VOLUNTARY ADOPTION OF SUSTAINABLE

STANDARDS

PROSPECT

Promotion of Sustainable and Clean Rattan Production

Haikou, China

June 1, 2015

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A.1. Importance of the “Clean and Sustainable” Standards

G1 h1,h2

G2 ,h1,h2,...

G3, h1, h2,...

C0

Distributors, Wall Mart,

Target, But, IKEA,..

Consumers become more demanding on price and origin of

the products

Consumers' Associations make studies on the quality of the products and their content

(Investigative) Journalism

Besides producing goods, suppliers must fulfil minimum requirements for sustainable production on environment, social and working conditions when purchasing products From an earlier obligation of reaching a specific result i.e. make a certain amount of goods (products) of a certain quality, the suppliers now are also obliged to perform to the best of one's ability to reach that specific result (process).

Indonesian anchor company (C)

Subcontractors (G) and Homeworkers (H)

Local companies have to deliver but also comply by the Indonesian law on labor and social protection

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A.2. How to stimulate the adoption of the clean and sustainable standards

• Socialize the concept

• Explain the different steps and support them (coaching with

subcontractors)

• … as opposed to pressing more “regulations” and “cost”

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B. The Sustainable Production: From Assesment to Adoption

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IN 5 STAGES

START Stage 1 – Preparation

ANALYSIS Stage 2 – Analysis of process stages and standard used

& SELECTION Stage 3 – Selection of Sustainability Opportunities

IMPLEMENTATION Stage 4 – Implementing Sustainability Solutions

Stage 5 – Monitoring Sustainability Solutions

Stage 3 Selection of the Sustainability Opportunities

a. Identify and develop opportunities based on the existing (best)

practices and standards, SoPs,... and new ideas from surveys /

interviews

b. Make long list of opportunities; Buyers’ Standards, UGM)

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Process Steam

Pengelukan

Pengemalan

Perakitan

Pengikatan

Master rangka

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Existing (best)

practices

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Existing (best)

practices

BUYERS’ STANDARDS: Walmart's Standards for Suppliers • 1. Compliance with Laws

Suppliers and their designated manufacturing facilities must fully comply with all applicable national and/or local laws and

regulations, including, but not limited to, those related to labor, immigration, health and safety, and the environment.

• 2. Voluntary Labor

All labor must be voluntary. Slave, child, underage, forced, bonded, or indentured labor will not be tolerated. Suppliers shall

not engage in or support trafficking in human beings.

• Suppliers shall certify that they have implemented procedures to manage the materials, including all labor-related processes,

incorporated into their products to ensure they comply with laws on slavery and human trafficking. Workers must be allowed

to maintain control over their identity documents.

• 3. Labor Hours

Suppliers must provide workers with rest days and must ensure that working hours are consistent with the law and not

excessive.

• 4. Hiring and Employment Practices Suppliers must implement hiring practices that accurately verify workers’ age and

legal right to work in the country prior to employment. All terms and conditions of employment including, but not limited to,

hiring, pay, training, promotion, termination, and retirement must be based on an individual’s ability and willingness to do

the job.

• 5. Compensation Suppliers must compensate all workers with wages, overtime premiums, and benefits that meet or exceed

legal standards or collective agreements, whichever are higher. Suppliers are encouraged to provide wages that meet local

industry standards. Suppliers are encouraged to provide wages and benefits that are sufficient to meet workers’ basic needs

and provide some discretionary income for workers and their families.

• 6. Freedom of Association and Collective Bargaining Suppliers must respect the right of workers to choose whether to

lawfully and peacefully form or join trade unions of their choosing and to bargain collectively.

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BUYERS’ STANDARDS: Walmart's Standards for Suppliers • 7. Health and Safety

Suppliers must provide workers with a safe and healthy work environment. Suppliers must take proactive

measures to prevent workplace hazards.

• 8. Dormitories and Canteen

Suppliers who provide residential and dining facilities for their workers must provide safe, healthy and sanitary

facilities.

• 9. Environment

Suppliers should ensure that every manufacturing facility complies with environmental laws, including all laws

related to waste disposal, air emissions, discharges, toxic substances and hazardous waste disposal. Suppliers

must validate that all input materials and components were obtained from permissible harvests consistent with

international treaties and protocols in addition to local laws and regulations.

• 10. Gifts and Entertainment Suppliers must not offer gifts or entertainment to Walmart associates or those

working on behalf of Walmart.

• 11. Conflicts of Interest Suppliers must not enter into transactions with Walmart associates that create a

conflict of interest.

• 12. Anti-Corruption Suppliers must not tolerate, permit, or engage in bribery, corruption, or unethical practices

whether in dealings with public officials or individuals in the private sector.

• 13. Financial Integrity Suppliers must keep accurate records of all matters related to their business with

Walmart in accordance with standard accounting practices such as Generally Accepted Accounting Principles

(GAAP) or International Financial Reporting Standards (IFRS).

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Make a long list of standards (buyer of company…)

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Walmart IKEA Maison du Monde … UGM Panduan 7. Health and Safety 8 WORKER HEALTH AND SAFETY

Suppliers must provide workers with a safe and healthy work environment. Suppliers must take proactive measures to prevent workplace hazards.

