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BU S IN E S S S O CI A L C OM P L I A NC E INI T I AT I v E
TABLE OF CONTENTS
Contact 35
FOREWORD
DE AR RE ADER,
2008 was an intense year for the BSCI as we convinced increasingly focus on training activities as well as
a great number of new retailers, brands and impor ters capacity building. In 2008, we trained suppliers
to join our initiative. We finished the year with a of consumer goods in China, India and Turkey and
membership of almost 250 companies engaged in using expanded our activities to food supplying countries like
the BSCI system to improve social compliance in their South Africa, Kenya and Morocco.
international supply chain. however, becoming big
brings challenges to remain dynamic. In 2008, we have In 2009, developing activities for our members and
developed ourselves to retain the level of suppor t and their suppliers to enhance improvement with regard
efficiency offered by our system. We have increased to working conditions in the factories will be our first
our human resources, updated our tools, adopted new priority. We will also continue to broaden and deepen
policies and processes, strengthened our members' our relationship with our stakeholders in Europe and
commitment and launched new projects in order to especially in sourcing countries. We will continue to
remain a credible and effective system. actively suppor t the UN Global Compact which provides
us with a platform for discussions with governments,
Companies have responsibilities that go beyond companies, labour and civil organisations. We will also
buying and selling products. They also have accepted continue the implementation of the primary production
a responsibility towards the workers who produce the module.
items they sell. Change towards sustainability in the
global supply chain will be more efficiently executed if This year will be a tough year for companies worldwide
done in a joint effor t of companies in a standardised with structural changes in business, reduction of
manner and on a worldwide scale. That is the essence impor ts and increasing pressure to reduce costs
of BSCI. to adjust to the global economic slowdown. In this
economic situation, sustainability is more impor tant
We are committed to improve the working conditions than ever for companies that wish to remain successful
in the global supply chain. We do this through the in the long term. We will continue discussions with all
implementation of our Code of Conduct which is shared those who share the same goal as ours to work towards
among all BSCI member companies and through the more social compliance in the supply chain. Together
monitoring of factories. In parallel to auditing, we we can make it and we invite you to join us!
- 5 years experience in improving working - More than 2,2 million workers reached through
conditions in supply chains worldwide. BSCI audits.
- 245 members with 300 billion € turnover. - 1602 suppliers having participated in workshops
in 2008.
- 3257 initial audits & 1732 re-audits performed
Improve auditing capacity - contract with two new auditing companies High
1
OUR INITIATIvE
OU R INITI ATI v E
Code of Conduct
ThE BSCI PROCESS Awareness
raising phase
Self Assessment/Audit (optional)
Controlling
Not successful
Successful
Coaching
Correction Phase
Training
Re-Audit
Re-Audit Phase
BSCI Social Requirements (mandatory) Best Practice (voluntary)
A BSCI audit implies answering more than 400 All audits are exclusively conducted by Social
questions translating the objectives of the Accountability Accreditation Ser vices (SAAS)-
BSCI Code into concrete requirements. The BSCI accredited auditing companies. Currently we
audit involves an inspection of the site and have signed contracts with thir teen auditing
a thorough examination of the company files companies to ensure a high quality of audits.
and records such as employment contracts and We insist that auditors have experience in BSCI
timesheets. The auditor also has to inter view auditing but also region and issue-specific
the management of the factory and a propor tion exper tise, including command of the local
of the employees. Employee inter views are languages. In addition, the audit team must
essential to identify problems such as lack of comprise at least one SA8000 trained lead
freedom of association and the right to collective auditor. The full list of accredited auditing
bargaining. The audit duration depends on companies is available online: www.bsci-eu.org
the size of the factory. In 2008, we ex tended SAAS also conducts sur veillance audits for
the audit duration to give auditors more time the BSCI to check if the audit guidelines are
to complete the BSCI audits and to inter view applied in a correct manner by the auditors. The
employees. Thus a BSCI audit can take up to objective is to ensure that all BSCI audits are
4½ working days to complete. The audit is not comparable and reliable, even when performed
to control and punish the supplier but to help by different auditing companies and in different
him improve the conditions in the factory to the countries. In 2008, thir teen sur veillance audits
benefit of his workers and for his own business. have been completed by SAAS.
