Ethical Trading Initiative Management Benchmarks

Transcription

1 Ethical Trading Initiative Management Benchmarks The Management Benchmarks are the means by which ETI (a) sets out its expectations of members and (b) measures members progress in applying the ETI Base Code and Principles of Implementation. For each Principle, the Management Benchmarks set out ETI s expectations of: The core requirements for maintaining ETI membership including guidance on how to reach the minimum standards (as outlined in the Foundation stage of membership). What is meant by continuous improvement. Appropriate business behaviours. The Benchmarks are designed to help members: identify their strengths and weaknesses in implementing the Base Code throughout their supply chain; use their ethical sphere of influence to implement the Principles; review the effectiveness of their actions prior to progressing to the next stage of implementation; and develop innovative, sustainable solutions The Management Benchmarks will also guide the structure and content of company members annual reports to ETI, from The purpose of the annual report is for company members to explain: The ethical trading risks (and opportunities) in company business. What companies are doing to mitigate those risks and maximise opportunities. How companies are working on their ethical trade strategies (sharing what worked and what did not). How companies are delivering improvements to individuals and businesses in the countries and communities from which they source. FINAL MANAGEMENT BENCHMARKS January 2010

2 Stages of Progress The four progressive stages of foundation, improver, achiever and leader outline the stages in which a company can build on existing policies and practices in achieving the aims of the Principles and demonstrating its commitment to continuous improvement. Foundation stage (provisional membership) Mapping, Diagnosis & resourcing The beginner level is being replaced by a time bound provisional membership stage in which the company will establish the minimum requirement of policies, plans and management systems necessary to begin implementing an ethical trade programme throughout its business and supply chain. This stage is time limited and is characterised by mapping the supply chain to diagnose problems and putting own house in order. A company specific time frame for this period will be agreed upon joining ETI. The company will need to demonstrate that it has met a reasonable level (80%) of the criteria of this foundation stage by the deadline. If this reasonable level of Foundation stage improvement is not achieved, ETI membership will be revoked. Once passed the Foundation stage, a company can claim ETI membership publicly. Improver Embedding policies, management systems, training & learning in own business & main suppliers The company has established a pro-active system to assess supplier performance on labour standards to improve conditions for workers rights in its supply chain. The company is embedding its ethical trade polices throughout its own business. Achiever Engage with suppliers to make progress, learning and sustainable improvement The Company is achieving sustainable improvements in working conditions and respect for workers rights by engaging with suppliers, trade unions, governments and customers. These actions are informed by but go beyond its supplier assessment programme. Leader Addressing root causes of issues at sectoral/country level; supporting suppliers to become leaders; working in partnership with others The Company is tackling the root causes of labour rights problems beyond individual workplaces with collaborative initiatives aimed at the sectoral level and/or in raw materials or components supply. The company can demonstrate positive impacts for workers in its supply chain and reports transparently on progress. The Company is advocating for greater respect for workers rights throughout its sphere of influence. FINAL MANAGEMENT BENCHMARKS January

3 Glossary of terms Capacity Building The development of an organization s core skills and capabilities, such as leadership, management, finance and fund-raising, programs and evaluation, in order to build the organization s effectiveness and sustainability. The process of assisting an individual or group to identify and address issues and gain the insights, knowledge, and experience needed to solve problems and implement change. Capacity building is facilitated through the provision of support activities, including coaching, training, specific technical assistance, and resource networking. Collaboration Strategic initiatives and programmes that involve the contribution and engagement of different stakeholders (eg competitors, suppliers, local institutions and organisations, ETI member unions and NGOs and those in other sourcing countries) in enhancing positive impacts on workers rights. Mature Systems of Industrial Relations A system where workers and/or their representatives play an active role in identifying and resolving workplace issues, through good faith interactions with their management, leading to sustainable improvements in terms and conditions of work, or in the ETI context, adhering to and exceeding the requirements of the Base Code. Employers have a key role to play in building such systems through allowing workers the freedom to form or join trade unions of their choosing, recognising and bargaining in good faith with those trade unions and representative structures, and providing appropriate training and resources in a spirit of co-operation. Governments also have a role in ensuring that labour legislation is implemented in accordance with ILO basic principles. Principles of Implementation (PoI) The Principles of Implementation define the commitments, management practices and behaviours required of corporate members to implement the ETI Base Code in their supply chains. Raw Material Suppliers Suppliers who provide or produce materials or substances used in the production or manufacturing of a good. Raw materials are often natural resources such as cotton, oil, iron and wood. Before being used in the manufacturing process raw materials often are altered to be used in different processes. Raw materials can be either integral (eg fabric, leather) or peripheral (eg thread, buttons) to the product. Risk Assessment A process for making an informed prediction, based on data from reports or studies, of where particular labour rights problems are likely to occur in certain types of production sites, industries, countries or regions. Sphere of Influence FINAL MANAGEMENT BENCHMARKS January

