SA8000 Certification on a Global Scale

Presented at the Social Responsibility Workshop

Lisbon, Portugal November 27th, 2007

by

Sean Ansett, SAI European Representative© Social Accountability International 2008

What is Changing?

What is changing?

• Corporate Social Responsibility mainstreaming

• Growing awareness by consumers

• Training capacity needs

New sectors

Training capacity needs

• New sectors

• Climate change

• Emerging BRIC economies

• Need for partnership

• New US Administration

• Back to the Farm…..

CSR Trends

“CSR, once a do-gooding slideshow, is now seen as mainstream. But yet too few companies are doing it well.” Daniel Franklin (Source : Economist, 19 de Enero 2008)

Consumers?

ComplexComplex

(Fuente : Economista, 19 de Enero 2008)

Compliance Risks

• Worldwide media exposure/potential

negative image

• Perceived lack of transparency

• Campaigns from activists

• Brand reputation risk among consumers

© SAI 20087

• Brand reputation risk among consumers

• Negative perception among buyers

• Increased scrutiny by investment community

• Unauthorized use of sub-contractors

• License to operate

Social Accountability International

• Established in May 1997

• Developed premier social compliance standard - SA8000

• Licenses Certification Bodies (CBs) to audit through Social Accountability Accreditation Services

• Multi-Stakeholder organization includes trade unions, NGOs and corporations

• Multi-industry and global

• Member of International International Social and Environmental Accreditation and Labeling (ISEAL) - an association of leading

© SAI 20088

Accreditation and Labeling (ISEAL) - an association of leading international standard-setting organizations that focus on social and environmental issues - Forest Stewardship Council, Rainforest Alliance, Fairtrade Labeling Organization International

• Leader in training for developing socially compliant supply chains -training for auditors, buyers and suppliers

• Manage SAI country programs in Europe, Americas and Asia

• Foster corporate adoption of CSR through Corporate Programs, members include Gap, Timberland, Toys R Us, Carrefour, HP, General Mills, Chiquita, Dole, Gucci, TNT, Otto Group, Tchibo, Billabong, Private Label Manufacturers Association, etc

Social Accountability Accreditation Services

• SAAS is structured and operates as an accreditation body. SAAS manages and

directs accreditation activities, including the granting, maintaining, extending,

reducing, suspending and withdrawing of accreditation for applicable social

standards and verification codes, such as SA8000 and InterAction. The primary

activities for SAAS are:

• To accredit and monitor organizations seeking to act as certifiers of

compliance with social standards, including the Social Accountability 8000

standard for ethical working conditions, the InterAction PVO Standards, and

other such verification standards;

© SAI 20089

other such verification standards;

• To offer accreditation services to certification bodies (CBs);

• To determine the qualifications of such organizations to perform full, reliable,

and impartial audits of employers against specified social standards;

• To provide confidence to all stakeholders in SAAS accreditation decisions and

in the certification decisions of its accredited CBs;

• To continually improve the SAAS accreditation function activities and

systems, in compliance with ISO/IEC Guide 17011 and SAAS Procedure 201,

“Accreditation of Certification Bodies of Social Accountability Systems”;

• To be impartial and fair to all applicant and accredited certification bodies.

Working with SAI GloballyWorking with SAI GloballyWorking with SAI GloballyWorking with SAI Globally

Gap Inc.

Human Rights at WorkTMThe Walt Disney Company

Social Accountability International (SAI) Globally

• 1,779 certified factories globally

• 67 countries

• 933,272 workers covered• 933,272 workers covered

(Summary statistics as of June, 2008)

Social Accountability International

Portugal 2008

© SAI 200812

SA8000: LABOR STANDARD

Child Labor Child labor shall not be used

Forced Labor People have the right to change jobs and shall not be forced to work

Health & Safety People must not be endangered at work

Freedom of Association

People have the right to organize and be heard at work thru collective bargaining

Based on UN and ILO Conventions & ISO Management Systems

© SAI 200813

Discrimination Hiring, promotions and wages must be equal and fair

Discipline People must not be abused at work and free from all corporal punishment

Working Hours Overtime is limited, voluntary and paid at a premium

Compensation People must earn enough to live on during a regular work week

Management System

A management system is the key to sustainable compliance, including requirement for a worker representative

What has changed?2001 to 20082001 to 2008

Themes Behind the Standard Redrafting Process

• Idea was not to weaken the standard, but to

clarify and strengthen it.

• Attempt to make the language of the standard

conform to ILO conventions, and other conform to ILO conventions, and other

codes, such as the ETI base code and the JO-

IN’s work.

