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FAIR LABOR ASSOCIATION 2 0 0 9 a N N U a L R E P O R T January 1, 2009–December 31, 2009

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FAIR LABOR ASSOCIATION 2 0 0 9 a N N U a L R E P O R T January 1, 2009–December 31, 2009 FAIR LABOR ASSOCIATION 2009 ANNUAL REPORT January 1, 2009–December 31, 2009 G W I N O T R C K E E T R S O ’ R R P I G • H 9 T 0 S 0 2 1 – 9 9 109 www.FairLabor.org June 2010 Board of Directors 2009 Our board of directors includes six representatives of universities, six representatives of NGOs, six company representatives and an independent chair. Independent Chair Carol Bellamy, World Learning, served from August 2007 until February 2009 Bob Durkee, Princeton University, Acting Chair from March 2009 Business Caucus NGO Caucus University Caucus Corinne Adam Marsha Dickson Karen Daubert Gildan Inc. Educators for Socially Responsible Apparel Washington University in St. Louis Business Daryl Brown Bob Durkee Liz Claiborne Inc. Linda Golodner Princeton University National Consumers League Nicole Bassett (until June 2009) Joe Ebaugh Patagonia Pharis Harvey (until February 2009) University of Maryland Formerly of International Labor Rights Marcela Manubens Fund Carol Kaesebier (until May 2009) Phillips-Van Heusen Corp. Michael Low (beginning June 2009) Mike Posner (until October 2009) University of Notre Dame Caitlin Morris Elisa Massimino (beginning October 2009) Nike, Inc. Human Rights First Maureen Riedel Penn State University Gregg Nebel James Silk adidas Group Orville H. Schell, Jr. Center for International Craig Westemeier Human Rights, Yale Law School University of Texas Vivienne Riggio (beginning August 2009) Asics Karen Tramontano Global Fairness Initiative Lynda Yanz (beginning October 2009) Maquila Solidarity Network The FLA thanks its Board members for their dedicated service to the organization and its mission. The FLA owes a special debt of gratitude to two distinguished and long-standing members who retired from the Board in 2009, Pharis Harvey and Michael Posner, who have been with the FLA from the beginning. FRONT COVER AND BELOW PHOTOGRAPHY: © 2007 UNIVERSITY OF DELAWARE SOCIAL RESPONSIBILITY PROJECT FAIR LABOR ASSOCIATION n 2009 ANNUAL REPORT 2 Contents President’s Message 4 Celebrating a Decade of Achievement 6 2009 In Review 12 Monitoring and Verifications 19 FAIR LABOR ASSOCIATION n 2009 ANNUAL REPORT 3 MESSAGE FROM THE PRESIDENT hen President Clinton commitment by companies to internally convened a meeting monitor their global supply chains and of multinational to allow the FLA staff to arrange for companies and unannounced audits of randomly selected WNGOs at the White House in 1996 facilities with transparent results. No and challenged them to work together multi-stakeholder initiative in any sector to improve working conditions in of industry has agreed to performance the apparel and footwear industry—a standards anywhere near those of the process that led to the formation of the FLA. Why? What was so special about Fair Labor Association in 1999—the the negotiating process that it allowed dialogue was highly adversarial. The the FLA constituents to achieve these parties had to hammer out a system for agreements and then to implement respecting labor rights with meaningful them (since agreement is one thing and performance obligations for companies implementation entirely another)? and sufficient safeguards to ensure Looking back on the last ten years, I that the companies lived up to those believe that one of the key factors is obligations. Securing those safeguards the concept of safe space. The FLA in a context in which there was no trust, constituents were able to create a safe precedent or template took a lot of hard space in which adversaries could discuss bargaining. The result, however, was an Looking back and negotiate highly sensitive issues unprecedented level of commitment without fear of being judged, betrayed or by all to respect human rights in global on the last ten ridiculed. Participants did not question supply chains. In the space of three years, the motives, good faith or values of those the negotiations went from a point at years, I believe at the table and were willing to give each which companies contested whether other the benefit of the doubt. Whatever they were responsible for labor standards that one of the private thoughts or feelings participants at contract facilities to one in which they may have had about each other were hung agreed to adopt a code of conduct and on the coat rack outside the door and once key factors is apply it throughout their supply chains. they sat down to work, the issues were Once the FLA was formed and the treated in their technical and practical the concept negotiations moved from questions of context without emotion or ideology. principle and ideology to questions of of safe space. That does not mean for an instant technical