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NEWSLETTER 15, JUNE 2002
From code to compliance:
Conference on European experiences with monitoring
and verification in the garment industry
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On October 3, 2001 the CCC and the Center for Research
on Multinational Corporations (SOMO) organized an international
conference that brought together 120 participants from business
associations, companies, trade unions and NGOs from all
over the world with an interest in multi-stakeholder initiatives
in the field of monitoring and verification of labor practices
in the garment industry. The gathering was the culmination
of a one-year project "European Initiatives on Monitoring
and Verification of Codes of Conduct in the Garment and
Sportswear Industry," funded by the European Commission,
Employment and Social Affairs (DG5).
The aim of the conference was to increase common ground
and understanding among different stakeholders in relation
to the challenges and practical experiences of five initiatives,
involving five CCCs, on monitoring and verification of labor
standards in the garment industry.
Dara O'Rourke of the Massachusetts Institute of Technology
(MIT) in the United States set the context for the discussions
that took place during the rest of the day by discussing
monitoring and verification initiatives in relation to the
goal of improving workers lives.
He explained that there are multiple forms of monitoring :
internal compliance monitoring; external monitoring, accredited/certified/verified
monitoring (this includes the Fair Labor Association, Worldwide
Responsible Apparel Production, SA8000, Workers Rights Consortium,
and the initiatives the CCC is involved in), NGO research
reports, and monitoring of monitoring.
Monitoring methods vary, in terms of the substance
of the monitoring, scope of the monitoring (time and resources),
who participates in the monitoring, the disclosure of the
results, and with regard to certification (factory or brand/retailer?).
He stressed the difficulties of monitoring due to
the structure of the apparel industry (long, mobile supply
chains; multiple layers of ownership, and shifting factory
locations); information access problems; limited leverage
of individual buyers; multiple codes; complex technical
and social issues; and transnational coordination.
In relation to what gets monitored, O'Rourke outlined the
core labor standards plus some additional standards: freedom
of association, collective bargaining, non-discrimination,
child labor, forced labor, working hours, wages, health
and safety as well as living conditions. He discussed the
need to monitor the monitors due to flawed monitoring
(caused by, for example, management biases and flawed interviews,
overlooking key issues) limited information from workers
or NGOs, over-simplified reporting and potential conflicts
of interest. Monitoring has costs : it is expensive
and time consuming; it only identifies problems (doesn't
solve them), and can have adverse effects (can hurt workers,
give PR cover to firms, miss biggest issues, "crowd
out" unions, demobilize or co-opt campaigns). It could
possibly support protectionism and the privatization of
regulation.
Despite these costs O'Rourke pointed to several reasons
to support codes and monitoring , such as the continued
weakness of state regulators; economic pressures against
enforcement (conflicting interests of governments); industry
outpacing traditional regulation; continued impediments
to unions, consumer awareness and momentum, and the potential
for improving conditions in global supply chains. In evaluating
monitoring we should look for technical competence, transparency,
public accountability, independence, local participation
and credibility, worker participation and benefits.
Does monitoring meet our goals? Ideal monitoring
and verification will identify problems and motivate solutions,
support worker organizing and empowerment, support consumer
campaigns, support firm supply chain management, support
improved government regulation and will not privatize regulation
(it will democratize it). For the future, O'Rourke called
for more attention to the issue of transparency and more
information on monitoring results and methods. Public comparisons
and discussions are needed, as well as more information
for workers, local NGOs and local government agencies. We
have to learn from these experiments and develop systems
of accountability, and multiple strategies (in cooperation).
Joris Oldenziel of the Centre for Research on Multinational
Corporations (SOMO) explained that the Clean Clothes
Campaign is involved in multi-stakeholder initiatives in
the Netherlands (Fair Wear Foundation); the UK
(the Ethical Trading Initiative), Sweden (the Swedish
Project on Independent Verification, now concluded), France
(Ethique sur l'etiquette with French retailers) and in Switzerland
(The Swiss CCC Project on Independent Monitoring). The aim
is to try to generate experience on monitoring and verification,
determine what good models for monitoring and verification
should look like and how code compliance can be achieved.