I. Purpose & Scope

• New language clearly sets forth the standard’s larger purpose: “to…protect and empower all personnel within a company’s scope of control and influence”

• This language leaves no doubt that everyone • This language leaves no doubt that everyone employed by the company – within their scope of control and influence – direct-hires, suppliers & subcontractors, sub-suppliers, and home workers, are covered by the standard.

III. Definitions – Child

• The developing-country exceptions under

ILO Convention 138 that are cited in the

2001 SA8000 are eliminated in the 2008

standard.

• This was due to the fact that very few

countries have taken the ILO exception.

III. Definitions – Human Trafficking

• The definition of human trafficking should

be read in conjunction with Section 2 of the

standard – Forced & Compulsory Labor.

III. Definition – SA8000 Worker Representative

• Defined as a worker chosen to facilitate

communication with management on all

matters relating to SA8000.

• Should be read in conjunction with • Should be read in conjunction with

Paragraph 9.3: SA8000 Worker

Representative.

IV. Social Accountability Requirements Child Labor – 1.21.21.21.2

• 1.2 Unlike the 2001 standard, SA8000 2008 requires companies to have written procedures for the remediation of child laborers.

� This was done in order to clarify and improve auditability.improve auditability.

• Companies must also provide financial support to enable children to attend and remain in school

Forced & Compulsory Labor 2.22.22.22.2

• Companies and their suppliers are prohibited

from withholding any part of any personnel’s

salary, benefits, property, or documents to

force them to continue working for the

company.

� The 2001 standard required only that a

company prohibit the lodging of deposits

or identity papers.

Health & Safety 3.33.33.33.3

• SA8000 2008 contains added details with

respect to training personnel on health and

safety:

� These include on-site instruction and job-

specific instructions. Additionally, the specific instructions. Additionally, the

instructions must be repeated in cases

where accidents have occurred.

Health & Safety 3.6 3.6 3.6 3.6

• SA8000 2008 requires companies to

ascertain the risks to new and expectant

mothers arising out of their work activity.

• Companies must also take steps to minimize • Companies must also take steps to minimize

the risk of injury to expectant mothers.

� Note: these provisions are partnered in

prohibition of pregnancy tests in 5.4.

FoA & Collective Bargaining 4.14.14.14.1

• All personnel have the affirmative right to

form, join, and organize trade unions, and to

bargain collectively.

• Company must effectively inform personnel

they are free to join T.U. of their choice and they are free to join T.U. of their choice and

guarantee no retaliation from the company.

• Explicit prohibition of co. interference in the

formation of worker orgs, their activities, and

collective bargaining.

Discrimination 5.45.45.45.4

• The 2008 standard introduces a new

prohibition requiring companies to abstain

from testing women for pregnancy or

virginity

Working Hours 7.27.27.27.2

• SA8000 2008 requires companies to provide

personnel at least one day off following six

consecutive days of working.

� Companies can deviate from this rule as

long as two conditions are met:long as two conditions are met:

• 1) National law must allow work time

to exceed this limit; and,

• 2) A freely negotiated collective

bargaining agreement must be in place

that allows work time averaging.

Remuneration – 8.18.18.18.1

• SA8000 2008 explicitly states that a company must respect the right of personnel to a “living wage”.

• This statement is intended to place basic needs wage calculations into context (e.g. in some countries it’s not possible to assume some countries it’s not possible to assume two wage earners)

• The committee also decided the definition of a living wage has seen emerging consensus around: a basic needs wage and discretionary income.

Management Systems 9.39.39.39.3

• Under 9.3, companies must ensure that workers have the right to representation on all matters relating to the standard.

• Where (representative union exists) union performs this role. Where no union exists, workers must be allowed to elect an SA8000 workers must be allowed to elect an SA8000 worker representative from among themselves.

• Under no circumstances shall the SA8000 worker representative be a substitute for a trade union.

Management Systems 9.149.149.149.14

• SA8000 2008 requires companies to demonstrate their willingness to participate in dialogues with all interested stakeholders in attaining sustainable compliance with the standard.

• Reflects the emerging consensus within the CSR movement that dialogue with local stakeholders is vital in achieving sustainable compliance with social standards.

