EMERGING CORPORATE SOCIAL RESPONSIBILITY IN KENYA S CUT FLOWER INDUSTRY

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1 EMERGING CORPORATE SOCIAL RESPONSIBILITY IN KENYA S CUT FLOWER INDUSTRY Maggie Opondo University of Nairobi Department of Geography and Environmental Studies Abstract Fresh flowers are one of Kenya s great economic success stories. Floriculture is now the fastest growing sector in the Kenyan economy, outpacing the nation s conventional hard currency earners and providing employment to an estimated 50,000 workers who are predominantly female. Having been the target of civil society campaigns and media exposés for poor labour practices and environmentally damaging production processes, the industry appears poised towards growing flowers in a more socially responsible manner. This paper, explores the trajectory of corporate social responsibility in Kenya s cut flower industry. By highlighting the role of codes of conduct and civil society, it assesses the circumstances and actors that have led to the emergence of a more socially aware and responsible cut flower sector. The paper concludes by illustrating some of the positive changes that have taken place on flower farms in Kenya as they embrace responsible corporate citizenship. Key words Kenya, codes of conduct, corporate social responsibility, horticulture, multi-stakeholder initiatives, participatory social auditing Introduction Cut flower production is now a major part of the Kenyan economy. The industry has generated significant foreign exchange and created new employment opportunities in both production and processing. Women in particular have benefited from these opportunities, and now comprise between per cent of the 40,000-50,000 workers employed in the industry. Kenya boasts the oldest and most successful cut flower industry in Africa. These exports that initially served small niche markets have witnessed an exponential expansion within the last two decades. The cut flower industry, that has an estimated annual growth rate of 20 per cent, increased its export volume from 19,807 to 52,106 tons between 1992 and 2002, which was an increase of 163 per cent (HCDA 2003). Consequently, cut flowers have become Kenya s second largest agricultural source of foreign exchange. Currently this sector is the fastest growing agricultural sub-sector in the country and is a major contributor to GDP (HCDA 2003). The largest proportion of Kenyan flower exports is shipped to Europe. Kenya has surpassed Colombia and Israel as the largest supplier to the EU, accounting for 58 per cent of all ACP (Africa, Caribbean and Pacific) countries cut flower exports to the region (Hennock 2002, COLEACP 2002). Within Europe, the Netherlands is the leading destination for Kenyan flowers, followed by the UK and Germany. A significant quantity (approximately 80 per cent) of Kenyan flowers is also re-routed to other countries through the re-exports of the Netherlands. Although supermarkets continue to buy flowers through the Dutch auctions, today more supermarkets are sourcing flowers directly from growers and bypassing the Dutch auctions altogether. UK supermarkets in particular are increasingly bypassing the Dutch auction system and sourcing large volumes of flowers directly from growers (Barrett 1999, Kopiki 2000). However, the country s success in supplying European markets has brought with it increased attention to the industry s social and environmental impacts. Driven by the various concerns of consumers, retailers, auctions, European regulators and civil society organizations, flower growers have to comply with a number of codes of conduct developed by their major market- 1

2 brokers, international organizations, national industry associations and multi-stakeholder initiatives. Adherence to these codes has seen the Kenya cut flower industry rapidly evolve as one of the most codified agricultural sectors in the world. By the mid-1990s most of the leading companies had applied codes to gain or maintain access to markets and/or to satisfy the requirements of customers for environmental and social responsibility. Simultaneously local civil society organisations in collaboration with their international counterparts spearheaded a campaign against poor working conditions on Kenyan flower farms, spawning a series of articles in both the Kenyan and UK press. These activities generated concern about the reputation of the industry in overseas markets, and were responsible for bringing together a range of stakeholders to engage in dialogue on the labour practices of flower farms. Generally, media coverage and public interest in corporate social responsibility (CSR) has been sustained at much higher levels in Europe than elsewhere in the world (Power, 2003). Therefore, the local media and civil society organisations were quick in taking advantage of this awareness in putting the Kenya cut flower industry on the global spotlight. The