4 As part of its membership commitments, an ETI member company acknowledges its responsibility for the impacts of its activities and decisions that run through the core of its business practices and relationships. A member can use its ability and seek opportunities to influence the decisions or behaviour of parties with which it has a relationship. Such situations are considered to fall within an organisation's sphere of influence. A member can exercise its ethical sphere of influence with others either to enhance positive impacts on workers rights and welfare or to minimise negative impacts. As an ETI member, the company should seek involvement of stakeholders in exercising such influence. Methods of exercising influence include: Setting contractual provisions and/or incentives. Sharing knowledge and information. Conducting joint projects to improve workers rights. Undertaking responsible lobbying and using media relations. Promoting good practices. Preventing and ending poor practices. Forming partnerships with sector associations, local organisations and others. Suppliers The supplier is defined as the first layer of production or production site down a member s supply chain whether or not a member has a direct legal or financial contractual relationship with this supplier. Intervening supply chain layers (eg vendors, agents, importers, trading companies) between the member and production site are not part of the necessary information considered by ETI. Subcontractors Subcontractors are often the next level down from the supplier in the supply chain providing input into the production process. Suppliers can either be a) subcontracting of the whole process; or b) subcontracting of ancillary operations such as printing, washing, packing, canteen, etc. FINAL MANAGEMENT BENCHMARKS January

5 PRINCIPLE 1 (Commitment) ETI Principle of Implementation Foundation Stage Improver Achiever Leader 1.1 Policy Ethical trading, including the adoption of the Base Code and these Principles, is recognised at the highest level as a company objective and the implementation of this policy is assigned to a senior manager. 1.2 Communication Commitment to ethical trading is communicated publicly, throughout the company, to its suppliers and to the people who work in its supply chain. 1.3 Resources The company makes available sufficient resources to ensure that its commitments are fulfilled and that there is continuous improvement in the application of these principles. Company has a code that is consistent with the ETI s Base Code. Code is signed off by the Board and a senior manager has been designated to implement the Base Code. Company has a communication plan outlining its expectations and obligations as an ETI member. Company has committed sufficient resources relative to its scale and impact to meet all the requirements of the Foundation stage of membership. Company has an accountable structure and the senior manager(s) have clear reporting lines to the strategic decision-making body. Company communicates its ethical trade commitments within its business and to its suppliers. Suppliers confirm their commitment to communicate the provisions of the ETI Base Code and local law to their workforce. (See PoI 3.3) Company allocates resources to embed and implement its ethical trade strategy throughout its own business. (See PoI 1.5) Senior manager has strong support from the Board or senior committee which has a good understanding of issues and regularly reviews ethical policies and outcomes. Company communicates its ethical trade programme to a wider audience including a range of external stakeholders including workers, trade associations, sectors, and public forums. Company reviews allocation of resources to ensure that it achieves its strategic aims of action and continuously improve its implementation plan that engages with suppliers and stakeholders. Board or senior committee members lead innovation and deepen company s engagement within its sphere of influence. Company policy and scope of implementation extends across and down supply chains. Company has a track record of advocating for workers rights and the enforcement of labour laws, in conjunction with suppliers and other stakeholders in supplier countries. Company allocates and maintains resources to implement comprehensive action plan and engages stakeholder resources to achieve leadership aims. FINAL MANAGEMENT BENCHMARKS January

