign investorscontinues to be directed at weakeningnational labour laws and/or theirenforcement, there was someanecdotal evidence in 2003 of a fewbrand-name buyers encouraginggovernments to better enforce existinglegislation.

In the Tarrant case in Mexico, LeviStrauss was willing to meet with andwrite to state government officials tourge them to act in accordance with theFederal Labour Law when reviewing anapplication for an independent union.As well, Gap Inc is initiating a project inCentral America that encourages

governments to see labour standardscompliance as a possible competitiveadvantage in the post-quota world.

MSIs have also engaged with localgovernments (FLA in Guatemala andSri Lanka, SAI in Vietnam, WRC inMexico) to encourage governmentaction on freedom of association. It isalso worth noting that in theGuatemalan case the governmentthreatened to deprive a Koreangarment manufacturer of its exportlicense if it failed to resolve a two-year-old dispute with unions in its twinfactories. However, this unprecedentedaction by the Guatemalan governmentprobably had more to do with the

14

government’s fear that the disputewould become an issue in negotiationsfor a regional free trade agreementwith the US than with the interventionof the FLA or companies sourcing fromthe factory.

There is some evidence that manybrand merchandisers and some of theirsuppliers would prefer that localgovernments consistently enforcedlabour legislation. The World Bankstudy found that 61 percent ofcompanies surveyed say strong lawson CSR help their business, and 65percent say strong, consistentenforcement helps their business.21

At the same time, some respondentsto the World Bank survey noted, “As thesystem currently works, governmentsmay perceive an advantage to laxenforcement because this allows themto attract foreign investment from bothcompanies that do and do not careabout these issues; relying on thecompanies that do care to enforceprovisions on their own.”22

As is the case with suppliers, localgovernments will need to see concreteincentives for labour rights enforcementbefore they will view labour standardscompliance as a competitiveadvantage.

On the crucial issue of sustainableincomes, the overwhelming pressureon local governments is to maintain orlower already inadequate minimum

wages. Even corporate members ofMSIs whose codes of conduct requirepayment of a living wage by localstandards seldom, if ever, call upongovernments to raise the minimumwage to a level that meets basic needs.As a result, even progressivegovernments feel compelled to keepthe minimum wage below povertylevels.

One exception to this general rule isthe support some ETI membercompanies gave to a campaignlobbying the UK government forchanges in the national minimum wagelaw to provide full coverage tohomeworkers. According to the ETI’sDan Rees, the willingness of ETI-member companies to work togetherwith unions and NGOs in lobbying thegovernment for improved minimumwage legislation contributed real addedvalue to the campaign.

Rees also pointed approvingly to thedirect involvement of the South Africangovernment in the Wine Industry EthicalTrade Association (WIETA), a voluntarymulti-stakeholder initiative promotingimproved labour practices on farms inthat country’s wine industry. “We’velearned from the WIETA experiencehow powerful multi-stakeholderinitiatives can be when the voluntaryinitiative complements rather thansubstitutes for government regulation,”says Rees.

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As a key actor in the implementationof the US/Cambodia Textile Agreement,the ILO has overseen monitoring offactory compliance with ILO coreconventions and provided publicreports on progress toward achievingcompliance. The Cambodia TextileAgreement provides for increasedaccess to the US market for garmentsmade in Cambodia in exchange forprogress in achieving compliance withILO standards.

In October 2003, the ILO publishedits “Seventh Synthesis Report on theWorking Conditions Situation inCambodia’s Garment Sector.”23 Thereport provides an overview of thefindings of ILO monitoring of the 61remaining factories in the country’sgarment sector that had not previouslybeen monitored by the ILO. The USgovernment has decided to partiallyfund an extension of the project for atleast another two years.

For many US NGOs and academicsworking on trade issues, the CambodiaTextile Agreement has become animportant example of an alternativeapproach to bilateral and regional tradeagreements that gives greaterprominence to labour rights andtransparent reporting.24

Some companies are also seeing theadvantages of the level playing fieldcreated by the inclusion of labour rightsin trade agreements. According to SeanAnsett of Gap Inc, his company has

seen some improvements in workingconditions in its Cambodian supplyfactories as a result of the CambodiaTextile agreement. He attributes theseincremental changes to the ILO’s role inthis initiative and the fact that themonitoring reports are published.

In 2003, the UN Global Compactcontinued to be a subject of heateddebate among NGOs, if not companies.While some NGOs, includingCorpWatch, the Institute for PolicyStudies, Third World Network, Focus onthe Global South, and the InternationalBaby Food Action Network, continuedto dismiss the Global Compact as“bluewash” (using the UN flag to giveunwarranted legitimacy tocorporations),25 others, includingAmnesty International, OxfamInternational, Human Rights Watch, andthe Lawyers Committee for HumanRights, continued to support theinitiative while voicing criticisms of itslack of accountability or transparentreporting mechanisms.26

On August 13, the United Nations(UN) Sub-Commission on thePromotion and Protection of HumanRights approved the draft UN Normson the Responsibilities of TransnationalCorporations and Other BusinessEnterprises, which gathers together inone document the relevant internationalhuman rights, labour, gender,indigenous, environmental and anti-corruption treaties and standards

International Institutions TTTTThe Whe Whe Whe Whe World Bank is not the only international institution that has enterorld Bank is not the only international institution that has enterorld Bank is not the only international institution that has enterorld Bank is not the only international institution that has enterorld Bank is not the only international institution that has entered intoed intoed intoed intoed into

the vthe vthe vthe vthe voluntary code debates. In 2003, both the United Nations (Uoluntary code debates. In 2003, both the United Nations (Uoluntary code debates. In 2003, both the United Nations (Uoluntary code debates. In 2003, both the United Nations (Uoluntary code debates. In 2003, both the United Nations (UN) and theN) and theN) and theN) and theN) and theInternational LInternational LInternational LInternational LInternational Labour Orabour Orabour Orabour Orabour Organization (Iganization (Iganization (Iganization (Iganization (ILLLLLO) playO) playO) playO) playO) played a mored a mored a mored a mored a more pre pre pre pre prominent rominent rominent rominent rominent role on issuesole on issuesole on issuesole on issuesole on issuesconcerning corporate social responsibility and voluntary codes of conduct.concerning corporate social responsibility and voluntary codes of conduct.concerning corporate social responsibility and voluntary codes of conduct.concerning corporate social responsibility and voluntary codes of conduct.concerning corporate social responsibility and voluntary codes of conduct.

