To what extent do corporate social responsibility initiatives such as corporate codes of conduct actually improve the behavior of multinational corporations?

The Dutch Clean Clothes Campaign commissioned SOMO, the Centre for Research on Multinational Corporations, in the Netherlands, to come up with some answers to this important question. Specifically, the Dutch CCC asked SOMO to investigate working conditions at factories in India and Sri Lanka producing for Dutch garment retailers that have codes of labor standards. The garment retailers are all part of Vendex KBB, the largest retail group in the Netherlands. HEMA, Vroom & Dreesmann, de Bijenkorf, Prénatal and Hunkemöller are just a few of the retailers that are part of Vendex KBB. The Vendex KBB code of conduct, and those of its subsidiaries, states that the garments they sell should be produced in conditions that are in accordance with ILO Conventions. This means no forced labor, child labor, or discrimination, and that workers should be able to freely exercise their rights to form associations and bargain collectively, and enjoy the right to health and safety at the workplace, fair wages, and a cap on the maximum hours of work. Vendex KBB also claims to be monitoring their suppliers for compliance with their code of conduct, but refuses to reveal anything about the way the monitoring is being done, how many factories have been checked so far, and what kind of methodology is used to obtain information on the working conditions.

In order to assess the extent to which Vendex KBB's ethical policies have been put into practice and to learn more about how they monitor compliance with labor standards, SOMO gathered infomation on 12 Vendex KBB suppliers in India and Sri Lanka. The study found that Vendex KBB's current code of conduct and monitoring system, and those of its subsidiaries, are ineffective in preventing labor rights violations, and that many violations of minimal standards still exist on a large scale. Numerous violations of the basic labor rights endorsed by Vendex KBB were found.

Working conditions in India and Sri Lanka

Representatives of management at the 12 factories were interviewed by SOMO (the true purpose of the interview was not disclosed), while local researchers and NGOs interviewed workers from these same factories. These researchers and NGOs have been working with garment factory workers for a long time and are well aware of their problems and the risks involved in participating in such a research project. The workers were interviewed without the presence of management, in a situation where they felt it was safe to speak openly. To prevent victimization of the workers and to prevent the Dutch retailers from "cutting & running" (i.e. cutting their contracts with the supplier in question as soon as problems are found, and shifting production elsewhere), the names of the workers and the factories have been kept confidential.

Researchers concluded that the biggest obstacles for garment workers in India and Sri Lanka is the lack of freedom of association and the right to organize, long working hours (60 hours a week on average, sometimes even 90 hours), forced overtime, and low wage levels. No workers in the Indian and Sri Lankan garment industry receive a wage that can meet their basic needs. Some of the factories SOMO studied pay wages that are even below the legal minimum wage, which is around $40 to $50 (US) per month. The only improvements in recent years seem to have taken place with respect to child labor and health and safety, though the conditions in the factories are still far from safe and garment workers continue to suffer from health problems. Improvements can be seen in the areas that are possible to check by physical factory inspections, without interviewing workers about their real concerns. In the factories that were investigated, even management said that Vendex KBB never carried out factory inspections. Most of the workers that were interviewed for this research project had never been interviewed by "social auditors" working for Dutch retailers (or any other Western retailers for that matter). The few workers that had been interviewed by auditors said they had been told by management beforehand what they should say, and were too afraid to tell the truth.

Researchers did find some differences between working conditions in India and those in Sri Lanka. For example, working hours tend to be even longer in Sri Lanka, while health and safety conditions are often worse in India. But in any case, none of the factories that were investigated complied with the self-proclaimed ethical standards of Vendex KBB. The number of factories investigated shows that these violations are not isolated incidents. These findings demonstrate that whatever Vendex KBB is doing to behave in a socially-responsible manner, it is obviously not enough to guarantee that minimum labor standards are met.

The outcome of this research may also explain why Vendex KBB is reluctant to be transparent about their efforts to monitor their suppliers for compliance and to improve working conditions when needed. Their code of conduct may just be one of the many public relations exercises that initiatives in the field of corporate social responsibility often are.

The SOMO research findings were presented in the report "The reality behind the code: working conditions in garment factories producing for Vendex KBB" published in July 2001. The report was sent to Vendex KBB for comments, but the CCC thought their reaction -- that they would take the results into account in the development and improvement of their system -- was quite unsatisfactory. The CCC had no reason to believe that the efforts of Vendex KBB would lead to improvements, since the reality in the workplaces producing their garments reflects radically different standards from those (higher) standards they claim to have implemented. Therefore, the CCC called upon Vendex KBB to allow independent verification of compliance with labor standards, and to develop a system for monitoring and verification together with NGOs and trade unions that allows the voices of the workers to be heard and taken seriously.

Since Vendex KBB's reaction was not enough for the CCC, media attention was sought to increase pressure on the company. Articles about the outcome of the research were published in four national newspapers. As the pressure on Vendex KBB was growing, a meeting was arranged between Vendex KBB and some of its subsidiaries, SOMO, the CCC and the Dutch trade union federation FNV. The meeting took place in October 2001. During this meeting the NGO-trade union delegation again urged Vendex KBB to accept the principle of independent verification and to work together with NGOs and trade unions to develop a system that is more effective than the one being developed by Vendex KBB, which the SOMO research showed has been ineffective to date. The CCC made a concrete proposal, requesting that Vendex KBB join the Dutch Fair Wear Foundation (FWF), a multi-stakeholder initiative involving companies, trade unions, and NGOs, that is developing a system for implementation, monitoring, and verification of the CCC model code of conduct. Vendex KBB made a first step in the right direction by promising to start talks with the FWF. However, whether these talks will lead to acceptance of the principles of the FWF remains to be seen. Clearly the CCC will have to keep a close watch on Vendex KBB and keep the pressuring on them -- and other companies -- to improve the working conditions in which the garments they sell are made.

To read the complete report, "The Reality Behind the Code: Working Conditions in Garment Factories Producing for Vendex KBB," visit the CCC website http://www.cleanclothes.org/companies/vendex.htm