6 PRINCIPLE 1 (Commitment) ETI Principle of Implementation Foundation Stage Improver Achiever Leader 1.4 Influencing Suppliers The company requires its suppliers to comply with the Base Code and also requires them to engage with their own suppliers to comply with the Base Code throughout the supply chain. Company informs its suppliers that they are required to comply with the Base Code and local law. (See PoI 2.1) Company identifies approaches to use with suppliers in which to gain influence in promoting good practice. Company develops a supplier engagement programme to influence understanding of and compliance with the Base Code/relevant local laws and ethical practices. (See PoI 3.1 & 3.2) Company s suppliers are implementing Base Code and relevant local law. (See PoI 5) Company supports suppliers engagement of subcontractors and raw material suppliers to help them identify risks and promote compliance Company has an increasing understanding of and influence over conditions in key sites of suppliers, subcontractors and raw material suppliers. Company s key suppliers have an active implementation plan for their key sub-contractors and raw materials sites. Company helps suppliers to establish initiatives to drive best practice within sub-contractors and raw materials suppliers. FINAL MANAGEMENT BENCHMARKS January

7 PRINCIPLE 1 (Commitment) ETI Principle of Implementation Foundation Stage Improver Achiever Leader 1.5 Strategy The company has a strategy for implementing the Base Code and these Principles, based on timebound measurable actions. Company has developed a strategy for implementing ethical trade principles focused on a continuous improvement model. Company is implementing its strategy, setting clear timebound targets and reporting against them. Company is implementing a strategy to achieve requirements of Achiever level. Company is implementing a strategy, devised with inputs from and in collaboration with key stakeholders to achieve requirements of Leader level. 1.6 ETI participation and application of learning The company plays an active role in ETI caucuses and activities and applies good practice learning wherever possible. Company participates in caucus meetings as required by the caucus group. Company joins/participates in ETI working group(s), relevant ETI seminars and other relevant multistakeholder initiatives to identify good practice. Company is reviewing and strengthening its strategy and its targets. Company is an active participant and implements learning and feeds back regularly. Targets are being achieved and company can explain instances where strategic targets are not achieved. Company is applying good practice learning wherever possible across its supply chain, and is a source of regular good practice examples. FINAL MANAGEMENT BENCHMARKS January

8 1.7 Collaboration In undertaking ethical trade activities, the company works collaboratively with other ETI members and with other parties including suppliers affected by its activities. Company openly seeks advice from the Secretariat, other Members and its suppliers. Company begins collaborating and openly shares experience and learning within ETI. Company and key suppliers are collaborating in a range of projects (commensurate with its size) with other ETI members or through multistakeholder engagement, and are demonstrating effective outcomes for workers. Company systematically takes a collaborative approach in addressing ethical trade. FINAL MANAGEMENT BENCHMARKS January

9 PRINCIPLE 2 (Integrating Ethics into Core Business Practices) 2.1 Supplier selection The company selects suppliers with good labour practices that are likely to observe the provisions of the Base Code. 2.2 Stable business relationships The company recognises the contribution that stable business relationships can make to the observance of good labour practices and endeavours to establish long-term relationships with its suppliers. Company has defined minimum standards for approving suppliers. Company is building its understanding about the impact of stable relationships on workers. Company has mechanisms for assessing new suppliers against its ethical trade requirements. Company offers support to new and potential suppliers to assist them make necessary improvements. (See PoI 3.1, 3.4 and 5.1). Company has identified the aspects of its business relationships with suppliers that drive business benefits and improve labour practices. Company has clearly defined and communicated to suppliers how performance and progress on ethical trading is measured. Company is able to show that conditions are improving in its Company has mechanisms to retain and reward suppliers according to their adherence to the ETI Base Code/relevant local laws and their role in driving changes. supply base. Company is able to show that suppliers are making continuous improvement and achieving a high level of compliance. Company has a programme in place to encourage more stable supply chain relationships. Company has an increasing number of long-term supplier sites. Supplier review is used to determine which preferred suppliers could be upgraded to long-term status and/or gain access to markets. FINAL MANAGEMENT BENCHMARKS January