16

applicable to global companies. Thedraft Norms now go to the UN HumanRights Commission, which will considerthem at its upcoming March meeting.

While the Norms are supported bysome NGOs involved in the GlobalCompact, including AmnestyInternational, the Lawyers Committee,and Human Rights Watch, which callthem “a sensible legal framework for

business behavior,”27 they are stronglyopposed by two key Global Compactpartners, the International Chamber ofCommerce (ICC) and the InternationalOrganization of Employers. In anobvious reference to the GlobalCompact, the ICC dismissed the Normsas a “move away from the realm ofvoluntary initiative... conflicting with theapproach of other parts of the UN.”28

Re-examining First Principles Despite these advances in non-governmental regulation and mandatory andDespite these advances in non-governmental regulation and mandatory andDespite these advances in non-governmental regulation and mandatory andDespite these advances in non-governmental regulation and mandatory andDespite these advances in non-governmental regulation and mandatory and

voluntary corporate social reporting, there is a growing body of evidence that thevoluntary corporate social reporting, there is a growing body of evidence that thevoluntary corporate social reporting, there is a growing body of evidence that thevoluntary corporate social reporting, there is a growing body of evidence that thevoluntary corporate social reporting, there is a growing body of evidence that thecurrent code monitoring and verification model is not resulting in sustainablecurrent code monitoring and verification model is not resulting in sustainablecurrent code monitoring and verification model is not resulting in sustainablecurrent code monitoring and verification model is not resulting in sustainablecurrent code monitoring and verification model is not resulting in sustainablechanges in labour practices and working conditions in global supply chains.changes in labour practices and working conditions in global supply chains.changes in labour practices and working conditions in global supply chains.changes in labour practices and working conditions in global supply chains.changes in labour practices and working conditions in global supply chains.

As the World Bank study states,“…[W]hile the present system ofimplementation has resulted in someimprovements, some of themsubstantial, it possibly has reached itslimits, and may not be positioned tobring about further real and sustainableimprovements in social andenvironmental workplace standards indeveloping countries withoutmeaningful adjustments.”29

In 2003, leading companies andMSIs were more openly questioningthe dominant policing model of non-governmental labour standardsenforcement and checklist method ofcompliance monitoring and verification.

Key questions concerning this top-down enforcement model that wereidentified in our interviews withcompany compliance staff of leadingapparel brands included:

• Is it sustainable and affordable?• Does it accurately assess

labour practices?• Does it encourage

improvements?• Where do workers and civil

society fit in?

17

Among the dilemmas facing thecompanies and MSIs in monitoring andverifying labour standards compliance,Neil Kearney of the ITGLWF identifiesquality of workplace audits as a majorproblem. “The quality of audits isappalling at the moment, and getsworse the further away you get fromthe multi-stakeholder codes,” saysKearney. “There is little understandingof freedom of association or collectivebargaining, and auditors aremesmerized by working hours and howto measure a living wage.

“This new social auditing professionneeds standards itself, and the ILOshould develop such standards,” saysKearney. “I’m very pessimistic about theauditing profession; they are lettingdown the whole process – poorauditing, lack of knowledge of theissues, lack of training, complicity withemployers.”

Speaking at the the November“Labour Standards and Human Rights”conference in Brussels, Levi’s Head ofHealth and Safety and Code of ConductDepartment, Patrick Neyts, noted thatone of the inherent flaws of checklistcompliance model is that it doesn’t takeworkers or communities sufficiently intoconsideration. According to Neyts, aparticipatory workplace assessmentapproach that involves affectedworkers, communities, and localgovernments has advantages over theconventional policing model. Neyts alsonoted that the compliance model isextremely expensive.

In the same panel discussion,

Mohammad Tamer, a Moroccansupplier for Levi’s, noted that factoryaudits are becoming routine, and thathis company needed to hire an internalauditor to organize preparation foraudits by buyers. He said bottom-upcommunication with employees wasn’tworking.

Stephanie Barrientos and Sally Smithof the Institute of Development Studies,described a participatory workplaceassessment project with workersemployed at 17 farms in Kenya, SouthAfrica and Zambia. They noted that onefarm had 17 codes of conduct it wassupposed to comply with.

Workers were interviewed in a focusgroup discussion format, usingparticipatory tools, rather than throughthe checklist approach. Of the 269workers interviewed, only 13 workershad ever heard of codes of conduct.According to Barrientos and Smith, theworkers had no involvement in theimplementation of codes.

Barrientos noted that while there hadbeen some improvements as a result ofcodes and monitoring, particularlyconcerning health and safety, housing,sanitation, employment contracts, andlegal benefits, there were continuingproblems with discrimination (gender,race, ethnicity), freedom of association,and harassment and abuse.

According to Barrientos, seniormanagement were often unaware ofthose problems, line management werea block in the communication channel,and workers were afraid to talk aboutissues with auditors.

Beyond Audits The quality of workplace audits is a major problem.The quality of workplace audits is a major problem.The quality of workplace audits is a major problem.The quality of workplace audits is a major problem.The quality of workplace audits is a major problem.

18

While Peter Utting, UNRISD DeputyDirector and CSR Research Co-ordinator, is generally sympathetic tothe participatory workplace appraisalapproach, he notes that experiencewith participatory rural appraisal, onwhich it is based, points to potentialproblems with scaling up the processand the potential for co-optation of thediscourse of participation bymainstream institutions.“Key players such asTNCs and commercialauditing firms, as well asmulti-stakeholderinitiatives that are heavilyinfluenced by businessinterests, may well resistor dilute any seriousapplication of suchmethods,” he warns.30

Barrientos advocatesgreater workerparticipation in codeimplementation and localstakeholder engagementin the monitoring andverification processes. Shebelieves local multi-stakeholder initiatives can achievemore sustainable change than can thechecklist audit model, and points toWIETA31 in South Africa and HEBI32 inKenya as two positive examples ofindependent, multi-stakeholder bodiesthat give local stakeholders a significantrole in designing and overseeingmonitoring programs as well asaccrediting local monitors.

Barrientos favours some flexibility inaddressing labour practices to allow localstakeholders to focus on particularproblems of local industries, but warns thatthis framework approach shouldn’t beused as an excuse to avoid addressing, atminimum, ILO Core Conventions.