BSCI member companies are directly involved in the We consider the standard SA8000, developed by Social
governance structure of the BSCI. With the booming Accountability International (SAI), as our best practice.
membership of the BSCI in 2008, the governance Therefore suppliers who meet all BSCI requirements are
procedures had to be adapted to maintain the encouraged to apply for SA8000 cer tification. Those
efficiency of the initiative. The Members' Assembly suppliers who already have a valid SA8000 cer tificate
is still the core body in the BSCI system but focuses are not involved in the BSCI process.
on strategic questions, such as the action plan, the
budget, the Code of Conduct and the System Rules and 6. FOCUS ON RISK COUNTRIEs
Functioning. All other specific and technical questions
are dealt with and decided upon in the six exper t The BSCI focuses on those impor tant sourcing
committees. The Super visory Board is composed of countries which are known for their risk of workers'
senior managers of BSCI members, FTA Board members rights violations and non-compliance with local labour
and a representative of the Executive Office. ( p.35) law and international labour standards. Therefore,
Its role is to approve new BSCI members, to review the the focus lies mainly on developing and newly
implementation of BSCI members' commitments and to industrialised countries in Asia for non-food products
super vise the Executive Office and Committees. and Africa and the Americas for agricultural products.
The list of risk countries was updated in 2008 to
In addition, stakeholders par ticipate in the BSCI reflect the latest economical and social development
system through constructive dialogue and involvement of the countries concerned. BSCI members are free to
in the Stakeholder Board. This body can advise and decide on an individual basis to implement the BSCI
criticise the development of the BSCI and, very system in non-risk countries. The latest list of risk
impor tantly, it can initiate projects thereby getting countries is available on www.bsci-eu.org.
engaged in concrete activities for the improvement of
the workers living conditions. The trade union and NGO
members can also get engaged in individual projects
with member companies.
Members' Assembly
All regular and associated
Members
- Strategic decisions:
Budget, Action Plan, BSCI Structure
Stakeholder Board
The BSCI Governance Supervisory Board
Members & FTA
Trade Unions, NGOs, Suppliers,
EU Commission,
Consumer organisations, Academia
- Supervision of Executive Office Initiates, approves, advises on policy
- Accept new members and systemic questions
- Supervise commitments of Members
- Supervise Committees
Executive Office
CEO, Managing Directors
Secretariat
BUILDING CAPACITY
After five years of experience, our greatest challenge is Advanced training sessions
to suppor t suppliers in adapting changes for sustainable
improvement. We need to convince the suppliers of the We also organise advanced training projects to provide
benefits of improving the working conditions in their the middle management of the suppliers with the
factories. Then we need to motivate them to tackle the knowledge, skills and the tools to successfully fulfil the
issues found during the audit and help them to rectify BSCI requirements. These training sessions typically
the non-compliances. take place after an audit and focus on specific social
issues that are par ticularly problematic in a cer tain
In 2008, we have reviewed our training policy based on area or among cer tain suppliers.
our experience to offer three different capacity building
activities. Advanced training sessions can also help towards
building a social management system: an impor tant
element in the BSCI primary production module is the
General awareness raising workshops
necessity for the supplier to build a social management
We regularly organise awareness raising workshops system to check the working conditions on the farms.
to introduce the background, principles and process Many organisations, including governmental
of the BSCI and explain its requirements based on organisations, trade unions and NGOs, are already
ILO Conventions and national labour legislation. running programmes to deal with specific local labour-
These workshops are arranged for suppliers and related issues. Where possible, the BSCI is promoting
subcontractors who have not yet been audited. such programmes, engaging suppliers in local activities
In 2009, we will continue to develop training sessions or cooperating to develop the necessary local skills.
as they represent the BSCI basic tool to understand and In 2009, we will develop a series of advanced training
appropriately prepare for the initial audit. activities notably in China and India. We believe those
specific training sessions are a critical tool to help
those suppliers who failed to comply with the BSCI Code
and need to implement the corrective action plan before
being re-audited.