SOMO and the CCC organized a one-year project (this conference
is a part of it) to coordinate the exchange of experiences
from these projects. The projects have similarities and
differences in terms of structure and what models are being
tested. No final conclusions can be drawn because the projects
(except for the Swedish project, which ended and has generated
a proposal for a monitoring and verification body) are still
underway.
Oldenziel explained that some key issues have emerged
during the projects. Monitoring and verification processes
are linked -- similar tools are being used (ex. social audits)
and they are ongoing and overlapping processes. Management
systems should call for information gathering at supplier
and retailer level and address the need for information
and education at all levels. A monitoring guide for companies
was seen as useful. Key issues that need further discussion
(some will be discussed in the afternoon workshops) include:
roles for stakeholders in monitoring and verification processes,
as well as relationships between stakeholders; more clarity
of terminology is needed, reconciling competing needs for
transparency and confidentiality; policies and procedures
in relation to complaints and corrective action. SOMO and
the CCC have proposed that they continue their joint work
on monitoring and verification. Specifically, they propose
to continue tracking the European monitoring and verification
initiatives, with an eye toward harmonizing terminology
and methodology, and to develop several monitoring and verification
tools.
A stakeholder panel was convened to get input from
a variety of actors involved in monitoring and verification
initiatives to get a sense of why they feel it is worthwhile
to be involved in such projects and what they think are
the issues that urgently require attention.
Lara Cataldi, representing the Bern Declaration, an NGO
active in the Swiss CCC Project on Independent Verification,
reported that working with companies is difficult work involving
lengthy negotiations about publishing findings. There are
limitations on their work, such as capacity problems (the
work load is huge, while their means are very limited).
She recognized that stakeholders have different ambitions.
As an NGO, she said, they want dialogue, but they have to
maintain leverage.
Astrid Kaag of the Dutch Federation of Trade Unions (FNV),
which is active in the Fair Wear Foundation, explained that
the initiative in the Netherlands involves three parties:
branch organizations, the FNV (at the industry and confederation
level) and NGOs. Though the FWF was founded in 1999 it was
preceded by very long negotiations. Trust had to be built.
Joining this multi-stakeholder initiative seemed worthwhile
in terms of strengthening campaigning efforts to improve
working conditions. Now participants are working together
on pilot projects with five companies. For NGOs a challenge
is to figure out the balance between campaigning and negotiation.
A balance between transparency and confidentiality needs
to be reached. Though the biggest retailers in the Netherlands
have not yet joined the foundation, the FNV is happy with
their choice. They are confident that together they will
build a system in the Netherlands.
Satish K. Bhardwaj of the National Institute of Fashion
Technology (NIFT) in India provided information regarding
the (supplying) companies in the South. Managers at this
level have to receive training and become aware about workers
rights and the Northern initiatives that aim to regulate
them. If this is not organized he feels that the initiatives
will not meet with success. There are local institutes such
as NIFT, which is a government institute that could provide
such training. He believes that in the long run also productivity
will go up and relations with the buying companies will
improve, which is an important message also for the management
of the supplier companies.
Jacqueline Peltier from Auchan, one of France's major retailers,
explained that they became involved in these issues in the
middle of the nineties and developed a code in 1997. They
believe that implementation of this code is essential but
it is also very complicated, but they have taken concrete
steps and for example trained their buyers (in cooperation
with the French CCC) as part of their own monitoring program.
They also have social audits done at their suppliers, so
far by commercial audit firms. A pilot with the French CCC
regarding methods for social auditing is under discussion.
Following the plenary sessions, participants broke up into
smaller groups for more in-depth workshop presentations
and discussions.
After adopting a code of labor practices the next step
for retailers and suppliers is to start implementing those
standards in the workplaces throughout their supply chains.
In a workshop on code implementation, the training of
workers came up repeatedly. Retailers, trade unions
and researchers all felt this was a very important aspect,
but all of them posed questions on how to organize worker
training. Costs and the failure of internal monitoring
were also mentioned. The role of government was raised
as something important to consider.
