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Supply Chain Worker Rights: From Good Intentions to Implementation

Bill DiBenedetto | Wednesday April 2nd, 2014 | 1 Comment

manifesthope_arrietaNot that long ago worker rights were a given, labor unions were strong and powerful, as was the American middle class where a large part of the work and the need to enhance and protect workplace rights, benefits and progress was most in evidence.

Sure, it was a simpler time. Today’s globalized economy and its extended supply chains, rising income inequality, and stagnant economic and trade conditions makes the preservation of worker rights more problematic and difficult. This is especially true for supply chains in manufacturing and retail apparel sectors.

Today, worker rights might even be considered an oxymoron. But it’s a struggle well worth engaging as both a holding action and in efforts to bring workers across the globe living wages, safe working conditions and better standards of living.

Driven by globalization, supply chains are rapidly evolving across every industry sector, and the vendors in those supply chains are often a moving target as multinational corporations search for the lowest cost suppliers. Another unfortunate result of globalization is a race to the bottom by resource-poor, developing nations that are eager to secure sourcing contracts from wealthier countries. Concerns also center on how labor standards can best be monitored and enforced throughout these evolving organizational structures.

The University of Washington last year explored this topic during a conference on “The Transformation of Supply Chains” featuring academic experts and leaders from several labor rights organizations, including Central General Trabajadores, Worker Rights Consortium and the Fair Labor Association (FLA). The focus was on these issues: how supply chains have changed over the years; pressures to evolve; and how — if at all — workers have benefited from these transformations. The gist of their findings was that a collaborative approach will bring continued improvement among multinational corporations, and that better alignment is needed among all the players – from governments and corporations, to the brands and companies ordering the products, to factory owners, management and workers on the factory floor.

FLA President Auret van Heerden addressed the improvement of labor standards by the Chinese government and its efforts to create high value-added supply chains. He said China’s low value-added systems — for example in the garment industry — did not create the type of high-wage, high-skilled jobs that China was seeking. But van Heerden added that China has begun to raise its standards to create better jobs and greater value in its supply chains, including developing labor law provisions and increasing factory wages.

The problem is that for every laudable step forward there are countries, such as Bangladesh, that lower their labor standards in order to compete with China.

NGOs could also take a larger and more collaborative role by working with factory owners to improve labor conditions, rather than policing the supply chain through frequent auditing. Nike Inc. picked up on this idea, saying it is “evolving its mindset and its field operations away from a compliance auditing model towards a coaching model for factory partners focusing on continuing improvement in sustainability.” Nike adds, “We are looking forward to continued partnership with FLA in the development of industry-wide tools to build sustainable supply chains in the footwear and apparel industry.”

Ceres and Sustainalytics recently analyzed 600 major U.S. companies as part of a “Road to 2020″ report on corporate sustainability. While 43 percent of the firms surveyed have supplier codes of conduct, according to the report only 25 percent perform even minimal monitoring to determine if suppliers are abiding by those codes, and only 10 percent have codes that reference International Labor Organization conventions.

Levi Strauss & Co. was one of the first companies to adopt a supplier code of conduct more than 20 years ago. After a recent Ceres-led dialogue with labor and human rights groups, NGOs, suppliers and other companies, Levi Strauss released a blueprint for supply chain engagement that promises “deeper efforts to improve the lives and well-being of its supply chain workers, and challenges and inspires other companies to do the same.” The blueprint, “Improving Worker’s Well-Being: A New Approach to Supply Chain Engagement,” signals a shift away from the compliance-driven model in which companies periodically police supplier factories to see if they are complying with minimal standards. As with Nike, this effort is more inclusive — involving workers, suppliers and companies as active partners in efforts to improve child and maternal health, promote gender equality and empower women, combat disease, strengthen local communities and protect the environment wherever they do business.