Stephen Ouma, Senior ProgramOfficer with the Kenya Human RightsCommission, who is also involved inHEBI, agrees with Barrientos on theimportance of local stakeholderinvolvement in the design andimplementation of codes of conduct.While he agrees that codes should bebased on international standards, hebelieves additional provisions are

needed to address “greyareas” that are particular tothe local situation, such asrecruitment policies foragricultural workers.According to Ouma, groupsin Kenya are working todevelop a local pool ofauditors who have the trustof and experience workingwith local workers.

Doug Cahn of Reebokdescribes his company’sexperience with trying toenforce labour standardscompliance in a top-downmanner in the followingwords: “We would demandthat problems be fixed and

return to the factory and find theyweren’t fixed. Workers didn’tunderstand their rights and there wereno mechanisms in place for workers tocommunicate with management.”

According to Cahn, the checklistapproach to monitoring labourstandards compliance puts moreattention to the more measurable codeprovisions, such as those on health andsafety, and less attention to rightsbased issues such as non-discrimination, non-harassment andfreedom of association.

Cahn points to the need forsustainable compliance, in which thereare systems in place to achieve and

«««««the checklistthe checklistthe checklistthe checklistthe checklistapproach toapproach toapproach toapproach toapproach tomonitoring labourmonitoring labourmonitoring labourmonitoring labourmonitoring labourstandards compliancestandards compliancestandards compliancestandards compliancestandards complianceputs more attention toputs more attention toputs more attention toputs more attention toputs more attention tothe more measurablethe more measurablethe more measurablethe more measurablethe more measurablecode provisions, suchcode provisions, suchcode provisions, suchcode provisions, suchcode provisions, suchas those on healthas those on healthas those on healthas those on healthas those on healthand sand sand sand sand safafafafafetyetyetyetyety, and less, and less, and less, and less, and lessattention to rightsattention to rightsattention to rightsattention to rightsattention to rightsbased issues such asbased issues such asbased issues such asbased issues such asbased issues such asnon-discrimination,non-discrimination,non-discrimination,non-discrimination,non-discrimination,non-harassment andnon-harassment andnon-harassment andnon-harassment andnon-harassment andfreedom offreedom offreedom offreedom offreedom ofassociation. «association. «association. «association. «association. «

19

maintain compliance over the long-term. According to Cahn, this is lessabout policing and more aboutcoaching and training.

Monina Wong of the Hong KongChristian Industrial Committee (HKCIC)acknowledges that some companiesand MSIs are beginning to see beyondthe corporate policing model. For anumber of years, CIC and other HongKong-based NGOs have been highlycritical of factory auditing by western-based commercial firms, advocatingworker education and empowermentas a more effective and sustainablealternative.

“In the China context, policing bybrands and commercial auditorsbackfires – factory records are falsifiedand workers are bullied to lie toauditors,” says Wong. “Commercialinterests always trump CSR.”

Wong favours the bottom upapproach of some of the multi-stakeholder initiatives in which there isengagement with civil society, workereducation and training, workercomplaint mechanisms, and NGO andworker participation in monitoring.

Labour Rights Training andWorker Empowerment Interviews with company compliance staff and NGO representativesInterviews with company compliance staff and NGO representativesInterviews with company compliance staff and NGO representativesInterviews with company compliance staff and NGO representativesInterviews with company compliance staff and NGO representatives

indicate that a number of leading companies and Mindicate that a number of leading companies and Mindicate that a number of leading companies and Mindicate that a number of leading companies and Mindicate that a number of leading companies and MSSSSSIs now see labour rightsIs now see labour rightsIs now see labour rightsIs now see labour rightsIs now see labour rightstraining as a key element in making labour rights compliance sustainable.training as a key element in making labour rights compliance sustainable.training as a key element in making labour rights compliance sustainable.training as a key element in making labour rights compliance sustainable.training as a key element in making labour rights compliance sustainable.

There is a need for worker rightstraining with both managementpersonnel and workers, says LakshmiBhatia, Gap Inc’s Global PartnershipsManager. Involving first line supervisorsin training programs is key, she notes,but in order to do so, you first have toinvolve top management. To besuccessful, training should focus onbasic management skills as well aslabour rights, she suggests.“Groundwork needs to be done toremove management’s fears [aboutlabour rights training]; ample time isneeded to get all stakeholders involvedand on board.”

According to Doug Cahn of Reebok,

his company has a “multi-facetedprogram to enhance workerrepresentation that includes coachingand training, a worker exchangeprogram and elections.”

While the primary objective of labourrights training with workers as part ofthe Swiss CCC pilot project was seen asfacilitating worker empowerment, theSwiss project director also concludedthat “worker training will also facilitatemore complete fact-finding, becauseonly if workers are better informed canthey provide more complete informationto interviewers.” The report goes on tosay, “Empowered workers can lead tobetter-functioning compliance systems,

20

because of their increased potential forplaying a more meaningful role in suchprocesses as interviews and complaintmechanisms.”33

Monina Wong of the HKCIC agreesthat some companies are now moreopen to worker rights training, butnotes, “The key questions for us arewhat kind of training, about what, andby whom.” She points to the problem ofselective engagement – companiescherry picking NGOs based on theNGOs’ willingness to adapt to thecompany’s agenda.

She also notes that there issometimes a penalty for workerempowerment and points to majorbrands cutting back on production inIndonesia as worker organizing anddemands for improvements in wagesand working conditions increase.

While some leading companies aregiving increased attention to labourrights training, the World Bank studyconfirms the findings of numerous otherstudies that most workers remainlargely unaware of codes of conductand of their rights under codes ofconduct, local laws or ILO Conventions.And despite the obvious need forincreased labour rights training forworkers, the majority of trade unionrespondents to the study were stronglyopposed to NGOs playing the role oftraining workers, even where unionswere unable to do the job.34 The WorldBank study also reveals that fewsuppliers surveyed share the view ofbuyers and NGOs that theirmanagement personnel need capacitybuilding to improve implementation oflabour standards.35

The Business Case A more compelling business case could be made if buyers made strongerA more compelling business case could be made if buyers made strongerA more compelling business case could be made if buyers made strongerA more compelling business case could be made if buyers made strongerA more compelling business case could be made if buyers made stronger

concrete commitments to suppliers taking serious steps to achieve and maintainconcrete commitments to suppliers taking serious steps to achieve and maintainconcrete commitments to suppliers taking serious steps to achieve and maintainconcrete commitments to suppliers taking serious steps to achieve and maintainconcrete commitments to suppliers taking serious steps to achieve and maintaincompliance – preference in placing orders, longer term business relationships,compliance – preference in placing orders, longer term business relationships,compliance – preference in placing orders, longer term business relationships,compliance – preference in placing orders, longer term business relationships,compliance – preference in placing orders, longer term business relationships,and sharing the financial cost involved in upgrading working conditions.and sharing the financial cost involved in upgrading working conditions.and sharing the financial cost involved in upgrading working conditions.and sharing the financial cost involved in upgrading working conditions.and sharing the financial cost involved in upgrading working conditions.