Several different steps that should be taken to implement
the labor standards found in the code were mentioned:
Communication; both internally as well as
externally (to suppliers). Internally, communication is needed
with different audiences, such as functional specialists,
buyers, HR teams and managers. There is a need to introduce
a routine into these different channels of communication.
Externally, the communication with suppliers should be a two-way
dialogue; feedback from suppliers on how they implement the
code is also needed.
- Risk assessment of suppliers; assessment of the brands
that are produced, the location of the supplier and the
local problems.
- Site assessment: by the retailer's personnel, using
second party auditors, and using mixed audit teams, such
as male/female, generalists/specialists, local knowledge
and language skills.
Different roles and responsibilities for both suppliers
and retailers were discussed. The responsibility of the
retailers includes: knowledge of the whole supply chain,
owned and contracted, building of long-term relationships
with suppliers. Mapping their network of suppliers was seen
as something difficult for retailers to do, but an important
element of code implementation. Retailers should also try
to involve local stakeholders during the process of code
implementation. Local stakeholders can be involved in the
internal monitoring by companies.
Suppliers also have responsibilities, for example having
knowledge of the retailer's code and their implications,
being transparent with relevant information, and to implement
the action plan that was agreed with the retailer.
Role of the management systems in organizing code implementation
was discussed, and some important elements of management
systems were mentioned:
- Management should define a policy for social accountability,
which includes a commitment to the code, commitment to
applicable law, continuous improvement, how this will
be documented and the transparency of the system.
- Clear procedures for communication and documentation
have to be established.
- There should be a periodic management review to assess
adequacy, suitability and effectiveness of the policy.
- A company representative should be appointed that has
the responsibility to ensure implementation.
In the course of monitoring and verification, code violations
are revealed and plans to rectify those violations are supposed
to be developed. During this session participants considered
the roles that different stakeholders should play in determining
what corrective action should be taken, in setting a schedule
for complying with actions requests, and in any other follow
up.
Three critical concerns were pinpointed that need to be
dealt with in relation to corrective action. First, once
the point is reached when corrective action should be taken,
it is difficult to determine what is correct in terms of
freedom of association, wages and hours. Secondly, if a
corrective action system is to be set up it should be a
multi-stakeholder system, otherwise many problems will arise.
Workers must be involved, and to be involved there needs
to be education. And finally, following a discussion of
the impact of cost structure on the implementation of codes,
it was noted that production processes cannot be improved
if prices are kept low.
Local Stakeholder Participation
Because it has been unclear what roles NGOs and trade union
based in production countries should play in monitoring
and verification processes, and because the roles of factory
management in these processes is also not always clear,
this workshop brought together participants from various
monitoring and verification initiatives to discuss the possibilities.
This workshop tried to find answers to three key questions
on who stakeholders are, what their roles are, and how to
facilitate the fulfillment of those roles. Participants
said that local trade unions and local suppliers were stakeholders.
But beyond that there was not total agreement among those
who participated in the workshop. Some thought that NGOs,
local government (ex. labor inspectorates) and academics
(who conduct research) are all stakeholders. Not all local
people were seen as stakeholders. Suggested roles for local
stakeholders were research and information gathering, though
this in itself was not seen as enough. Local stakeholders
should be able to give input. Other roles mentioned were
trust building and involvement in remedial action (what
and how to implement). As stakeholders workers should be
involved in developing the code that covers their workplace.
Stakeholders should be involved in the institutional framework.
The main obstacle to the local involvement of stakeholders
is knowledge (ex. knowledge of the code and its relevance)
and capacity (limited resources means getting involved with
codes quickly overwhelms an organization and prevents them
from doing their other work).
Transparency & Confidentiality
The monitoring and verification systems currently being
experimented with call for vast amounts of information to
be disclosed regarding workplace operations and conditions.
At the same time there are legitimate concerns that some
information should remain confidential for various reason
(ex. to protect workers). Participants in a workshop focusing
on transparency and confidentiality investigated these concerns.
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