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Corporate Social Responsibility in Supply Chains: Improving Working Conditions Through Dialogue and Cooperation

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Corporate Social Responsibility in Supply Chains: Improving Working Conditions Through Dialogue and Cooperation Corporate Social Responsibility in Supply Chains: Improving Working Conditions through Dialogue and Cooperation Maren Knolle In: Rudolf Traub-Merz and Kinglun Ngok (Eds.): Industrial Democracy in China. Beijing: China Social Sciences Press 2011 (forthcoming) 1. Introduction Globalisation puts multinational enterprises (MNEs) in an area of potential conflict: as the main drivers of globalised markets, MNEs are accused of taking advantage of weak social and environmental regulations in developing countries. The production of textiles and clothing is one example of a highly globalised sector. In particular, labour-intensive production stages, such as the manufacturing of apparel, have been shifted to low-wage countries where the enforcement and implementation of environmental and social standards is often weak. For almost two decades, retailers in the industrialised countries have been attacked by non- governmental organisations (NGOs), such as the Clean Clothes Campaign (CCC), for their failure to ensure better working conditions in the worldwide production of their goods. In response to the growing stakeholder pressure regarding the environmental and social performance of companies, the concept of Corporate Social Responsibility (CSR) emerged as a framework within which companies can commit themselves, on a voluntary basis, to sustainable management by integrating social and environmental aspects in their business operations and in their interaction with their stakeholders (European Communities, 2001: 8). This chapter provides a brief overview of the CSR activities of brands in their supply chains, focusing on the social dimension. One current trend of CSR activities is the commissioning and running of training programmes for suppliers, with a strong focus on in-house dialogue and workplace cooperation. Practical experience of this approach is provided by a closer look at the outcomes of the project »Worldwide Enhancement of Social Quality« (WE Project), a public–private partnership project between Tchibo, a German retailer, and the Deutsche Gesellschaft für technische Zusammenarbeit (GTZ). The author accompanied project activities within the framework of her doctoral research work. The opportunities and challenges presented by the dialogue approach are summarised at the end of the chapter. 1 2. Current Approaches to Ensure Compliance with Social Standards In order to ensure social standards in the production of textiles and clothing, most retailers have set up codes of conduct for their suppliers, which often contain the International Labour Organisation’s (ILO) core labour standards (CLS)1 and further ILO Conventions concerning compensation, working time and occupational health and safety. Codes of conduct are not mandated by law nor negotiated as mutually binding collective agreements by social partners but rather are voluntary initiatives on the part of management to promote social standards. They may be developed by the management of the client company itself or, in best practice cases, in collaboration with multi-stakeholder organisations, NGOs or trade unions (Mamic 2004: 38). So-called »social auditing« was introduced by brands to monitor compliance with the client’s code of conduct at the manufacturing site. Audits can be carried out by the factory itself as a self-assessment (first party audit), by the CSR team of the purchasing brand (second party audit) or by NGOs or external private audit organisations (third party audit) (Locke and Romis 2006: 5). Where non- compliance is identified in any area of the audit, the supplier is informed about the improvements needed in a Corrective Action Plan (CAP). After a fixed period of time, the site will be audited again in order to check the implementation of the CAP (Mamic 2004: 209). The CCC (2005: 59) estimates that around 10 per cent of all clothing workplaces are audited every year. 2.1 Broad Improvement Still Lacking Codes of conduct and their monitoring are the most widespread tools for promoting social standards in supply chains. However, ongoing reports on major violations of social standards at factory sites which have, nevertheless, passed audits several times show that monitoring has not had the expected positive effects. This provoked the CCC (2005: 74) to claim that the lack of progress is »scandalous«. Why are audits unable to address the problem? There are several reasons, mainly to do with how audits are conducted. Critics argue that social audits are too short and superficial to identify violations, especially in the areas of freedom of association and collective bargaining, discrimination and harassment (Clean Clothes Campaign 2005). In the case of scheduled audits, it is easy for managers at the production site to prepare in advance by improving labour conditions 1 The CLS include freedom of association and protection of the right to organize and bargain collectively (Conventions 87 and 98), equal remuneration and non- discrimination at work (Conventions 100 and 111), abolition of forced labour (Conventions 29 and 105) and elimination of child labour (Conventions 138 and 182). 2 especially for the day of the audit or manipulating documentation of working conditions: for example, they may withdraw children from the premises (DeRuisseau 2002: 225). But even where audits are not announced, many factories will already be practising double book-keeping, falsifying payrolls and time cards. Furthermore, worker interviews during audits are often too short for the purpose of double-checking working conditions. Moreover, workers are often too scared to talk about problems in the factory or are coached by management on how to answer questions in audit interviews (Clean Clothes Campaign 2005: 27). Social auditing is a top-down process in which compliance with standards is demanded from external parties, but which at the same time leaves the factory to tackle the problems. Whether social audits have much of an impact on improving social standards is difficult to assess, given the outlined pitfalls (Witte 2008). Several researchers have come to the conclusion that auditing practice itself must be improved (DeRuisseau 2002; O'Rourke 2003), while some propose abandoning auditing completely and instead increasing the capacity of suppliers to work on the causes of violations (Locke et al. 2006). 2.2 Trend towards Capacity-building and Workplace Cooperation Aware of the fact that auditing is a control mechanism in which the putative beneficiaries – the workers – are hardly involved, an increasing number of brands are setting up additional training programmes for their suppliers in which the promotion of workplace cooperation and dialogue between managers and employees are used to enhance working conditions. The ILO (not dated: 12) describes workplace cooperation as »a general term that refers to the arrangements for establishing and improving relations between management and workers within the enterprise. It involves interaction between workers and managers at all levels within an enterprise.« Moreover, workplace cooperation aims at preventing disputes by resolving complaints before escalation and improving enterprise performance with regard to working conditions, as well as productivity and product quality (ILO, not dated: 14). One of the first programmes on improving dialogue and workplace cooperation between managers and workers in the textile and automotive industries in developing countries was designed and implemented by the ILO. After running the Factory Improvement Programme (FIP) in Sri Lanka (since 2002) and Vietnam (since 2004) successfully, more countries have been covered by the programme, recently renamed »SCORE« (Sustaining Competitive and Responsible Enterprises) (ILO 2010). Increasing numbers of projects are designed and implemented with a focus on cooperation, in-house dialogue and workers’ participation in improving social standards. 3 3. Worldwide Enhancement of Social Quality (WE Project) A current project promoting dialogue and participation with a view to improving working conditions in factories in Thailand, Bangladesh and China is the »Worldwide Enhancement of Social Quality« or WE Project,2 initiated by Tchibo GmbH, a German consumer goods and retail company, and the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), a federal organisation in Germany for international cooperation in the field of sustainable development. The public–private partnership project was launched in September 2007 and completed in August 2010. A second phase of the WE Project has now been initiated. In total, 40 suppliers producing textiles, jewellery, furniture or metal and leather goods for Tchibo were selected. In each of the four project regions (two in China, one in Bangladesh and one in Thailand) ten suppliers took part in training activities which emphasised in-house dialogue and participatory structures to overcome internal barriers at the factory level regarding the implementation of social standards. Seven cross-hierarchical supplier workshops were conducted in each project region and six individual training sessions took place at the factory between March 2008 and January 2010. The training activities covered technical topics, such as child labour, forced labour, discrimination, freedom of association and the right to collective bargaining, compensation and working hours, as well as tools for enhancing dialogue between workers and managers. The training was delivered by 18 local trainers, who were accompanied and coached by the consultancies Sustainability
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