8.1 Workplace risk assessment 8.2 Incidents and accidents

8.3 Health & safety training

8.4 Machinery and other equipment

8.5 Safety information

8.6 Safe working routines

8.7 Safety hazards

8.8 Personal protective equipment (PPE)

8.9 First aid equipment

8.10 First aid trained persons

8.11 Workplace conditions and ergonomics

8.12 Drinking water

8.13 Housekeeping and hygiene

8.14 Break areas

8.15 Alcohol and drugs

8.16 Legal compliance

9 RECRUITMENT, WORKING HOURS, WAGES AND BENEFITS

4. Hiring and Employment Practices Suppliers must implement hiring practices that accurately verify workers’ age and legal right to work in the country prior to employment. All terms and conditions of employment including, but not limited to, hiring, pay, training, promotion, termination, and retirement must be based on an individual’s ability and willingness to do the job. 5. Compensation Suppliers must compensate all workers with wages, overtime premiums, and benefits that meet or exceed legal standards or collective agreements, whichever are higher. Suppliers are encouraged to provide wages that meet local industry standards. Suppliers are encouraged to provide wages and benefits that are sufficient to meet workers’ basic needs and provide some discretionary income for workers and their families.

9.1 Reporting and inspection by authorities

9.2 Recruitment routines and recruitment agents

9.3 Employment contracts

9.4 Payrolls and attendance records

9.5 Working hours and overtime

9.6 One day off in seven

9.7 Wages

9.8 Leaves

9.9 Breaks

9.10 Benefits

8. Dormitories and canteen 10 ACCOMODATION Suppliers who provide residential and dining facilities for their workers must provide safe, healthy and sanitary facilities.

10.1 Housing conditions

10.2 Housekeeping

10.3 Safety

10.4 Legal compliance

2 Voluntary labor 11 CHILD LABOUR AND YOUNG WORKERS

All labor must be voluntary. Slave, child, underage, forced, bonded, or indentured labor will not be tolerated. Suppliers shall not engage in or support trafficking in human beings.

11.1 Prevention of child labour at Supplier

11.2 Response to child labour at Supplier

11.3 Prevention of child labour at sub-Suppliers

11.4 Response to child labour at sub-Suppliers

11.5 Protection of young Workers

Stage 4: Selection of the Sustainability Opportunities to adopt

Select opportunities based on

1. Long list of standards of buyer (and the company and the subcontractor)

2. Importance for the company (and the buyer)

3. Difficulty of implementation (financial and human investment)

4. Closely linked with productivity

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LONG LIST OF "STANDARDS" Selected

by Selected

by Importance for the

company Difficulty of

implementation Special Attention for Productivity

1 Business Ethics of the Buyer Company Subcon Must do Should do Can do House

keep Ltd Invest

Large Invest

Not Feasible

Implementation of the Opportunities for sustainable production: from easy to difficult

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1. Options not requiring financial investment

2. Measures with small investment (which could be

implemented with the budget of the company / subcontractor (and the leading company)

3. Measures which needs large investment and long amortizations which require more complex feasibility study

4. Measures obviously not feasible at the moment the assessment if performed

Stage 5 Implementation of the Sustainable opportunities to adopt

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• Audit the conditions in the factory (workshop of the subcontractor)

• Identify the weaknesses according to internationally accepted

categories Production (organization, work-post, raw material…

Environment (air, soil, noise, waste, energy…)

Safety and health (first aid, fire safety, working conditions…)

Workers rights (contract and legal documentation…)

• Identify solutions (easy to difficult) and prioritize the selected

interventions

• Detail the implementation process (what, who does, who pays,…)

• Identify the pace of implementation, pilot, training, coaching

milestones

• Plan the interventions

Stage 6 Monitoring the implementation

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Before and

After

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Scoring the situation

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… and monitoring

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C. Conclusion

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1. Outputs of the interventions for the companies and the standards’

adoption

2. Outcome of the interventions

The outputs of the intervention 1. For the companies: • Immediate:

a reflection of the companies’ sustainability standards a screening of the application of the standards in-house and with the subcontractors

• Longer term: the implementation of selected sustainability standards a better, more inclusive collaboration of the International buyer with the companies (’

subcontractors)

2. For the rattan producers’ community (association / sector) • Immediate

A better knowledge of the standards applied within the sector The promotion of selected standards throughout the rattan producers’ community

• Longer term The adoption of a series of minimum standards by the rattan industry (UGM Panduan)

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Outputs of the interventions at standard level

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Standards specific to the cy

New common (UGM?) StandardsCommon Existing Standards

Buyers

Company

Subcontractor G1h1,h2

C1

Walmart

G1h1,h2

C2

IKEA

G1h1,h2

C3

MdM

G1h1,h2

C25

...

G1h1,h2

C30

....

G1h1,h2

C...

...

Standards already adopted by the 30 companies

New standards adopted by the 30 companies

SC1 SC2 SC3 SC4 SC25 SC30

24 companies in Cirebon 4 in Solo 2 in Srbya

The outcomes of the intervention

The outcome of the intervention

• Economically stronger rattan companies

• More productive subcontractors

• A more cohesive and sustainable rattan sector

• An Indonesian rattan industry in a better competitive position

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