It sounds like some progress is occurring, but — and there is always a but when it comes to worker rights — note this from a 2013 report (“Labour Rights in Unilever’s Supply Chain: From Compliance Towards Good Practice”) from Oxfam: “Working conditions remain poor for many workers in the value chains of multinational companies around the world, despite the often good intentions of senior management.”

Low wages, long hours, weak systems of industrial relations and job insecurity “combine to leave many of the world’s poorest people in a precarious situation and undermines their efforts to work their way out of poverty,” the report continues. “As the U.N. Framework on Business and Human Rights makes clear, companies have a responsibility to respect the human rights, including labor rights, of all people involved in or affected by their business.”

Case study: Unilever

The Oxfam report focuses on Unilever’s Vienam operations; Unilever Viet Nam (UVN) directly employs about 1,500 people producing home, personal care and food products. Among the report’s findings:

  • Unilever has made a commitment to social responsibility by adopting the U.N. Guiding Principles on Business and Human Rights. It also has a Code of Business Principles (CoBP); a Respect, Dignity and Fair Treatment policy; and a Supplier Code, all publicly stated.
  • Despite this, human and labor rights are conspicuously absent from the Unilever Sustainable Living Plan. “Social targets focus on the well-being of consumers and smallholders, but there are no targets for labor rights.”
  • Unilever management in Vietnam lacked “the capacity and knowledge to ensure the company’s operations comply with international standards, nor did they have the authority to support suppliers to do so.”
  • Many suppliers in Vietnam were unclear about Unilever’s expectations and how best to realize labor rights in practice.
  • Some Unilever sourcing practices were found to contribute to “excessive working hours and precarious work in the supply chain.”
  • There are no tracking or internal reporting mechanisms that cover Unilever’s effectiveness in dealing with labor issues, and grievance mechanisms are ineffective because workers lack the confidence to use them.
  • Unilever shows a good level of transparency and “actively engages with stakeholders at the global level.” But in Vietnam this is still at an early stage.

Regarding freedom of association and collective bargaining, Oxfam concluded that Unilever corporate policy appears to provide “a good overall framework” for these rights. “The challenges arise when it comes to implementation, since the industrial relations policy of Unilever (and potentially other multinational corporations) may be country-specific and locally determined.”

Case study: Target

Consider Target. America’s third-largest retailer has a somewhat complicated and double-edged record concerning domestic and international worker rights. In the U.S., it is staunchly anti-union despite recent violations of labor law because of its activities; it remains so today as this recent video amply illustrates.

On the other hand there is progress of sorts on the international scene, if forming a top-level committee is considered progress, that is. Last month Harrington Investments, a socially responsible investment advisory firm, convinced Target to step up its human rights oversight. After several weeks of dialogue with Harrington, Target’s legal staff recommended that Target’s Board of Directors “expressly oversee” human rights issues through its Corporate Responsibility Committee. And in a legal opinion, Target acknowledged that such a commitment to human rights oversight is a fiduciary obligation of directors pursuant to Minnesota state law.

“Until now, there has been no explicit board oversight for human rights issues at Target,” Harrington said. “It is almost unheard of for a large retail company, with 1,200 employees working in its supply chain and sourcing material from more than 50 countries, to not have board oversight in human rights compliance.”

Harrington had filed a shareholder resolution that targeted Target, calling for a human rights committee based on previous settlements for human rights abuses, including the multi-corporation $20 million settlement for sweatshop conditions in factories in the early 2000s. The firm also cited the human rights compliance issues in the company’s own, internally produced reports. “By Target’s own account, wage and safety violations have been increasing since they began keeping track in 2010,” CEO and Chairman John Harrington said.

According to Target’s most recent Corporate Responsibility Report, 40 percent of its supplier factories were found to have unacceptable human rights compliance practices, and critical violations were found in 20 percent of the factories. In China alone, working conditions in 50 percent of supplier factories were found unacceptable.