10 PRINCIPLE 2 (Integrating Ethics into Core Business Practices) 2.3 Terms of agreements The company ensures that the terms of agreements with its suppliers such as prices, lead times and quantities are consistent with the ability of the supplier to observe the provisions of the Base Code. Company works with its commercial teams to build its understanding of its purchasing processes. Company reviews its commercial arrangements with suppliers and identifies possible factors that affect continuous improvement and adherence to the Base Code/relevant local law. (See PoI 3.2) Based on open discussions with suppliers, the company begins to implement changes to commercial relationships in order to improve its impact on workers. The impact of these changes is assessed and activities are undertaken to understand how further improvements to business practices could improve working conditions of suppliers. Company establishes terms of agreement with a significant proportion of its suppliers, on issues such as prices, lead times and quantities that are consistent with the ability of the supplier to observe the provisions of the Base Code. 2.4 Internal buy-in Buying staff and other personnel whose decisions may affect working conditions and labour practices in the supply chain are made aware of the potential impact of such decisions. They are provided with training and guidelines that enable them to carry out company ethical trading policy and their performance is assessed and managed accordingly. Company informs all key commercial staff of its business commitment to ETI Principles and their own role in implementation. Company provides training and guidance to all personnel whose decisions and practices affect working conditions and labour practices and issues guidelines. (See PoI 3.2) Ethical trade targets and objectives are developed, piloted and implemented for relevant personnel. Company embeds an ethical buying plan across its business. Company performance management system assesses individual commercial team members against ethical trading targets and objectives. FINAL MANAGEMENT BENCHMARKS January

11 PRINCIPLE 3 (Capacity building) 3.1 Enabling Suppliers to have ethical employment practices The company provides information, guidance, training and support for its suppliers to observe the Base Code and to comply with any other policies on ethical trade required by the company of its suppliers. Company reviews relevant capacitybuilding processes and projects from other members and stakeholders, and identifies possible training and resources available to assist suppliers. Company pilots capacitybuilding initiative(s) with selected suppliers, providing guidance on how to implement the Base Code and local law. Company systematically provides training and/or other forms of support to suppliers. Company reviews options for scaling-up initiative(s) including those to establish strategic partnerships with international and local stakeholders within its supply base. Company works with other companies, suppliers and stakeholders on initiatives to apply good practice within its sector to drive sustainable impact. 3.2 Seeks views and supports The company seeks the views of its suppliers over their ability to meet the Base Code given existing buying practices, and assists them to meet their concerns. Company is starting to engage with suppliers about their ability to meet the Base Code given existing buying practices. Company works with some suppliers to examine their abilities and gaps in meeting the Base Code/relevant local law, and assists them to meet their concerns. Company involves significant number of suppliers in a review to enable them to find solutions and strategies to improve their ability to implement the Base Code/relevant local law, and assists them to carry out such solutions and strategies. Through providing assistance, company enables suppliers to take responsibility for resolving issues and making improvements within their own supply base and at sector/country level. FINAL MANAGEMENT BENCHMARKS January

12 PRINCIPLE 3 (Capacity building) 3.3 Worker awareness The company ensures that all workers covered by the Code, and their representatives, are aware of the provisions of the Base Code and of the commitments to ethical trade that it has made through its ETI membership. 3.4 Effective and mature systems of industrial relations The company supports and encourages the development of effective management systems among its suppliers and mature systems of industrial relations that require full respect for freedom of association and collective bargaining. Company s ethical trading plans include provisions relating to distribution of information about workers rights under the Base Code and relevant local law to workers and their representatives. Company builds its understanding about the key role played by effective management and industrial relation systems in supporting ethical trade. Company works with suppliers to communicate rights and entitlements of the Base Code and local law to their workforce and workers representatives. Company pilots initiatives to support suppliers to develop human resource management systems and mature systems of industrial relations. Company works with its suppliers, local stakeholders and workers to ensure that workers in primary production sites understand their rights. Company rolls out learning to a wider group of its suppliers to enable them to regularly train all staff and management on industrial relations. An increasing number of suppliers have formalised relationships with worker representatives and trade unions where they exist. Company expands awareness-raising efforts to ensure widespread worker awareness of their rights amongst workers in primary production sites of its supply base, and a growing awareness further down its supply chains. A significant and growing number of suppliers have formalised systems allowing workers and where possible their trade unions to bargain effectively with supplier management about pay and conditions. FINAL MANAGEMENT BENCHMARKS January