pressure towards responsible corporate citizenship in the Kenya cut flower industry has mainly been driven by codes of conduct and campaigns by civil society organisations. These have been instrumental in encouraging leading cut flower producers to re-examine their commitment to social and environmental concerns brought about by the industry. Supported by in-depth research which was conducted in the Kenya cut flower industry in 2002, this paper, explores the trajectory of corporate social responsibility in Kenya s cut flower industry. By highlighting the role of codes of conduct and civil society it assesses the circumstances and actors that have led to the emergence of a more socially aware and responsible cut flower sector. The paper concludes by outlining some of the positive changes that have taken place on flower farms in Kenya in their attempts to embrace responsible corporate citizenship. In the following sections, the role of codes of conduct and civil society organisations is examined. Codes in Kenya s cut flower industry Since the early 1970s, shifts in the global economy have forced global industries to seek flexibilities in their quest to lower costs, enhance productive and improve market positions. Flexible labour strategies which inevitably lead to the erosion of workers rights have been the most widely employed flexibility. Like many other global industries, the cut flower industry is characterized by feminised and flexible labour strategies. Companies perceive women as more productive workers, equating production imperatives of quality, consistency, and speed with ostensibly feminine traits of dexterity, reliability, and attention to detail. The industry is also comprised of high levels of non-permanent work (seasonal and casual), particularly for the tasks that women perform such as picking and packing, and value-added activities of bunching and sleeving roses. The study found that regardless of the type or number of codes in application, and whether or not the code had been audited externally, the kinds of problems experienced by workers on cut flower farms in Kenya, were not dissimilar to those found on other global supply chains. These included: Employment insecurity; Overtime work; Sexual harassment; Low wages; Lack of access to maternity leave; Minimal union membership among the workers; Poor communication between workers, supervisors and management; Poor transport facilities; Frequent exposure to chemicals; Lack of opportunities for promotions; Lack of a proper complaints procedure; and Lack of awareness of codes among the workers (Dolan, et al 2003). 2

3 It is these types of issues that social codes of conduct aim to eradicate. The expansion of direct sourcing by UK supermarkets is accompanied by increased pressure on suppliers to abide by codes of conduct. During the 1990s, the Kenya cut flower industry was profoundly impacted by the shift away from governmental regulation toward voluntary initiatives as the main instrument for realising development goals. One type of voluntary initiative codes of conduct covering the employment conditions of Southern producers exporting to European markets mushroomed throughout the 1990s. By the mid 1990s, most leading Kenyan cut flower producers had applied codes in order to gain access to markets and/or to satisfy the requirements of their customers for environmental and social responsibility. In Kenya (and African horticulture generally), codes have been introduced from four different origins: by dominant buyers such as supermarkets, importers and/or individual exporters within the chain (company codes); trade associations linked to the northern fresh produce industry (northern sectoral codes); sectoral trade associations linked to the African horticulture sector (southern sectoral codes); and independent bodies comprising companies a range of stakeholders (multi-stakeholder codes) (Barrientos et al. 2003). During the mid-1990s, most of the major UK supermarkets introduced codes of conduct to cover their supply chains and to address burgeoning consumer concerns surrounding food safety, environmental damage, and worker exploitation. As a form of corporate selfregulation, most company codes were unilaterally designed and implemented, and monitored internally using conventional checklist auditing techniques with minimal worker and stakeholder consultation. However, company codes have become less common since the adoption of sectoral and multi-stakeholder codes. A second group of codes were developed by industry-wide organizations and/or trade associations in the North to protect the image of the fresh produce industry as a whole. These codes initially focused on environmental and food safety issues, and included the environmental code of the Dutch organization Milieu Project Sierteelt (MPS) and the Euro- Retailers protocol on Good Agricultural Practice (EUREP GAP). Separate labour standards were also