Training the buyers is the key
Worker training sessions
to sustainable sourcing practices
In the long run, we wish suppliers to take over their
BSCI members are recommended to par ticipate social responsibility and be more independent. Thus the
in training sessions tailor-made for social BSCI intends to organise, with the help of appropriate
stakeholders, training activities to increase workers'
compliance managers and buyers. We believe
knowledge about their social rights. The objective is to
time and cost pressure can prevent suppliers
help them influence their own situation. These training
from implementing the BSCI Code of Conduct.
sessions will focus on those issues where workers also
These seminars help to integrate the idea of the
have a responsibility to ensure good and safe working
BSCI into daily business and decision making conditions. We will also pay par ticular attention to
processes, especially of those staff members give recommendations on how to build a constructive
who - like the buyers - have a close relationship dialogue within the company. To ensure the efficiency
with suppliers. In 2008, the BSCI organised of those training activities, it is crucial to organise
several training sessions for buyers at the management training sessions at the same time.
headquar ters of BSCI members. We have also
worked in par tnerships with organisations such
Working with a solid network of trainers
as Social Accountability International and other
exper ts to offer such training sessions. The In 2009, we will build up a pool of ex ternal trainers and
training sessions help buying organisations to consultants to provide qualification ser vices. We define
avoid day to day friction and lead to a long term requirements for trainers and for consultants to which
improvement of the quality and performance at all applicants have to comply. The approved trainers and
competitive costs. consultants will be eligible to conduct training activities
for BSCI, for our member companies and suppliers.
Jouko Nieminen,
Managing Director
INTRADE PARTNERS OY
page11
OU R members
Andreas Streubig ,
Division Manager - Corporate Responsibility
OTTO GROUP
3
OUR STAKEhOLDERS
OU R STA K EhOLDERS
various industries. The discussion process in this The China National Tex tile and Apparel Council (CNTAC)
laboratory has contributed to learning more about the developed the CSC9000T management system for the
CSR activities of all par ticipants laying the ground for Chinese tex tile industry. Although the system does
more cooperation and harmonisation across different not meet all BSCI requirements, it is a positive step
sectors of business. ( www.csr-supplychain.org) towards the implementation of social compliance in
China. The BSCI and CNTAC agreed to increase common
ChINA: AGREEMENT ON MORE COOPERATION capacity building activities for Chinese factories in
2009. Additionally, improved mutual information
The China National Tex tile and Apparel Council (CNTAC) and cross-audits will be organised in order to assess
represents a major industry in the most impor tant the similarities and the differences obtained after a
sourcing market of BSCI members. BSCI has cooperated BSCI and a CSC9000T audit. The objective of this is to
with CNTAC since 2007, conducting supplier awareness evaluate the comparability of the tools and practices
workshops and training sessions for companies on
of both systems and to explore the possibilities of
specific social issues. On 18 November 2008, both
mutual recognition.
organisations convened the Sino-EU Supply Chain
Leaders Summit in Beijing, bringing together top
In the food sector, numerous initiatives focusing
representatives of European and Chinese companies.
on fair trade and environmental issues, but also to
They discussed the true benefits of embedding
improve social compliance, already exist. BSCI held
corporate responsibility into their business strategies
and highlighted the actions still needed to improve discussions with these in order to avoid duplication
social compliance in China. and focuses its activities on products or markets
where social compliance needs broader enhancement.
GlobalGAP has set technical standards for good
MORE SyNERGIES WITh OThER SySTEMS
agricultural practices, and has also created a
BSCI enjoys a longstanding cooperation with Social module containing a documented check on cer tain
Accountability International (SAI), as we recognise social issues. BSCI and GlobalGAP have agreed on a
the SA8000 cer tification scheme as our best practice. cooperation to ensure a complimentary approach of
In addition, BSCI has agreed at the end of 2008 to their systems related to social topics. We are also
cooperate closely with the International Council of Toy discussing cooperation possibilities with Rainforest
Industries (ICTI), focusing on transparent information Alliance which works to conser ve biodiversity and
sharing and concrete projects aiming at the capacity ensure sustainable livelihoods.
building in the toy industry.