While increased emphasis on labourrights training for both workers andmanagement personnel is certainlywelcome, the focus of most companieson training for management personnelappears to be based on a questionableassumption that the main barrier tosustainable compliance is the failure ofsuppliers and their managementpersonnel to understand the “businesscase” for labour standards compliance.

The business case argumentassumes that improved workingconditions and labour practices will

automatically result in increasedproductivity and efficiency, and thatbuyers will place more orders anddevelop more long-term relations withsuppliers who invest in improvedworking conditions and respect forworkers’ rights.

While the World Bank study defined“insufficient understanding of thebusiness case” as one of the three keychallenges for voluntary initiatives, itfound there were “mixed perceptions ofthe degree to which the business caseexists.” As the report notes, “Many

21

participants, including suppliers, buyers,and NGOs, appear to hold the view thatimplementation of social andenvironmental standards in manyinstances tends to generate costs andprovides relatively low return oninvestment.”36 Suppliers complain ofreceiving mixed messages from buyers– comply with code of conductstandards, but at the same time, lowerprices and speed up delivery time.

The World Bank report goes on tosay, “Suppliers in particular did not seea direct link between CSR performanceand obtaining or keeping contracts,except in a handful of cases in whichbuyers were genuinely involved withCSR practices of suppliers.”37

With the planned final phase out ofquotas coming in 2005,38 Gap Inc.’sSean Ansett believes garment-producing countries and regions thatwill lose quota protection will begin tosee that labour rights compliance canoffer some competitive advantage. Hepoints out that Central America shouldcontinue to be competitive on leadtimes and speed to market, but thatlabour rights compliance would add totheir competitive advantage. He viewsCambodia as a positive example of acountry positioning itself to survive inthe post quota world at least partiallybased on labour standards compliance.

Whether or not the business caseargument has validity, it appearstraining alone will not convincesuppliers that labour standardscompliance will result in more ordersand an increased return on theirinvestment. A more compellingbusiness case could be made if buyersmade stronger concrete commitmentsto suppliers taking serious steps toachieve and maintain compliance –preference in placing orders, longerterm business relationships, andsharing the financial cost involved inupgrading working conditions.

The pricing issue also remains amajor barrier to suppliers accepting thebusiness case for labour standardscompliance. In our 2002 Year EndReview, we stated, “A key challenge formanufacturers, retails and brands is…how to reconcile contradictory demandsbeing made by different departments ofnorthern companies – that productioncosts be constantly lowered and thepace of production increased, and thatworkers’ rights be respected and factoryconditions improved.“

In 2003, an increasing number ofmajor retailers and brands wereacknowledging that their purchasingpractices undermine efforts to achievelabour standards compliance, however,to date there has not been significantaction on this issue.

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In addition to labour rights trainingfor workers and managementpersonnel, active participation ofworkers and local civil societyorganizations in code implementation isincreasing recognized by leadingcompanies and MSIs as a key elementin achieving and maintaining labourstandards compliance. To date, theinvolvement of workers and local civilsociety in code implementation hasbeen given more attention by the multi-stakeholder initiatives in the UK andcontinental Europe than by their UScounterparts.

According to Ineke Zeldenrust of theEuropean secretariat of the CleanClothes Campaign (CCC), local civilsociety organizations should have theright to identify the organizations thatare best skilled and best suited to workon audits and corrective action.“Currently, groups in producingcountries are expected to give all theirknowledge and expertise for free.”

“To do a quality assessment oflabour practices in a workplace youneed people with different skills,” saysZeldenrust. These include knowledgeof health and safety issues, ability togain the trust of workers, andexperience and skills in auditing booksand pay slips. “These different skillsand experience are not often found inany one organization,” she says.

“Quality control and financial auditorsshould have a limited role in theprocess.”

Zeldenrust, who is also the CCCrepresentative on the Dutch Fair WearFoundation (FWF), says the FWFsupports the building of local partnernetworks in which stakeholders in thecountry of manufacturer have adecision-making role in the monitoringprocess and can advise the FWF onpriorities in remediation.

“We need a shift of resources frommultinational accounting firms to localcivil society networks,” says Zeldenrust.“We need to build the capacity of thosegroups and workers to carry outongoing monitoring. The aim is to makefactory visits by outsiders redundant.”

Sean Ansett of Gap Inc agrees withZeldenrust that sustainable solutionscannot be achieved without dialoguewith and involvement of localstakeholders in identifying problemsand finding solutions. He points to theimportance of local knowledge and theneed for capacity building with crediblelocal civil society groups, as well astraining with management and workers.Looking to the future, Ansett sees thepossibility of involving multi-stakeholderteams in compliance assessment.

The most extensive involvement oflocal civil society organizations in GapInc’s monitoring program has been in

Civil Society andWorker Involvement Active participation of workers and local civil society organizations in codeActive participation of workers and local civil society organizations in codeActive participation of workers and local civil society organizations in codeActive participation of workers and local civil society organizations in codeActive participation of workers and local civil society organizations in code

implementation is a key element in achieving and maintaining labour standardsimplementation is a key element in achieving and maintaining labour standardsimplementation is a key element in achieving and maintaining labour standardsimplementation is a key element in achieving and maintaining labour standardsimplementation is a key element in achieving and maintaining labour standardscompliance.compliance.compliance.compliance.compliance.

23

Central America, which remains theonly garment producing region wherethere are a significant number of localcivil society organizations withexperience and expertise in monitoringcompliance with codes of conduct andlocal laws.

In 2003, COVERCO, GMIES and EMIcarried out monitoring of Gap supplyfactories in Guatemala, El Salvador andHonduras. The regional network ofindependent monitoring groups iscurrently working to harmonize theirmonitoring methodologies in order tobe able to negotiate on a regional basiswith companies about monitoring oftheir Central American supply factories.