introduced to the flower industry through the International Code of Conduct for Cut Flowers (ICC), a sectoral code developed by non-governmental organisations (NGOs) and trade unions in Europe, and supervised by the directorate of the German-based Flower Label Program (FLP). In addition, the Max Havelaar criteria for Fairtrade Cut Flowers, which requires compliance with MPS or ICC, was also introduced on several Kenyan farms. At the same time there was growing recognition that voluntary standards (whether company or sectoral) tended to represent the ethical agenda of Northern actors and excluded the issues and values of greatest concern to producers and workers in developing countries. As a result, a number of producer and exporter organizations in Africa developed southern sectoral codes to promote the ethics of African horticultural operations (Barrientos et al., 2001). In Kenya, these included the Kenya Flower Council (KFC), the Fresh Produce Exporters Association of Kenya (FPEAK), and the Kenya National codes, each of which target a slightly different type of grower and require different approaches to verification. Concerns about the efficacy of codes developed unilaterally by different interest groups have led to the inclusion of multi-stakeholder actors in the development of codes. This is a process in which all stakeholders (consumers, buyers, producers, workers, trade unions and civil society organisations) work together in the formulation and implementation of codes. Thus multi-stakeholder initiatives such as the Ethical Trading Initiative (ETI) and Horticultural Ethical Business Initiative (HEBI) Base Codes have emerged in the industry. The ETI is a UK-based alliance of companies, trade unions organisations and NGOs that seeks to identify and promote good practice in the implementation of codes of labour practice in workplaces supplying the UK market. Adoption of the ETI Base Code is increasing among Kenyan flower producers supplying the UK retail market as seven of UK s largest supermarkets are ETI members and have agreed to apply the ETI Base Code to all their 3

4 fresh produce suppliers. While the Base Code is not an auditable standard, the ETI has initiated a process of learning to identify good practice in multi-stakeholder approaches to monitoring and verification. HEBI was incorporated in 2003 as an independent non-profit organisation with the aim of promoting ethical social behaviour in the horticultural industry in Kenya. As part of the process of achieving its goal, HEBI has developed a Base Code (Box 1), trained forty local auditors on participatory social auditing and sixteen awareness educators. With a multistakeholder audit team HEBI conducted pilot social audits on eight flower farms in The endorsement of the HEBI code by KFC and FPEAK horticultural producer associations in Kenya can be seen as further attempts by the industry to embrace responsible corporate citizenship. Since only one of the farms in the pilot audits has undergone a formal audit of the HEBI code, it is expected that with this endorsement these producer associations will encourage their members to apply the HEBI code. This would significantly increase the potential for HEBI to develop into a credible social auditing institution. Participatory social auditing Despite the proliferation of codes in the 1990s, cases of worker exploitation and environmental damage persisted, prompting NGOs to denounce the industry s embrace of codes as a mere bluewash, delivering a boost to corporate image and a salve to European consumers but little in the way of improved social and environmental performance in Africa (Utting 2002). The fact that employment problems continued to persist in one of the most codified industries in the world raises questions about the capacity of conventional auditing procedures to detect workplace violations and breaches in codes of conduct. In standard auditing procedures, codes have been monitored by existing quality assurance staff and/or through a technical approach, which relies predominantly on interviews with employers. Thus far such auditing processes have not taken seriously the notion of worker or stakeholder participation. Internal monitoring and checklist auditing has been shown to be ineffective for monitoring and improving social performance and labour standards (Auret 2001). Even in cases where independent auditing has taken place, this has typically consisted of parachuting in auditors to make snapshot assessments, which are clearly not effective in picking up sensitive issues such as gender discrimination and sexual abuse (Dolan et al. 2003). A participatory approach encourages the involvement of marginalized groups, who might otherwise be overlooked in checklist auditing, and facilitates discussion and identification of sensitive issues. By implementing participatory social auditing, companies commit to engaging in an on-going process of improvement and