Compliance & Management Systems

The Key to Continual

Improvement

ISO & SA8000 Systems

• Similarities of ISO & SA8000

� Management system based

� Documented policies and procedures

� Senior management support is critical

� Worker participation is key

� “Continual improvement” approach

� Self-monitoring is crucial

© SAI 200831

� Self-monitoring is crucial

• Conforms to the fundamental management system audit principles as stated in ISO 19011

• Plan, Do, Check, Act

SA8000 Management Systems Standard

• Senior Management will direct the implementation of the company’s policy for social accountability and labor conditions

• Senior Management will insure that policies include:

� Commitment to conform to all requirements of the SA8000 Standard

� Commitment to comply with all applicable and requirements to which the company subscribes, including international law

� Commitment to continual improvement

© SAI 200832

� Commitment to continual improvement

• Policies must be documented, implemented, maintained, communicated

• Policies must be accessible and comprehensible to all personnel, whether directly employed or contracted

• Policies must be publicly available

Management System Components

• Company Code of Conduct Adopted by Board & CEO

• CEO Statement to Employees & Suppliers

• Statement of Scope and Risk Analysis based on Supplier Mapping

• Company Organization Chart, including CSR department or function

• Employment policies (hiring, compensation, termination)

• IT support plan for integrating compliance and sourcing data

• Job Descriptions of CSR staff & CSR advocate in sourcing department

© SAI 200833

• Training plan and curriculum for staff, suppliers and auditors

• Key Performance Indicator reports for compliance and sourcing

• Supplier Contracts & Purchase Orders, including authorization procedures

• Control of sub-Contractors and sub-suppliers

• Supplier compliance policy, sub-contractor policy, including termination and incentives

• New Supplier Evaluation Forms, including self-assessment

• Auditing policy and procedure (including internal, second and third party)

• Corrective Action, Remediation and Complaint Policies and Procedures

• Policies for engaging external stakeholders, including NGOs

• Public Reporting policy, strategy and guidelines

Social Auditing

• Much more subjective than quality or environmental auditing

• Auditors need to use their judgment in the face of conflicting evidence

• Audit quality and calibration is a constant issue

• Cultural norms heavily influence auditor views

© SAI 200834

• Cultural norms heavily influence auditor views Management intent has a big impact on how their actions are viewed

• Interviewing techniques are critical - truth, lies and judging motives

• “Snapshot” audits

• Conflicting messages from customers - sourcing versus compliance

Steps to Compliance

• Create internal social compliance team - managers and workers

• Must have CEO support

• Establish a social policy and management systems

• Integrate internal compliance with basic business operations

• Clearly communicate the policy:

� Internally - to managers and workers in all departments

� Externally - to buyers, suppliers, sub-contractors and investors

• Develop specific procedures based on the policy

© SAI 200835

• Develop specific procedures based on the policy

� Integrate social compliance procedures with other procedures

� Define specific action plans and timelines

• Conduct an internal “test” audit

• Management review

Benefits from Improved Social Compliance

Production Benefits,

Management and Worker

Benefits

Production Benefits

• Improved worker retention (example in China: 78% to 32% annual employee turnover in 3 years)

� Lower training and recruitment cost

� Better quality / lower defect rate

• Fewer accidents / work days lost –

© SAI 200837

• Fewer accidents / work days lost –

� Safety and protective equipment improvements

� Accident rate increases sharply beyond 60 hours per week

SA8000 SA8000 SA8000 SA8000 Benefits to WorkersBenefits to WorkersBenefits to WorkersBenefits to Workers

• Fewer injuries & accidents.

• Adherence to labor laws.

• More awareness of labor rights.

• Enhanced opportunities to organize.• Enhanced opportunities to organize.

• Higher compensation.

• Better communications with

management.

Human Rights at Work

SA8000SA8000SA8000SA8000Benefits for EmployersBenefits for EmployersBenefits for EmployersBenefits for Employers

• Gains in quality & productivity.

• Higher employee retention.

• Better relations with workers,

trade unions, NGOs, customers.trade unions, NGOs, customers.

• Effective management systems.

• Enhanced brand & reputation.

• Increased attractiveness to global

buyers.

• InnovationHuman Rights at Work

“It is no longer when, but

Closing thought

when, but how…”

John John RuggieRuggie, The UN Secretary General’s Special , The UN Secretary General’s Special Representative on Human RightsRepresentative on Human Rights

5 West 44th Street, 6th Floor

New York, NY 10036

www.sawww.sawww.sawww.sa----intl.orgintl.orgintl.orgintl.org www.saasaccreditation.orgwww.saasaccreditation.orgwww.saasaccreditation.orgwww.saasaccreditation.org

New York, NY 10036tel: (212) 684-1414 fax: (212) 684-1515

www.sawww.sawww.sawww.sa----intl.orgintl.orgintl.orgintl.org

TM