According to Dara O’Rourke,assistant professor at the Departmentof Environmental Science, Policy andManagement at the University ofCalifornia, Berkeley, worker and civilsociety involvement in the monitoringand remediation processes are keyelements in democratizingnongovernmental regulation.

George Jaksch of Chiquita BrandsInternational sees real advantages forcompanies in involving labour and civilsociety organizations in the codemonitoring process. Jaksch calls theinvolvement of two Central Americanmonitoring groups, COVERCO andGMIES, and a Central American labourorganization in a Chiquita monitoringproject, “very positive,” and notes thattheir participation “elevated quality ofthe audits.” According to Jaksch,COVERCO and GMIES representativeswere involved from the start to thefinish of the project, even in thepresentation of the project report tosenior company management.

Jaksch supports the increasedallocation of resources for capacitybuilding with local civil societyorganizations to make use of local skillsand local knowledge. “There needs tobe a concerted effort and internationalfinancing,” he says.

Jaksch also supports greater workerinvolvement in the monitoring process.“Worker empowerment creates adifferent working environment, onewhere respect and dialogue are moreimportant,” says Jaksch. “Manymanagers welcome the changedatmosphere of dialogue and trust, andworkers who were interviewed noticedthat management was more respectful,less authoritarian. Workers had theopportunity to express theiraspirations.”

Asked about the role of workers inmonitoring code compliance, DougCahn of Reebok replies, “We can seeprogress in worker involvement inmonitoring systems, but it is at its initialstages. In our experience, monitoringalone is not enough to ensure thatworkers’ rights are respected,particularly in countries with significantcompliance problems. The best way toprotect workers’ rights is to build thecapacity of factories to own the processof maintaining good workplaceconditions, in consultation with workers.This will be most effective whenworkers are educated about their rightsand the best avenues for protectingthem. Monitoring will still be anecessary part of the process, but isnot an end in and of itself.”

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According to O’Rourke, the bestanswer to the quality of audits problemis greater transparency. He views therelease of summaries of audit reportsby the Fair Labor Association as isgood step forward, but favours evengreater transparency on the auditprocess and the release of full auditreports. “We need to know whatcompanies and their auditors are doing,how they are doing it, the length andscope of the audits, and the results,”says O’Rourke. “We need to open thehood on monitoring and verificationsystems.”

Zeldenrust argues that there need tobe different kinds and levels ofreporting for different audiences.“Workers and labour organizationsneed to receive feedback on the resultsof audits, not lengthy reports,” she says.“The Fair Wear Foundation is looking atthe question of whether remediationplans should be required to be postedin the factories. Tracking charts, likethose released by the FLA, could go upin the factory, not just on a website forNorthern consumers.”

Like O’Rourke, Zeldenrust believesinformation should be available on thecode implementation and assessmentprocess, “what is being done, how is itbeing done, and who is doing it.” Sheemphasizes, however, that theinformation made public should beaccurate and useful. “We need to makesure that the information made public iscorrect. FLA tracking charts are useful,but we need information made publicthat is quality information. We shouldn’toverwhelm people with information.”

According to Neil Kearney of theITGLWF, there is no justification forwithholding information from the publicon the results of audits or factorylocations. “We don’t need disclosure ofbusiness contracts, but there is noreason to view factory locations asproprietary information. Disclosure ofproduction sites is essential so that civilsociety can assess progress in ameaningful way. All information relatingto audits should be in the publicdomain.”

Transparency and Reporting TTTTThe best answer to the quality of audits prhe best answer to the quality of audits prhe best answer to the quality of audits prhe best answer to the quality of audits prhe best answer to the quality of audits problem is groblem is groblem is groblem is groblem is greater treater treater treater treater transparansparansparansparansparencencencencencyyyyy.....

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While Kearney supports factorycertification as an incentive for factoryowners to achieve and maintaincompliance with minimum labourstandards, he is concerned that thecertification is often seen as an end initself. “Manufacturers often believe that[factory] certification is the end of theprocess, but it’s only the end of thebeginning. They need to maintain thesestandards. For that reason, we needmanagement systems in place toensure that standards are maintained.”

O’Rourke is more sceptical of theusefulness of factory or brandcertifications. “Factory certification putsthe burden of payment and remediationon the factory; it is made for corporate

buyers, not for consumers,” saysO’Rourke. “What will change theindustry? The threat of consumeraction. But factory certifications don’tgive consumers the information theyneed to take action.” A major problemwith brand certification, according toO’Rourke, is the rapid change infactories used by brands.

Sean Ansett of Gap Inc. believesthere are advantages to the differentapproaches to code implementation bythe major MSIs. In his view, factorycertification by SAI, auditing theauditors by FLA, the space for dialoguecreated by ETI, and the WRC’s strongemphasis on the role of workers in theprocess can complement one another.

To Certify or Not to Certify? Certification is often seen as an end in itselfCertification is often seen as an end in itselfCertification is often seen as an end in itselfCertification is often seen as an end in itselfCertification is often seen as an end in itself.....

Finding the Right Regulatory MixDespite all the current barriers and disincentives to government action on labourDespite all the current barriers and disincentives to government action on labourDespite all the current barriers and disincentives to government action on labourDespite all the current barriers and disincentives to government action on labourDespite all the current barriers and disincentives to government action on labourstandards, most NGO and labour representatives involved in the major multi-standards, most NGO and labour representatives involved in the major multi-standards, most NGO and labour representatives involved in the major multi-standards, most NGO and labour representatives involved in the major multi-standards, most NGO and labour representatives involved in the major multi-stakeholder initiativstakeholder initiativstakeholder initiativstakeholder initiativstakeholder initiatives see the Mes see the Mes see the Mes see the Mes see the MSSSSSIs as only one of many instruments available toIs as only one of many instruments available toIs as only one of many instruments available toIs as only one of many instruments available toIs as only one of many instruments available toaddress labour rights violations and promote improved labour practices. Theyaddress labour rights violations and promote improved labour practices. Theyaddress labour rights violations and promote improved labour practices. Theyaddress labour rights violations and promote improved labour practices. Theyaddress labour rights violations and promote improved labour practices. Theycontinue to believe that voluntary initiatives are not a substitute for governmentalcontinue to believe that voluntary initiatives are not a substitute for governmentalcontinue to believe that voluntary initiatives are not a substitute for governmentalcontinue to believe that voluntary initiatives are not a substitute for governmentalcontinue to believe that voluntary initiatives are not a substitute for governmentalor international regulation.or international regulation.or international regulation.or international regulation.or international regulation.