awareness which incorporates the participation of all relevant stakeholders. Box 1: HEBI Base Code 1. Employment is freely chosen 2. Regular employment is provided 3. Child labour shall not be used 4. No discrimination is praticed 5. Living wages are paid 6. Working hours are not excessive 7. Working conditions are safe and hygienic 8. No harsh or inhumane treatment 9. Freedom of association and right to collective bargaining are respected 10. Management systems are responsible for compliance with this base code The realisation by stakeholders in the cut flower industry, that the main problem was not the standards against which farms were being measured, but in the way in which farms were assessed has seen the increased use of participatory social auditing in the sector. For 4

5 instance, the pilot audits carried out by HEBI in 2003, enabled the participants to assess labour standards on these farms as well as test the code, tools and audit methodology which HEBI had developed. The findings of the pilot audit indicated that while there had been some positive improvements, some areas of concern still remained. Areas of concern included excessive overtime during peak periods; maternity issues; inadequate emergency response procedures; poor discipline and grievance handling procedures; ineffective communications channels, inadequate health and sanitation facilities; congested workers houses; low union membership; barriers to freedom of association and poor worker knowledge about basic labour laws and standards. On the other hand, some of the farms in the sample indicated significant improvements such as higher than average wages; regular work; acceptable working hours; no child labour; existence of gender committees and good medical care. The HEBI pilot audits appear to have set the pace for incorporating participatory social auditing. One of the farms in the pilot audits underwent a formal participatory social audit of the HEBI code. Civil society campaigns The seriousness with which Kenyan producers engaged with voluntary initiatives underwent a marked change in the year 2002, following a barrage of media exposés and nongovernmental organization (NGO) campaigns on alleged labour rights violations. By the late 1990s, a spate of media-generated reports charted the exploitative nature of the flower industry, and its adverse impact on workers (Bolger 1997, Wolf 1996), providing the impetus for the formation of the Kenya Flower Council in 1997 and the development of the FPEAK code. However, by 2002, Britain s leading NGOs (e.g., Oxfam and Christian Aid) launched investigations into the cut flower industry and spearheaded high-profile campaigns in the UK against the inimical practices of producers selling to UK retailers. The initial engagement of civil society in Kenya s cut flower industry began in 1999 after the Workers Rights Alert (WRA) launched a campaign against workers rights violation in Cirio Delmonte (one of the largest and oldest pineapple companies in Kenya) 1. The success of this campaign, coupled with increased international attention on working conditions in global supply chains, prompted flower producers to turn their attention to social issues within the industry. The Kenya Plantation and Agricultural Workers Union (KPAWU) requested the Flowers Growers Group in Agricultural Employers Association (AEA) to include the International Code of Conduct in the collective bargaining agreement (CBA) and together with other stakeholders began to draft the Kenya Standard on Social Accountability. The Kenya Standard on Social Accountability formed the basis of a Voluntary Private Initiative (VPI) in the horticultural industry. This initiative was spearheaded by KFC, FPEAK, and AEA, who feared that the reputation of Kenyan flowers was under threat from the unethical business practices on certain flower farms. The group initiated discussions with stakeholders from civil society organizations, trade unions, and government on how to enhance social accountability in the industry. It was foreseen that once these consultations were complete, the employers committee would hold a symposium bringing together all stakeholders to agree on a strategy for taking the social accountability standard forward and creating a body to oversee its implementation. However, these plans were thwarted in February 2000 when the WRA placed the cut flower industry under intense public scrutiny through a series of workers rights awareness workshops. These events culminated in the public launch of a campaign on Valentine s Day in 2002 by the WRA who claimed that the flower producers were merely paying lip service to the VPI process. The significance of choosing Valentine s Day, coupled with the notion of a 1 The Workers Rights Alert (a network of NGOs that monitors workers rights in various industrial sectors) launched a campaign against workers rights violation in Cirio Delmonte. Following adverse media publicity that led to the boycott of Cirio Delmonte s products in Italy, the campaign led to the drawing and signing of a Memorandum of Agreement between the Del Monte management and the trade union representing the workers. The result of which has been considerable improvements in workers rights on the Cirio Delmonte farm. 5

