Frequently Asked Questions
Beyond the benefits to my company, why is decent work important?
Around two billion people in the world – more than 25% of the global population – are part of global value chains or are connected to them via their families or communities.1 These people want to be healthy, safe and treated fairly at work and provide a good future for their children.
Companies that advance decent work in the supply chain can improve the lives of many people – and drive sustainable development.2 Business success is closely linked to the prosperity of the communities in which they operate. In the long term, companies can thrive only if societies thrive.
Ensuring decent work will:
- Reduce inequality, reduces conflict and increase resilience in society
- Contribute to peaceful and inclusive societies
- Improve working conditions and opportunities for all women and men
- Contribute to gender equality and women empowerment as women in global supply chains are disproportionately subject to abuses
- Allow individuals and families to meet their economic needs, send children to school instead of to work, and have financial resources to spend in the local economy
- Increase tax revenues for Governments, so they can fund investments in education, training, capacity building, infrastructure development and health, ensuring skilled workers and a sustainable working environment
- Support the growth and development of companies, including small and medium-sized enterprises, so that they can hire more workers, improve their pay as well as working and living conditions while also strengthening local and national economies
What about the different pressures I am under as a buyer?
As a buyer, you may feel that you have contradictory objectives within your company. On the one hand, you are expected to achieve cost savings, on the other hand, you’re expected to promote better working conditions in the supply chain.
We talk about how to understand these perceived dilemmas in Tool 3: Embedding decent work in corporate processes and systems.
My company already has a supplier code of conduct and systems to monitor compliance. What else do I need to do?
Codes of labour practices, supplier codes of conduct, supplier compliance management systems, supplier audits, certification schemes — your company may have all of these in place. Ask yourself: How effective are they in helping you to identify and address risks in your supply chains and beyond your direct suppliers, and how effective is my companies’ strategy at impacting labour conditions?
These traditional, compliance-based supply chain sustainability efforts are a good starting point but may not be sufficient by themselves to identify and address risks, including beyond your direct suppliers. Additionally, fundamental principles and rights at work are often omitted from supplier codes of conduct. Yet, freedom of association and the effective recognition of collective bargaining are enabling rights that allow for the identification of decent work deficits, and to find solutions for their remediation.
To identify and tackle labour issues in the deeper tiers of your supply chain, you may need to take a different approach that draws on the support, knowledge and commitment of your suppliers to advance decent work. Moving away from a compliance and punitive approach to an engagement approach can lead to real change.
It is important to highlight the role of Government, especially the labour inspectorate, to ensure full compliance with laws and regulations. Companies can work in synergy with them to identify, understand and deal with the systemic causes of decent work deficits.
Shortcomings of a compliance focus include:
- Technical and structural flaws of audit schemes hinder sustainable improvements that are truly supported by the auditee
- The mid/long-term costs of monitoring and enforcement exceed short-term benefits (control and compliance)
- Complying with minimum standards does not provide an understanding of poor working conditions and its root causes
- In the supply chain, monitoring and auditing can impact supplier-buyer relationships negatively
- Companies that choose a compliance approach are unlikely to approach human rights risks proactively
- Complying with external minimum expectations is disempowering and hinders aspirations and visions to grow
What are the limitations of audits and certification schemes?
In the last 20 years, it has become increasingly mainstream for companies to commission audits of their suppliers' workplaces in a bid to show to consumers, investors and campaigners that their products are 'ethical'. Huge amounts of money and time are spent on audits by brands and their suppliers, which many business representatives themselves say are insufficient and ineffective in tackling systematic human and labour rights deficits and their root causes. Yet understanding root causes is essential to identifying the actions required to drive improvement.
Audits alone can fail to reveal the true picture of what working conditions are like as they represent a snapshot of a given situation at a given time. Pre-announced audits could miss situations of excessive overtime or child labour for instance, and a lack of confidence in auditors or the independence of the process could prompt workers to hide management issues. There are also concerns about audit fraud: managers falsifying records on wages paid and hours worked, sometimes with the connivance of unscrupulous auditors, or of workers trained to provide the 'right' answers when asked how they are treated.
Many companies have responded to these challenges by developing effective methods to expose compliance and management issues, for instance by organizing random audits, or night or neighbourhood audits, and by creating a safe space for workers to discuss issues with the help of well-trained independent auditors and with special attention given to cultural, gender or other type of sensitivities. However, overall and even with the best intentions, there is a risk of audits becoming a box-ticking exercise if they are driven by the desire to certify a supplier, rather than genuinely trying to assess working conditions. Supplier’s audits are also costly and time-consuming, and suppliers may quickly feel overwhelmed by the number of audit requirements by various buyers which contributes to the so called “audit fatigue” and can result in a lack of engagement.
Audits cannot replace robust human rights due diligence systems to identify and assess risks and impacts but can be a useful tool to monitor suppliers’ workplace conditions.
Why are engagement and dialogue important?
It will be much easier to identify and address risks in your deeper supply chain and engage suppliers on good practices to ensure workers’ rights are protected if you have good relationships with your direct suppliers. Building trust, openness and transparency with your suppliers will help you to:
- Map higher-risk supply chains
- Identify decent work deficits in your supply chains
- Understand whether local agents are used to identify subcontractors or hire workers and understand their practices
- Collaborate in identifying and addressing root causes
- Get feedback on your purchasing practices and whether any of them adversely impact workers’ rights
- Co-operate to remedy negative impacts when appropriate
- Help track performance improvements
What do my company’s purchasing practices have to do with it?
Surely, it’s the suppliers who need to change how they treat their workers.
Companies can significantly influence decent work conditions for supplier employees by adapting their purchasing practices. Purchasing practices that primarily focus on lower prices and shortening lead times run a greater risk of having a negative impact on working conditions. Paying a fair price, working to ensure orders arrive on time, avoiding short lead times or last-minute changes and helping suppliers plan their production and workforce effectively will help to avoid low wages, precarious contracts, unplanned downtime or excessive overtime. On-time payment to your suppliers, long-term business commitments and consistent order volumes are all part of building a trusting relationship.
What are the responsibilities and legal obligations of companies to improve working conditions?
International standards and laws are raising the importance of decent working conditions and human rights in business decision-making. The UN Guiding Principles on Business and Human Rights require companies to understand and address the impacts of their buying practices on workers in their supply chain. Those impacts are not limited to tier 1 – the responsibility exists wherever there is a direct link (e.g. a mined mineral is used in your product). Laws in several countries are also beginning to incorporate this requirement, such as the Australian and UK Modern Slavery Acts, the Dutch Child Labour Due Diligence Law, the French Duty of Vigilance Law and the EU Directive on disclosure of non-financial and diversity information by large companies. In our globalised and interconnected world, a company needs to take responsibility for any impact that its buying practices have along its supply chain.