A key issue under debate at theGeneva UNRISD conference on“Corporate Social Responsibility andDevelopment” was whether or to whatdegree voluntary labour rights andenvironmental initiatives crowd outpossibilities for government orinternational regulation.

Some activists and academics in thecorporate accountability movementview non-governmental regulation asprimarily a negative development,because of its historical associationwith globalization and neo-liberalideology. Others see these emergingvoluntary systems as a site of

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contention between different social andeconomic forces, and, potentially, usefultools for workers and civil society.

“Nongovernmental regulatory systemsare emerging and growing everywhere –diamonds, chocolate, wood products –everything,” says O’Rourke. “They aregaining a life of their own; they are notjust a temporary phenomenon. Theregulatory gap is not currently being filledby government or multilateral institutions;there are few other avenues for action inthe next period.”

According to O’Rourke, the centralchoice facing the various playersengaged in the development andimplementation of voluntary labour andenvironmental standards initiatives isdemocratization vs. privatizing ofregulation. While the dominant modelcontinues to be self regulation with verylimited worker or civil societyinvolvement or public access toinformation on process or performance,there are countervailing pressures fromthe corporate accountability movementand even from within the corporatesector itself for more democraticprocesses.

In his presentation to the Genevaconference, Peter Utting of UNRISDdrew a distinction between thecorporate accountability movement andthe corporate responsibility movement.“Rather than saying companies shouldassume responsibility for the actions,corporate accountability proposalsstress that companies must be held toaccount,” says Utting.

Corporate accountability implies thatcompanies must report to the public notonly on the processes they have put inplace to monitor compliance with labourstandards, but also the findings andcorrective action taken. It suggests thatworkers and interested third parties

should have mechanisms to registercomplaints when workers’ rights areviolated and access to the results of thecomplaints process and information oncorrective action taken.

Despite all the current barriers anddisincentives to government action onlabour standards, most NGO and labourrepresentatives involved in the majormulti-stakeholder initiatives see theMSIs as only one of many instrumentsavailable to address labour rightsviolations and promote improved labourpractices. They continue to believe thatvoluntary initiatives are not a substitutefor governmental or internationalregulation.

As Utting noted, “Rather than seeingcorporate self-regulation and voluntaryapproaches as an alternative togovernmental and internationalregulation, the CAM [corporateaccountability movement] is calling fora new mix of voluntary and legalapproaches.” Just as collectivebargaining interacts with and isreinforced by labour legislativeframeworks and legal processes, non-governmental regulation interacts withand is reinforced by governmental andmulti-lateral policies and regulations.

“We need to use all the tools wecan,” says Zeldenrust, “whether theybe government or nongovernmentalregulation. The key objective isstrengthening worker organization.”

“I live in hope that there will be atransition to more government action,”says Neil Kearny of the ITGLWF.However, Kearney also notes that if andwhen the intervention of multi-stakeholder initiatives is effective, “theycan sometimes shame governmentsinto action.” He points approvingly tothe recent Choi & Shin case inGuatemala in which the threatened loss

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of an export license was used topressure the manufacturer to respectfreedom of association. “This showswhat governments can do whenmotivated,” says Kearney.

“Civil society, manufacturers andbuyers are giving contradictorymessages to local governments,” saysZeldenrust. “MSIs need to jointlyconvey the same message – that wewant local governments to improve andconsistently enforce labour legislation.”

At the Geneva conference, DeborahDoane of the New EconomicsFoundation noted that currently thereare insufficient incentives forcompanies to improve their social andenvironmental practices, and that thebusiness case argument is inadequate.She pointed to the need for mandatoryreporting requirements, which she seesas preferable to voluntary reporting.

Interestingly enough, the WorldBank report echoes many of therecommendations of civil societyparticipants in and critics of voluntaryCSR initiatives. It calls on buyers to“communicate to governments andlocal business organizations the desireto see social and environmentalpractices improved,” and calls on homegovernments to “link CSR supply chainperformance to public procurementpurchasing criteria, export credits

(including investment guaranteeprograms and joint capital forinvestment projects in developingcountries), and by explicitly addressingCSR issues in bilateral developmentassistance programs.”39

As some leading companies andMSIs move beyond the “policingmodel” of enforcing code compliance intheir global supply chains toward morebottom-up approaches involving labourrights training, civil society and workerparticipation in monitoring, and evenpromotion of worker representationand empowerment, it will be importantto remember that top down pressureand public criticism will continue to beneeded to ensure that this newlanguage of “participation” is not co-opted and diluted.

As workers consulted for theWorld Bank study made clear, “top-down pressure [will continue to be]necessary to enable theimplementation of workerempowerment.”40 We would add thatwith the 2005 phase out of quotasrapidly approaching, very tangibleincentives and penalties from bothgovernments and buyers will also beneeded to convince suppliers thatlabour rights compliance really is acompetitive advantage.

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Company Codes of Conduct and

International Standards: An Analytical

Comparison (Part I of II), World Bank,

October 2003, 200 pp.

Race to the Top: Attracting and Enabling

Global Sustainable Business (Business Survey

Report), World Bank, October 2003, 28 pp.

Strengthening Implementation of Corporate

Social Responsibility in Global Supply Chains,

World Bank, October 2003, 67 pp.

These three complementary reportsfrom the World Bank provide usefulstatistical information and insights onvoluntary codes of conduct and howthey might be more effectivelyimplemented.

Company Codes of Conduct andInternational Standards compares andcontrasts the various provisions incompany codes of conduct, multi-stakeholder codes and internationallabour and environmental standards.The study focuses on the apparel,footwear and light manufacturing,agribusiness and tourism sectors. PartII of the study will examine codes in themining and oil and gas sectors.

Based on interviews with executivesof 107 multinational companies in theextractive, manufacturing andagribusiness sectors, Race to the Topexamines how and to what degree CSRissues influence investment andsourcing decisions, and howgovernments in Southern countriescould create CSR environments thatwould be attractive to multinationals.

The third, and possibly the most

interesting of the three studies,Strengthening Implementation ofCorporate Social Responsibility in GlobalSupply Chains, identifies threechallenges and barriers to the effectiveimplementation of voluntary codes ofconduct, and includes the results of itsconsultation on how to overcome thosebarriers with 194 representatives ofmajor buyers, suppliers, andstakeholder groups (NGOs, tradeunions, MSIs, international institutions,governments), as well as 199 workers.People interviewed for the study comefrom China, Honduras, India, Kenya,Europe and the US.