6 blue rose, sought to underscore how public demand for a symbol of love can have devastating implications for workers, involving long hours of forced overtime (Hale and Opondo, 2005: 308). This campaign which considerably raised public awareness and continued mounting pressure on the producers culminated in an international conference in May During this conference a transnational alliance between Kenyan and UK-based NGOs and consumer organisations was forged. The realisation that an increasingly considerable proportion of Kenyan flowers were being exported directly to UK supermarkets who are ETI members, opened up new campaigning opportunities particularly in invoking the Alleged Code Violations Procedure of the ETI 2. With funding from the UK-based Women Working Worldwide (WWW), a local NGO Kenya Women Workers Organisation (KEWWO) was able to gather evidence of code violations on flower farms and issued a report cataloguing inimical conditions on flower farms (e.g. pesticide poisoning, sexual harassment and rape) which was presented to the ETI by WWW in September Meanwhile, pressure continued to mount on the industry, with KEWWO announcing the launch of a campaign dubbed Produce Safely or Quit (Lloyd 2002), while the Kenya Human Rights Commission (KHRC) issued a three month ultimatum to flower industry to clean up its act, failure to which they would mount an international campaign reminiscent of the Cirio Delmonte one (Dolan and Opondo, 2005; Hale and Opondo, 2005).. The combination of the gravity of allegations against the industry, coupled with the force of the campaigns, prompted an ETI delegation to visit flower farms and stakeholders in Kenya in November This enabled the ETI to gain first-hand information on the problems facing flower workers, while at the same time recognising the challenges faced by ETI members in implementing codes of conduct in the industry. Following this visit, a working group the ETI Flower Forum 3 was established in the UK in 2003 to discuss and address issues existing in both the market and supply sides of the flowers supply chain and to share information and good practice (ETI, 2005: 5). Simultaneously, civil society organisations, flower growers, government and other stakeholders in Kenya set up HEBI to promote social accountability, and develop a code and a participatory social audit system acceptable to all stakeholders in the flower industry (Dolan and Opondo, 2005; Hale and Opondo, 2005).. Emerging corporate social citizenship While the industry faces many challenges in addressing employment conditions, there are a number of positive developments that reflect their growing willingness to engage in socially responsible production. This has led to a remarkable improvement of working conditions on the flower farms and packhouses in Kenya as illustrated in the following section. Changing employment practices Most of the farms have instituted a number of positive employment practices since 2002 when the research study was conducted. These include: increasing the number of permanent workers; awarding benefits to temporary workers; increasing attention to health and safety issues; reducing overtime hours; raising the housing allowance; and providing workers with contracts. A number of farms have created an equal opportunities policy and formalized their grievance procedures. Overall, there is a heightened awareness on farms of the need to improve the conditions of the workforce. Gender specific changes 2 Under the ETI Alleged Code Violations Procedure, information alleging labour rights violations is brought to the attention of members whose supply chains are involved, and a dialogue and process for resolving issues is agreed. 3 During the course of the Forum's existence, three new ETI members supplying flowers and plants (World Flowers, Flamingo Holdings, Lingarden) joined the Group. In December 2004, the Flower Forum ceased to meet separately and has been integrated into the ETI Food Group, a quarterly meeting of members supplying and retailing food and fresh produce (ETI, 2005:15). 6

