The Problem:
Companies sourcing products from developing countries are being pressed to ensure that their suppliers are not exploiting workers.
The Traditional Approach:
The traditional approach is the so-called "comply or die" approach. Under this approach companies conduct audits of suppliers to gauge their compliance against a set of standards. Suppliers failing audits have a short period to address problems, or face losing the business.
However, this approach is fraught with problems:
- This 'all or nothing', confrontational approach means that an NGO finding just one lapse may create reputational problems for the company
- Subcontracting the audit work can make it difficult to carry out to the required standard
- Once a supplier is dropped, there is no longer any direct mechanism for influencing conditions for those suppliers' workers.
- Conditions for those workers may reduce, and/or they may lose their jobs altogether
- Audits are only snapshots: suppliers may employ consultants to get them through the audits and/or create "shadow" facilities to meet order deadlines or pass the audits.
- Compliance to this approach can create signficant costs, both in time and money.
The Fair Labor Association Code:
The Fair Labor Association (FLA) more recent code, '
FLA 3.0', builds on the "comply or die" approach and makes it more collaborative. It begins by requiring companies to reveal their manufacturing sites, which are then audited through the
principles of monitoring. Non-compliance with the
Code of Conduct leads not to a knee-jerk reaction but instead to the identification and remediation of root causes of persistent and serious non-compliances.
Collaboration is the foundation of the new approach. In its 2007 Annual Report, the FLA argues that it is “more realistic and effective to acknowledge that problems exist, work to find their causes, remove those causes, and only then do an assessment”.
This is a good example of How to become a forceforgood company because it illustrates that:
- 'business as usual' situations can be improved
- collaboration creates better results than confrontation
- forceforgood processes, or CSR processes, can be subject to continuous improvement in just the same way as any 'tradtional' business process
See also Timberland's similar approach
here.