For information on the conclusions ofthe reports, see the Year End Reviewabove.

The reports are available at:www.worldbank.org/privatesector/csr/.

Challenges in China: Experiences from Two

CCC Pilot Projects on Monitoring and

Verification of Code Compliance, Nina Ascoly

and Ineke Zeldenrust, SOMO, October 2003,

38 pp.

The report documents and assessestwo Clean Clothes Campaign-initiatedpilot projects on monitoring andverification of code compliance in China.It reveals the difficulties in implementingcodes of conduct in a country wherethere are no independent unions andfew local NGOs.

In the Swedish pilot, a Hong Kong-based NGO, the Hong Kong Christian

New Resources

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Industrial Committee (HKCIC), carriedout off-site interviews with workersprior to an unannounced audit of thefactory by a commercial audit firm,Intertek Testing Services (ITS).

While the factory audit confirmedmany of the code violations identifiedduring worker interviews, both theproject coordinator and the HKCICquestioned the quality of the audit bythe commercial firm, suggesting itwould not have uncovered many of theviolations on its own.

The CCC criticized the ITS audit forfailing to check on certain health andsafety issues, and claimed the auditorsaudited against Chinese labour law,rather than the CCC code of conduct.The unannounced audit did, however,uncover double bookkeeping, which isa common problem in export factoriesin China.

In the Swiss pilot, worker interviewswere carried out several weeks beforethe factory audit by a team that includeda university academic, a Chinesenetwork organization and the projectdirector. Two freelance social auditorsselected by the project director carriedout the unannounced factory audits.

In addition, the Swiss pilot includeda training component for workers inone of the two factories. The four-hourparticipatory training sessionsfocussed on Chinese labour law, theSwiss company’s code of conduct,women’s reproductive health andrights, occupational health and safety,and stress management and lifeplanning. In evaluating the project, theneed for training of managementpersonnel, as well as workers, wasmentioned by the trainers, the auditorand the factory owner.

Key learnings from the two CCC pilotprojects include:

• Unannounced factory audits aremore likely to reveal workplacerealities than those that areannounced;

• Worker interviews carried out insafe locations by trusted NGOsare an important information-gathering tool; working on theirown, professional auditors oftenmiss important workplaceproblems and workers’ concerns;

• Worker training facilitates morecomplete fact-finding, andempowered workers can lead tobetter-functioning compliancesystems.

The report is available at:www.cleanclothes.org/codes/03-10-china.htm.

Seventh Synthesis Report on the Working

Conditions Situation in Cambodia’s Garment

Sector, ILO Garment Sector Working

Conditions Improvement Project, October

2003.

With the publication of this, theseventh report of the results of ILOmonitoring of labour practices inCambodia’s garment industry, all 200garment factories registered with theproject have undergone the first roundof ILO factory monitoring visits.

The report, which provides asynthesis of findings of audits of 61factories employing over 52,000workers, shows no evidence of forcedlabour, only two incidents ofemployment of minors, and two ofsexual harassment. The reportidentifies continuing problems withincorrect payment of wages, involuntaryand excessive overtime, and anti-uniondiscrimination in some factories.

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The ILO Garment Sector WorkingConditions Improvement Project is theresult of the US-Cambodia TextileAgreement, which provides improvedaccess to the US market for textileand apparel products made inCambodia in exchange for industryand government efforts to improvecompliance with ILO CoreConventions and national labour law.

Under this unique program, the ILO,in consultation with a Project AdvisoryCommittee made up of representativesof the Cambodia government,manufacturers and trade unions,carries out monitoring of the registeredfactories and issues periodic publicreports on its findings.

The ILO reports are available at:www.ilo.org/public/english/dialogue/ifpdial/publ/cambodia7.htm.

Cambodian textile workers face a gloomy

future, Trade Union World Briefing, ICFTU,

January 2004, 8 pp.

In this concise report, theInternational Confederation of FreeTrade Unions (ICFTU) describes theeconomic and political context thatsurrounds the ILO Garment SectorWorking Conditions ImprovementProject described above.

While generally supportive of theproject, the ICFTU report points tounderlining problems that make itdifficult for Cambodian garmentworkers to make significant advanceson wages, working conditions andrespect for their rights. These include:

• the legacy of war and terrorunder the Khmers Rouges;

• lack of access to land oremployment in rural areas that

drives desperate young peopleto the cities where the mustcompete for a limited number offactory jobs;

• few authentic unions thatdefend workers’ interests;

• lack of resources andcorruption of government labourinspectors, and;

• gender discrimination and thestigmatization of young womenwho work in the garment industry.

Although the report praises the workof the ILO inspectors, it calls“astonishing” the ILO Seventh SynthesisReport’s claim that there was noevidence of discrimination in the 61factories recently audited, except fortwo isolated cases of sexualharassment. It notes that sexualharassment is a taboo subject inCambodia, and that the recent increasein the number of women on the ILOmonitoring team may result in differentfindings in the future.

The report concludes, …”[I]t iscritically important that the ILOinspections are pursued after 2005when the ‘carrot’ now offered,increased export quotas, is completelywithdrawn.”

Sadly, at the time the report wasgoing to press, the ICFTU receivedword of the assassination of CheaVichea, a union leader who had beenfired for defending garment workers’rights. The report notes that the ICFTUsent a protest letter to the Cambodianauthorities and lodged an officialcomplaint with the ILO.

The ICFTU report is available at:www.icftu.org/www/pdf/CambodiaEN.pdf.

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Considering Complaint Mechanisms: An

Important Tool for Code Monitoring and

Verification, Nina Ascoly and Ineke

Zeldenrust, SOMO, December 2003, 17 pp.

The paper compares and assessesthe strengths and weaknesses of thedifferent mechanisms for workers andinterested third parties to registercomplaints under the major multi-stakeholder code of conduct initiatives– Fair Labor Association, SocialAccountability International, WorkerRights Consortium, Ethical TradingInitiative and Fair Wear Foundation.

The authors also provide usefulinformation on how and where to file acomplaint under the different initiatives,the criteria for acceptance ofcomplaints, how they are investigated,how corrective action plans aredeveloped if reported violations areverified, and what kind of reports onfindings are available and to whom.