As reported by Harrington, Target officials will recommend to the board specific language to make human rights oversight an explicit responsibility of the company’s Corporate Responsibility Committee. Oversight will also include, in addition to human rights, matters relating to health and safety, diversity and equal opportunity. “This is a wonderful success, not just for Target shareholders, but for employees, customers and all stakeholders,” Harrington said. The Harrington shareholder resolution was withdrawn following the agreement with Target.

Target is a founding member of the Sustainable Apparel Coalition and the Alliance for Bangladesh Worker Safety, which states that addressing human rights issues in its international supply chain is a “business imperative and opportunity” requiring leadership, resources and funding. Since 2011, Target was featured in two high-profile reports and media campaigns alleging factory worker beatings, death threats, and sexual abuse of young women in supply chains in Bangladesh and Jordan. So it’s good of Target to finally get around to kicking the issue up to board-level review. It’s only in recent weeks that this movement by Target’s board is evident — will it walk the talk?

Restless at the end of the supply chain

Last November, hundreds of truckers in Los Angeles took part in what was described as the first strike by independent contractors in decades. The truckers at Green Fleet Systems, American Logistics International and Pac 9, all of which deliver goods for retail giants like Walmart and Forever 21, were protesting unfair labor practices.

Robert Pollin, professor of economics at the University of Massachusetts and the founding co-director of the Political Economy Research Institute (PERI), was at the scene. In an in interview with The Real News.com he said:

“I think it’s very important that we’re seeing the Walmart workers, retail workers, we’re seeing fast food workers, and now we’re seeing truckers going out on short-term strikes because…their conditions have deteriorated. Union strength is weak, so without the formal role of the union behind them, their bargaining power has worsened … The point is that working people do deserve better conditions. It’s important that they fight for their rights, because otherwise they’re getting kicked around by both parties.”

Hyper-transparency

Sean Ansett, founder of London-based At Stake Advisors, a supply chain sustainability and strategy consulting group, says in an article for Shift that while supply chain human rights issues continue to make the headlines, “even in industries like apparel, it seems we are far from solutions despite significant investments to address systemic supply chain human rights issues since the 1990s.”

Technological trends, he continues, suggest that in the next several years “we will enter an age of ‘hyper-transparency’ in upstream and downstream supply chains with lower cost technologies like smartphones creating new communication platforms for workers and communities in the global South.”

This new world is empowering to some stakeholders and creates needed transparency and thus accountability. “However, it may be of concern to others. New engagement processes will be required as information loops exponentially pick up pace and brands lose control of their message and engagement strategies.”

Ansett says the solution to supply chain human rights issues will be “multifaceted and require brands to look into the mirror to assess how their own purchasing practices may be a part of the problem.” The U.N. Guiding Principles, he notes, require that a company look at how its activities may contribute to human rights impacts as a result of its business relationships.

“Brands should therefore determine if their own purchasing practices are undermining the monitoring efforts of their internal compliance teams or their external auditors.”

Ansett underscores this ambiguity, along with the complexity and the difficulty that companies — and worker rights — face. Is it possible to be committed to the success of a brand (i.e., profits and shareholder happiness) and at the same time be fully engaged on worker rights along the supply chain?

In a 24/7 news-cycle world with smartphones rampant, it’s also much harder to mask or ignore worker rights abuses wherever and whenever they occur. Companies today have to at least appear as if they are paying serious attention. Commitments, committees, board-level reviews and evolving mindsets are fine – but clear thinking and ethical implementation practices are what is really needed.

Image credit: Manifest hope workers rights poster by Jorge Arrieta via Flickr


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  • http://www.futureoffish.org Future of Fish

    Transparency is key, and new technology, as you feature on the sustainable seafood channel this week, is helping in the world of seafood. Often overlooked in these supply chain conversations, global seafood is a massive industry with deep human rights issues. For more, see our blog recapping a recent session on the topic at the North American Seafood Expo: http://www.futureoffish.org/blog/human-rights-and-seafood-sustainability-means-ending-slavery-too