13 PRINCIPLE 4 (Identifying problems in the supply chain) 4.1 Risk assessing and sharing The company undertakes activities to be aware of the working conditions and labour practices in its supply chain in order to understand the nature and location of risks to ethical trade, uses this information and shares it with other members. 4.2 Monitoring and evaluation The company gathers and analyses verifiable information about its suppliers performance on complying with the Base Code/relevant local law and uses this information to inform its Company attends seminars, meetings, and other learning based events about labour practices and conditions relevant to its supply base, region and sector. Company establishes an on-going list of stakeholders and information sources that can provide information & support on labour rights conditions in the supply base. Company begins mapping its supplier base. Company consults ETI and its members on best practice forms of information gathering and risk analysis. Company has processes that provide a clear assessment of regional and sector risks, risks at site level, and key concerns relevant to the scope and detail of the Base Code/relevant local law. Company engages with NGO and trade union stakeholders to build a shared understanding of the risks. Company has processes that produce information on working conditions at a high proportion of its supplier production sites, and some Company understands risks beyond supplier production sites and uses this information to define ethical trade priorities. Company shares information and experience within ETI on the nature and location of risks in its supply base. Company has good information about labour conditions in its supply chains, and information management systems which inform key staff and decisionmakers and its implementation. Company has processes for identifying and investigating less visible and more intractable issues. Company s implementation and sourcing strategy is informed by regular assessment of on-going risks. Results of assessment are benchmarked and shared amongst stakeholders to assess validity. Company mainstreams innovative and effective assessment and verification systems throughout scope and FINAL MANAGEMENT BENCHMARKS January

14 PRINCIPLE 4 (Identifying problems in the supply chain) sourcing decisions. information on subcontractors and suppliers of raw materials. Company has information management systems that are used to inform sourcing decisions. depth of supply base and shares with other members. (See PoI 2.1) 4.3 Worker complaint mechanisms The company ensures that mechanisms exist to enable workers in its supply chain to report confidentially and without detriment any failure to observe the Base Code and to deal with such complaints. Company consults ETI and its Members on best practice complaints mechanisms for their supply base sector and region(s). Company supports suppliers management by providing information on workers complaint mechanisms. Company pilots innovative assessment and verification systems, including input from workers, union/workers representatives and external stakeholders. Company works with suppliers to pilot sustainable workers complaints mechanisms. A majority of workers have access to effective complaint mechanisms. Their complaints are handled through a fair, transparent and timely process. FINAL MANAGEMENT BENCHMARKS January

15 PRINCIPLE 5 (Improvement actions) 5.1 Enabling remediation The company works with its suppliers to rectify any problems identified and implement improvements that are consistent with the provisions of the Base Code. Company consults ETI and its members on best practice approaches to achieve effective remediation. Company develops policies/approaches toward preventing and rectifying problems. Company works collaboratively with stakeholders and ETI on initiatives promoting responsible ways to prevent and rectify problems. Company works with suppliers, competitors and local actors to tackle industry-wide shortfalls in the application of the Base Code/ local laws. 5.2 Time-bound remediation The company negotiates time-bound plans for improvements with suppliers and makes sure that the improvements are actually made. Company understands the relative seriousness of different noncompliances and has an agreed response mechanism. Company arrives at improvement plans collaboratively with suppliers and worker representatives. Company has processes for reporting by suppliers on improvements made. Company has robust processes for following-up and ensuring that improvements are made. Company utilises its sphere of influence to bring about continual improvements in conditions across its supply base. Company establishes timebound monitoring and verification metrics. Company can demonstrate that most improvements are implemented within a reasonable period. Company has assessment and remediation systems to drive sustainable improvements based on engagement with workers representatives to drive sustainable improvements. FINAL MANAGEMENT BENCHMARKS January

16 PRINCIPLE 5 (Improvement actions) 5.3 Remediation Support The company provides support and advice to help suppliers make agreed improvements. Company gathers information on the common Base Code and local law issues and seeks advice from ETI. Company has identified thematic challenges facing its suppliers and provides appropriate remedial help. Company systematically provides assistance to suppliers to help them implement improvements. Company pilots different approaches to providing effective remediation advice with selected suppliers. Company scales up support and advice plan and implements it with other members, suppliers and local stakeholders. 5.4 Supporting industrial relations The company recognises the fundamental importance of independent and democratic organisations of workers own choosing commonly known as trade unions in achieving sustainable improvements and encourages an open and positive attitude towards trade unions and collective bargaining because they are the essential elements of all mature systems of industrial relations. Company has a plan to communicate to its suppliers the importance of respecting national and international labour laws on the right to organise and bargain collectively. Company consults with ETI members (trade unions and NGOs) and other stakeholders on ways in which it can encourage the implementation of positive relationships. Company includes consultation of worker representatives in audit and corrective action protocols, as good practice. Workers in key sites know about the local trade union (or other representative body) and have been given freedom of choice whether to join. Company proactively uses its influence to help resolve any industrial relations disputes between workers and supplier management, where such disputes are about ETI Base Code/local law issues. Company encourages its major suppliers to adopt an open and positive attitude towards trade unions and collective bargaining. In its significant sourcing countries, the company, unilaterally or with others, actively engages with suppliers, workers and their trade unions, and local institutions or organisations, to encourage mature systems of industrial relations. FINAL MANAGEMENT BENCHMARKS January