India is a sourcing country where child labour is Protection of Child Rights of the Government of
still a major challenge. In this contex t, the Indian India, addressed this challenge and underlined
Round Table who met on 29 April 2008 and was the impor tance that more children attend school
facilitated by the Federation of Indian Chambers for a longer time than current practice shows.
of Commerce and Industry (FICCI) decided to She explained that there is a direct link between
address the issue of Indian children working below child labour and education. Many children drop
the statutory minimum age. Representatives of out school before completing their studies and
international authorities such as United Nations then gravitate towards work. The impor tance
Industrial Development Organisation (UNIDO), of education has to be better explained in a
governmental authorities, several expor t society which has a rather indifferent attitude
promotion councils and NGOs expressed their towards the problem. The BSCI shared its policy
wish to develop concrete projects that could and requirement vis-à-vis child labour with the
focus on this par ticular issue. Prof. Shanta Sinha, par ticipants. It was decided to focus again on this
chairperson of the National Commission of the challenge during the meeting of 2009.
Hugo Byrnes,
Director Product Integrity
ROYAL AHOLD
page21
OU R PRO GR E S S
GENERAL OvERvIEW
hOW DO WE E vALUATE ThE SUPPLIERS AGAINST ThE GRAPhIC LEGEND FOR AUDITS AND RE-AUDITS
BSCI CODE OF CONDUCT?
Over the last few years, China has become the most BSCI Activities
important supplier of consumer goods. Awareness raising workshops for suppliers
On the social level, a new Labour Contract Law entered (19 May 2008, Beijing)
into force in January 2008. This new law aims at (20/21 May 2008, Shanghai)
tightening job security, makes dismissing workers (23/24 May 2008, Shenzhen)
more difficult and guarantees severance pay of one Stakeholder Round Table
month's salary for each year of employment. (19 November, 2008)
Additionally, China adopted new job discrimination Sino-EU Supply Chain Beijing Leaders Summit
laws making it easier to file complaints against (18 November 2008, Beijing)
employers. The implementation of these laws was a
burden on suppliers causing an increase of labour
costs which contributed to the inflation of commodity AUDITS RE-AUDITS
prices and of finished goods. It put certain export Suppliers
3785 1541
sectors – especially the textiles sector – to the test. in the process
Suppliers audited
In late 2008, China increasingly faced the and re-audited
1112 1112
Good (39,21%)
Improvements
Needed (13,4%)
Non Compliant
(47,39%)
INDIA
China is the most important sourcing country After five years of remarkable growth, 2008 saw a
for our members. More than half of the audits are decrease in the performance of the Indian economy.
conducted there. The results of the re-audits show an The reasons are to be found in the increase of raw
improvement of the social situation in the factories material prices and the international financial
involved in the BSCI process. Nevertheless, we crisis. Expor ts, which still weigh heavily in the
observe substantial difficulties creating a sustainable Indian economy, fell notably owing to a reduced
improvement for working time (B3) and compensation demand for manufactured goods. At the social level,
(B4). pover ty, mainly in rural areas and in big cities, is
still a huge challenge. Unemployment is also on the
As independent trade unions do not exist, the rise as the working age population grew faster than
BSCI Code requires suppliers to give room for so- the total population.
called "parallel means" of independent and free
however, several improvements have to be noted.
organisation of workers to negotiate with the company
India is determined to ex tend basic social security
management. We address these sensitive issues in
coverage and to take care of the workers' rights in
regular Round Table meetings with stakeholders but
its huge unorganised sector. Additionally, India has
also through continuous high-level political contacts. realised that it has one of the largest labour forces
Finally the improvement in management practice (B1) in the world but a poor number of skilled workers.
and health and safety (B11) is still lagging behind as So it is putting effor ts into improving its educational
re-audits have demonstrated. These non compliances system and has already adopted a series of
should be easier to tackle through the development of measures to eliminate the use of child labour in the
specific training sessions addressing those particular expor t-oriented industries.
topics.