7 In 2002, only one farm had instituted a Gender Committee to specifically examine issues affecting women such as sexual harassment, maternity leave, childcare, and domestic violence. But currently seven farms have gender committees. Furthermore, more farms are increasingly having a policy that supports the equal representation of men and women on worker s committees. Other gender specific changes include the following: Providing gender sensitive hygienic facilities Enabling pregnant women and nursing mothers to perform light duties Installation of crèches within the farms and packhouses Increases in duration and greater access to maternity leave Paid breast feeding breaks Separate toilets and showers for men and women Increased adoption of codes/standards All but one of the farms interviewed had introduced a number of codes to cover labour and environmental conditions. Most companies found codes to be constructive, both as a management tool and in enhancing their awareness of their legal and social obligations to their workers. Since, 2002 more farms are increasingly adopting codes of conduct to guide a more ethical production in the flower industry. Although, not a code as such, currently eight leading farms have been certified against the Flower Label Organisation and are currently supplying fair-traded flowers to supermarkets in the UK. The emergence of a multi-stakeholder process The adversarial relationship between flower growers and civil society (particularly NGOs) is showing signs of change. There is now increased dialogue between government, private sector, and NGOs, with a diverse group of stakeholders beginning to come together to constructively address the problems facing workers in the industry. Hopefully, trade unions will join this effort. Indeed, in 2004 a flower farm received the KHRC award for the best flower farm of the year. Participatory social auditing Related to this is the growing awareness that the process of auditing and verification needs to be transparent and inclusive, with greater attention paid to incorporating workers and civil society organizations that represent them into the process. Ratification of ILO Conventions In 2001 Kenya ratified several key conventions (e.g. Equal Remuneration and Employment Discrimination) of relevance to women working in flower industry. While the government must enact these in legislation, it is nevertheless a welcome step forward, especially since many codes are based on ILO conventions. Social infrastructure Gradually, more and more flower firms are extending the sphere of their social mandate beyond their farms and packhouses and into the host communities. Therefore farms are increasingly involved in the construction of roads, afforestation, social and recreational facilities such as schools, hospitals and sponsoring sports events which benefit not only their workers but the community at large. Conclusion The flower industry in Kenya is yet to fully embrace socially responsible behaviour; however there have been significant indications toward this end. Even though codes of conduct in the 7

8 cut flower industry were initially introduced to satisfy consumers and retailers in the European markets, the increasing adoption of codes has inadvertently compelled the cut flower producers to re-examine the ethical impact of their activities. This has led to a noteworthy improvement of working conditions on the flower farms and packhouses. The influence of activists groups has enabled the industry (both for the suppliers in Kenya and the retailers in the UK) to move beyond merely boosting their corporate image to more socially responsible behaviour. At the same time the civil society has been at the forefront in encouraging the industry to adopt multi-stakeholder approaches and participatory social auditing in the monitoring of codes. These are important milestones in the quest toward corporate social responsibility, which if fully embraced would see a more socially accountable industry. References Barrientos, S., Dolan, C., and A. Tallontire (2003) A Gendered Value Chain Approach to Codes of Conduct in African Horticulture, World Development 31.9:1, Bolger, A. (1997) Unions call For Code to Protect Flower Workers, Financial Times, 9 May 1997:4. Dolan, C., Opondo, M. and S. Smith (2003) Gender, Rights and Participation in the Kenya Cut Flower Industry (NRI Report No. 2768; Chatham, UK: NRI). Dolan, C.S. and Opondo, M., (2005) Seeking Common Ground: Multi-stakeholder Initiatives in Kenya s Cut Flower Industry, Journal of Corporate Citizenship on Africa, 18, Ethical Trading Initiative (ETI) (2005) Addressing labour practices on Kenyan flower farms. Report of ETI Involvement February Hale, A. and Opondo, M., (2005) Humanising the Cut Flower Chain: Confronting the Realities of Flower Production for Workers in Kenya, Antipode 37.2: Hennock, M. (2002) Kenya's Flower Farms Flourish, BBC News 14 February; Lloyd, N. (2002) Women Tell of Rape in Farms, The East African Standard, March 9 ( Power, G. (2003) Shaping Attitudes: The Media and Corporate Citizenship, Sustainability in Media, Public Relations and Marketing (United Nations Global Compact Office): Utting, P. (2002) Regulating Business via Multistakeholder Initiatives: A Preliminary Assessment, Voluntary Approaches to Corporate Responsibility: Readings and a Resource Guide (Geneva: UNRISD): Wolf, J. (1996) Report on Flower Industry Unearths Dangers to Workers, The Guardian, 10 May 1997:16. 8