17 PRINCIPLE 5 (Improvement actions) 5.5 Supplier termination The company terminates supplier relationships where serious breaches of the Code persist only after reasonable attempts have been made to work with the supplier to implement improvements, and where there is no reasonable prospect of securing improvements. Such terminations should be carried out in a responsible way. Company is designing a policy on termination. Company develops policies and approaches based on best practice in this area. Company communicates its policy to suppliers. Company reviews its practices based on learning and develops a responsible supplier exit strategy. Company follows clear, robust procedures for communicating requirements, and institutes an exit strategy only after remediation has failed. Company is responsive to the different circumstances of supplier disengagement that it has experienced and consistently applies a responsible exit strategy. Company offers support to suppliers who have been terminated to make the changes to enable re-engagement. 5.6 Tackling root causes The company works with suppliers, other ETI members and other parties affected by its activities to address the root causes of non-compliances through the design and implementation of activities which identify and test good practice and effective solutions. Company starts developing its understanding that the problems at individual production sites within the supply chain are often rooted in broader sectoral or country problems. Company identifies intractable issues, and their likely root causes (including company s own behaviour). Company identifies other stakeholders to work with in addressing these root causes. Company engages with suppliers and other parties to identify possible solutions. Company exercises leverage within its sphere of influence to mainstream the implementation of adequate solutions. Company reports transparently on progress. FINAL MANAGEMENT BENCHMARKS January

18 PRINCIPLE 6 (Transparency) 6.1 Fair & accurate reporting The company reports fairly and accurately on its ethical trade activities. 6.2 ETI reporting The company complies with ETI reporting requirements. 6.3 Public reporting The company reports publicly, and in more detail as its experience grows, on its commitments to ETI, its ethical trade activities and impacts. Company starts reporting on its ethical trading activities, including a broad description of its strategy and programmes. Company has an increasing understanding of ethical trade and is integrating ethical trade into its policies and procedures. Company submits its first acceptable report to ETI in the agreed format and within the agreed time scale. Company does not report publicly at this stage. Company reviews the successes and challenges of the past 12 months and accurately reflects these in the company report (including detailed data analysis, feedback from supply base, stakeholder analysis and implementation reviews of all projects at all levels within the business). Strategic plan is also covered for the next 12 months and beyond. Company reports annually to ETI to a standard considered acceptable. Company has made its commitments to the ETI Base Code publicly available. Company reports to a higher standard and shares good practice as it becomes more experienced. Company reports in detail about its ethical trading commitments and programmes. Company draws lessons from feedback to improve its report. Company s report is exemplary in terms of accuracy, completeness and relevant detail, according to an independent evaluation process. Company publicly reports commensurate with its size and complexity, including detailed mention of policies, practices, impacts, scales of programmes, problems and challenges faced FINAL MANAGEMENT BENCHMARKS January

19 PRINCIPLE 6 (Transparency) and future strategies. 6.4 Supplier transparency The company encourages its suppliers to be transparent about their ethical trade performance. 6.5 Response to violations The company responds rapidly, fully and openly to any complaints about code violations in its supply chain. Company invites supplier feedback. Company responds on an ad hoc basis to any complaints. Company develops tools to encourage suppliers to examine their abilities and gaps in meeting the Base Code/relevant local law. Company has a defined process for responding to complaints. Company encourages and supports its suppliers to share fully information on working conditions. Company is able to respond openly, rapidly and transparently to complaints. Company has enabled suppliers to share problems/challenges and identified ways to resolve them. Company works with local actors and suppliers to identify potential and actual problems. FINAL MANAGEMENT BENCHMARKS January