India is the second most impor tant sourcing country
for our members. The improvement rate in the re-
TOTAL INITIAL AUDIT AND RE-AUDIT RESULTS audit results is remarkable and shows the benefits
of the implementation of the BSCI Code. however,
B.1 some non-compliances are par ticularly impor tant
B.2
B.3
in terms of working time (B3), compensation (B4)
B.4 and management practice (B1). Indeed, the main
B.5 causes of strikes in India are linked to wages and
B.6
B.7 working hours. It is wor th mentioning the good
B.8 representation of trade unions at least in the non-
B.9
B.10
agricultural sectors. however, there is a problem
B.11 of rivalry among those unions which has led to a
B.12 radicalisation of trade unions.
B.13
0% 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %
Finally, child labour (B5) and discrimination (B8)
are still big issues but are difficult to track through
Initial audits :
audits. That is why we address those issues through
G IN NC NA
our on-going dialogue with various stakeholders in
Re-audits : G IN NC NA the Indian Round Table.
AUDITS RE-AUDITS
BSCI Activities
Awareness Raising workshops for Suppliers Suppliers
564 177
in the process
(21/22/23 April 2008, Gurgaon)
Suppliers audited
(25 April 2008, Tirupur) and re-audited
177 177
Good (38,98%)
AWARENESS RAISING WORKShOPS IN INDIA
Initial audits : G IN NC NA
Re-audits : G IN NC NA
TURKE Y
AUDITS RE-AUDITS
Turkey's economy is, owing to its expor t
dependency, vulnerable to ex ternal trends. In 2008, Suppliers
in the process
539 198
the country suffered a slowdown in its economic
Suppliers audited
growth because of the significant fall in expor ts of and re-audited
194 194
manufactured goods.
BSCI Activities
Advanced supplier training sessions
(26 February/ 5 March 2008, Istanbul)
Technical assistance for suppliers TOTAL INITIAL AUDIT AND RE-AUDIT RESULTS
(October 2008, Istanbul)
B.1
B.2
B.3
B.4
B.5
B.6
B.7
B.8
B.9
B.10
B.11
B.12
B.13
0% 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %
Initial audits : G IN NC NA
Re-audits : G IN NC NA
SOUTH AFRIC A
South Africa is the largest economy on the African In October 2008, we organised a follow-up
continent. For our members, it is a key country stakeholder meeting in Cape Town. One of the
for sourcing fruits. The reversal of the seasons in issues underlined was the need for sufficient
South Africa with respect to Europe is an impor tant audit capacities in Africa, notably SA8000 lead
competitive advantage. Moreover, its delivery times auditors. As a result of the growing requests for
are much shor ter than those of its other competitors social compliance from the retail side, the entire
of the Southern hemisphere. South Africa supplies fruit industry in South Africa is discussing the
our members with citrus fruits (lemons, oranges, development of a South African social standard
grapefruits and mandarins), avocados, prunes and based on the current Code requirements of
fruit tree har vests (apples, peaches, apricots and European retailers that would include the BSCI
pears). The country is also one of the largest global Code. The different steps and players in this project
expor ters of canned fruits, vegetables and wine. have not yet been finalised but we will monitor the
development of this process.
We star ted to implement the primary production
module in South Africa at the end of 2007 when a BSCI Activities
stakeholder dialogue as well as an auditor and a Stakeholder meeting
supplier workshop were organised. Therefore there (2 October 2008, Cape Town)
is no table of audits and re-audits to repor t yet.
South Africa has ratified all core ILO Conventions
and the South African labour legislation is, in
cer tain cases, even more restrictive, such as the
legislation on working hours. In general, there is
a good level of awareness about corporate social
responsibility issues, especially in the field of
health and safety. There are already several
initiatives that address, to a cer tain ex tent,
corporate social responsibility and influence
working conditions. Never theless, some issues still
have to be tackled such as the migration of workers,
the use of labour brokers for temporary workers,
the hIv/Aids problem (18,1% of the population is
infected according to UNAids) and the inclusion of
small farms into development processes.