detail, the character of the that the participants were uncritically process changed noticeably and the accepting of each other. The ground- focus shifted to how companies should rules of company participation are take responsibility for conditions in substantial and involve a formal, legal their supply chains. The commitments engagement to implement the Obligations made by the companies won a degree of Companies set out in the FLA Charter. of trust and respect from the NGOs and The independent external monitoring universities at the table, and everyone that follows is pursued with absolute started to trust the process. By mid- rigor by the staff. Companies that stick 2002, the negotiations had produced a with the program enjoy the support and methodology with unheard-of levels of trust of all concerned. Companies that FAIR LABOR ASSOCIATION n 2009 ANNUAL REPORT 4 do not may find themselves subjected to continuous scrutiny by the Board and may Finding new and novel ways to even be placed on special review if they are not upholding their commitments. All educate and inform consumers companies may be the object of a Third Party Complaint that could be investigated has to be one of our priorities for by the FLA. This robust system is one of the reasons that the safe space created the next decade. within the FLA works so well—it is based on real performance and accountability. The space the FLA creates is safe for educate consumers. We publish a lot but we will have to find creative ways of other constituents as well. NGOs, for of information about labor conditions getting at them. Those creative options example, can engage with companies in in factories around the world as part will include alliances with the ILO a highly regulated process that protects of our commitment to transparency, and other international organizations, their independence but gives them but it is highly technical and requires government-to-government relations significant leverage. The fact that the considerable engagement with the and even multi-stakeholder alliances to FLA system is based on performance material to understand it and research try to get systemic changes made. The obligations means that many of skills to analyze. Finding new and novel plight of migrant workers in many parts the demands NGOs often make of ways to educate and inform consumers of the world is an example of an area companies outside the FLA are actually so that they can distinguish a monitored requiring the intervention of international built into the FLA system and thus are product from an unmonitored product organizations, national governments not contested. Companies affiliated at the point of sale has to be one of our (sending and receiving countries), with the FLA are bound to performance priorities for the next decade. multinational and national companies and standards, and the debate among civil society. constituents is about the most effective What are the other challenges we need ways of getting the job done. to confront? One of them is the issue To systemic flaws we can add structural of sustainable compliance. Many of issues. These relate to the structure of Many of the key NGOs dealing with the remedial measures FLA-affiliated certain supply chains and industrial human, labor or environmental issues companies implement fail to make a sectors. Some involve raw materials or are skeptical of multi-stakeholder lasting change. This may be due to a lack of production processes that are considered initiatives because of a perceived capacity at the factory level to maintain the high risk, and others are produced in lack of commitment by companies standards required for code compliance. high-risk countries. Product categories to monitoring, remediation or The need for capacity building is well that are driven by price competition are accountability (or all three). At the known, but attempts to develop it have particularly likely to put pressure on same time companies soon realize that bumped up against the shortage of local wages and working conditions. there is no value to be had in a toothless resources. The FLA has developed an exercise, in terms of risk management, Tackling these risks will once again online training portal and organizes social responsibility or credibility. In require broad, multi-stakeholder alliances. courses to help build local capacity, but this respect, it is interesting to note These complicated and sensitive issues this remains a real constraint. that the companies active in the FLA will most certainly test the limits of the demand high standards of performance Systemic flaws in the local labor market FLA’s safe space, but it has served us well from their peers, partly to avoid free are equally hard to address. Many in difficult conversations before, and I am riders and partly to ensure that the countries have reasonable labor laws confident
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