The report also raises a number ofimportant questions about this relativelynew development in voluntary codes ofconduct, such as how accessiblecomplaint mechanisms and reports onfindings are to workers, and howeffective they are in addressingworkplace problems.

The paper is available at:www.cleanclothes.org/ftp/03-12-complaints_paper.pdf.

Working Conditions in Morocco, Campana

Ropa Limpia (Spanish Clean Clothes

Campaign) in collaboration with Intermon

(Oxfam Spain), May 2003, 110 pp.

The study documents the growingimportance of Morocco as a source ofapparel products for Spanish companies,and examines working conditions inMoroccan garment factories andsubcontract facilities producing for theSpanish and European markets.

According to the study, the greatestexploitation of workers takes place insmall subcontract factories wherenational labour law – minimum wage,hours of work limits, social securitycontributions, statutory holidays – aresystematically violated.

The study also looks at the position ofwomen in Morocco’s garment industry,the abuse of child labour in smallerfactories, and the denial of freedom ofassociation in the industry as a whole.

A summary of the report is availableat: www.cleanclothes.org/publications/03-05-morocco.htm.

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1 In the Gina Form Bra case, the employer wasengaged in a campaign to eliminate an alreadyexisting union. In response to the campaign, Gapand The Limited agreed to pressure theircommon supplier to reinstate improperly firedunion supporters and to respect the workers’right to be represented by the union of theirchoice. In the Tarrant case, the employer firedworkers attempting to form an independentunion. Although Levi’s decided to end itsrelationship with its Tarrant after its supplierrefused to cooperate with a factory audit, Levi’swas willing to contact other buyers and thePuebla State government about the situation.

2 Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, WorldBank, October 2003, p. 20.

3 For MSN’s assessment of WRAP, see CodesMemo #12, November 2002

4 Company Codes of Conduct and InternationalStandards: An Analytical Comparison, World Bank,October 2003, p. 2.

5 Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, op. cit.,p. 18.

6 Race to the Top: Attracting and Enabling GlobalSustainable Business, World Bank, October 2003, p.25.

7 Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, op. cit.,p. 22.

8 Ibid. p. 19.

9 To access the tracking charts, visit:www.fairlabor.org/all/transparency/

10 For an assessment of the FLA’s new reportingprogram, see Codes Memo #14, June 2003.

11 To access the company corporateresponsibility reports, visit: www.chiquita.com/

12 For an analysis of the CCC’s Swiss andSwedish pilots in China, see Nina Ascoly andIneke Zeldenrust, “Challenges in China:Experiences from Two CCC Pilot Projects onMonitoring and Verification of Code

Compliance,” SOMO, October 2003.

13 “Italian Region Gives Priority to SA8000-Certified Firms,” Social Accountability Internationale-Update, February 2003. http://www.sa-intl.org/AboutSAI/February2003.htm

14 To access submissions from ETAG and othercivil society organizations, companies andindustry associations, visit: www.ppforum.com/textile_labelling/submissions_e.htm.

15 Mary Lou Egan, Fabrice Mauleon, et al,“France’s Nouvelles Regulations Economiques:Using Government Mandates for CorporateReporting to Promote EnvironmentallySustainable Economic Development,” paperprepared for Research Conference of theAssociation for Public Policy and Management,Washington DC, November 2003.

16 Garment Industry Subcontracting and WorkersRights: Report of Women Working Worldwide actionresearch in Asia and Europe, WWW, 2003, 256 pp.Visit: http://www.poptel.org.uk/women-ww/subcontracting.html

17 For a more detailed assessment of thecomplaints systems of the various MSIs, see NinaAscoly and Ineke Zeldenrust , “ConsideringComplaint Mechanisms: An Important Tool forCode Monitoring and Verification,” SOMO,December 2003, www.cleanclothes.org/codes/03-12-complaints-report.htm.

18 For information on the FLA complaints system,visit: www.fairlabor.org/all/complaint/index.html.

19 To access progress reports, and for informationon filing a complaint, visit: www.sa-intl.org/Accreditation/CertificationComplaints/ComplaintIndex.htm.

20 Full reports from WRC investigations areavailable at: www.workersrights.org.

21 Race to the Top: Attracting and Enabling GlobalSustainable Business, op. cit., p. 4.

22 Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, op. cit.,p. 26.

23 To access the report, visit: www.ilo.org/public/english/dialogue/ifpdial/publ/cambodia7.htm

Endnotes

33

24 See Codes Memo #15, September 2003.

25 For information on the Alliance for aCorporate-Free UN, visit: www.corpwatch.org/campaigns/PCC.jsp?topicid=101

26 See April 7, 2003 letter to Global Compact:http://web.amnesty.org/pages/ec_briefings_global_7April03

27 http://web.amnesty.org/pages/ec-unnorms-eng

28 www.lchr.org/workers_rights/wr_other/wr_ft_article.htm

29Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, op. cit.,p. 16.

30 Utting, Peter, “Regulating Business via Multi-stakeholder Initiatives: A PreliminaryAssessment,” Voluntary Approaches to CorporateResponsibility, NGLS Development Dossier, NGLS/UNRISD, 2002, p. 106.

31 The Wine Industry Ethical Trade Association(WIETA) is a South African multi-stakeholdercode implementation initiative that arose out ofan Ethical Trading Initiative (ETI) pilot project. Formore information, visit: http://www.wosa.co.za/wieta.asp.

32 The Horticulture Ethical Business Initiative(HEBI) is a Kenyan code implementationinitiative that arose out of a complaint to the ETI.HEBI is an NGO/company initiative that does notcurrently include labour organizations fromKenya or the UK.

33 Nina Ascoly and Ineke Zeldenrust ,“Considering Complaint Mechanisms: AnImportant Tool for Code Monitoring andVerification,” op. cit., p. 21.

34 Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, op. cit.,p. 26.

35 Ibid. p. 25.

36 Ibid. p. 17

37 Ibid. p. 27.

38 In 2005, all garment and textile quotas thatcurrently limit the number of specific productsimported from a developing country to adeveloped country will to be phased out underthe WTO’s Agreement on Textiles and Apparel(ATC). Most industry analysts anticipate thatafter 2005 much investment in garment andtextile production will shift to fewer developingcountries, such as China and India, and thatcompetition among countries for investment andorders will intensify.

39 Strengthening Implementation of CorporateSocial Responsibility in Global Supply Chains, op. cit.,pp 53-55.

40 Ibid. p. 3.