KENYA
Kenya is one of the most dynamic economies of challenges as those smallholders are often
East Africa. The new plan for growth "vision 2030" illiterate. In this contex t, we have identified
was launched in 2007 with the objective to boost the need to develop new tools to improve
the Kenyan economy. however, the country's growth the understanding of our primary production
rate declined in 2008 not only as a result of the requirements by smallholders and farmers.
rising oil price which made impor ts of any petrol- Finally, one of the core issues for the suppliers is
based products more expensive but also due to duplication of audits. In some cases, other retailers
political violence. already require them to perform self-assessments
and social audits in the framework of their own
The Kenyan economy depends strongly on the social programmes. The BSCI aims at avoiding
agricultural sector which employs 80% of the duplication and thus will engage in an active
working population and expor ts products such as dialogue with other retailers to make the platform
tea, coffee, sugar, flowers, fruits and vegetables. as broad as possible.
Our members buy green vegetables such as peas,
beans, baby corn and broccoli in Kenya and also BSCI Activities
some tropical fruits. They mainly buy cut flowers BSCI Stakeholder meeting
there. Basically, with 40% market share, Kenya is (6 October 2008, Nairobi)
the principal expor ter of cut flowers for Europe. BSCI Supplier workshop
This sector employs 70.000 people directly and (8 October 2008, Naivasha)
more than 1.5m people indirectly. On the social
level, Kenya has ratified practically all core ILO
Conventions and the level of the national labour
legislation offers a protection almost equivalent to
BSCI requirements.
MOROCCO
In Morocco, the food sector is the main driver par ties. As a result of these various discussions,
of economic growth. The country expor ts citrus both within and outside the framework of the
fruits, tomatoes, courgettes and melons but also stakeholder meeting, there is now a common
olive-based products, canned vegetables and fish. understanding among the par ticipants that
Fur thermore, Morocco expor ts tex tiles, especially collective agreements between the agricultural
to France, Spain and to the United Kingdom. The producers, the government and trade unions may
tex tiles sector employs 200.000 people and its be the best long-term solution to solve many
responsiveness and flexibility makes it possible to issues currently related to social dialogue and the
accommodate the necessities of the big consumer applicability of the Labour Code.
markets and "fast fashion".
BSCI Activities
Our members work together with Moroccan Stakeholder meeting
companies mainly to source agricultural products, (7 April 2008, Agadir)
most notably tomatoes. The implementation of the
BSCI process star ted in Morocco in 2007. So far, few
audits have been performed. Therefore, there is no
table of audits and re-audits in the repor t.
In 2008, we organised a stakeholder meeting in
Agadir to follow up on the agreed actions from the
last meeting in 2007.
Conclusions
In 2008 our members performed 4989 audits in order In order to assess the improvement that the
to check whether working conditions in the factories of implementation of the BSCI process has brought to
their suppliers comply with the BSCI Code of Conduct. the factories of the suppliers we need to compare the
The number of audits available in the BSCI database results of those suppliers which have been audited
has therefore more than doubled from 3563 audits at least twice (audit and re-audit). The results of
performed before the end of 2007 to 8552 performed the initial audits show that the working conditions
by the end of 2008 (6121 initial audits & 2431 re- in supplying factories were greatly lagging behind
audits). This development reflects the rapid growth of the requirements of the BSCI Code (71,29%). The
our membership in 2008, which has more than doubled results of the re-audits provide a much more positive
in one year. picture since the number of compliant companies has
increased significantly (42,63%) whereas the number
Indeed, after a preparation phase of maximum six of non-compliant companies has decreased (41,37%).
months, every new BSCI member has to star t the We believe that those results demonstrate progress in
BSCI process by organising the initial audits of their performance of suppliers and prove the efficiency of
suppliers. In 2008 our members conducted 3257 the BSCI system.
initial audits in all sourcing countries defined as risk
countries while only 1732 re-audits were performed.
By region, the main sourcing countries are China
(62,28%), far ahead India (8,62%) and Turkey (8,47%).
Audits Re-audits
Suppliers
6121 2431
in the process
Suppliers audited
1839 1839
and re-audited
Improvements
Needed (12,18%) Improvements
Needed (16%)
Non Compliant Non Compliant
(71,29%) (41,37%)
CEO
Jan A. Egger t
Communication Advisor
Stéphanie Luong
Printing
Impact Communication, Belgium
This sustainability repor t is printed on FSC©
Papyrus MultiDesign Natural Paper.
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