Working with Asian Suppliers: The CSR Challenges for Norwegian Firms

1. Working with Asian Suppliers: The CSR Challenges for Norwegian Firms Heather White Founder and President, Verité

2. Challenges in Overseas Contracting Relationships • Arms length oversight • Little bargaining power • 3rd party ownership poses potential reputational threat

3. Role of Host Government - Uncertain • Lack of government enforcement • Presence may be antagonistic to workers' rights/protections • May resent interference posed by outsiders’ codes

4. Social Consequences of Global Outsourcing • Persistent discussion of ‘living wage’ • Increase in prominence for ‘fair trade’ goods • Companies argue the social benefit of job creation and economic activities • Companies pondering MFA-end impacts • Possibility of downward pressure on working conditions due to economic disruption

5. Social Consequences of Global Outsourcing • Companies at the forefront of CSR are engaging discussion of the social benefits of their production • Responses to ‘anti-globalization’ forces require broad conceptualization of business’ role • ‘Outsourcing’ debate has political importance

6. Globalization and CSR The literature shows systematic evidence of multinational companies exposed by so-called anti-sweatshop campaigns being subsequently punished by the market through sharp decreases in share prices. Responsibility Breeds Success, Development Outreach, Nigel Twose and Ziba Cranmer, World Bank

7. On Wall Street, a Rise in Dismissals Over Ethics New York Times Published: March 29, 2005 By LANDON THOMAS Jr. “With regulatory scrutiny heightened, there has been a wave of firings as corporations move to stop perceived breaches of ethics.”

8. Consumers Media NGOs Labor Unions Students Business partners Investors (owners) International Organizations Church/religious groups Groups Influencing Social Compliance

9. Globalization and CSR

10. Trends in Social Compliance: the Verité view Collaboration Accountability Standardization Transparency Worker Empowerment Social Benefit

11. The Case for Worker Empowerment • Stakeholders’ push for SC better informed workers • Greater awareness  sustained SC (or push from below) • Use of area-based NGOs for sustainability

12. The Case for Worker Empowerment • Workers are sharing responsibility for social compliance (even pushing it and enabling it) • Empowered workforce sustains the workplace  develops community • Healthy community averts economic displacements

13. Movement Toward Standardization • Factories with multiple buyers • Licensees or agents serving multiple brands with same info • Shared auditing • Cost reduction • Minimize audit ‘fatigue’

14. Standardization of Expectations and Accountability • Foundation of CoC is universal • Respect for human rights • Int’l labor standards • Coming together of governments - - Nafta, Asean, APEC, US-Jordan trade • Cooperation bet. brands • Better info management • Access to information

15. More Collaborative Initiatives Among Brands • Standardization • Codes, tools, approaches • Industry wide initiatives • Common production facilities common target audience • Cost reduction • Minimize audit ‘fatigue’ • Minimize learning ‘fatigue’ • Better protection for the brands

16. Role of Transparency in Reporting • Vendor performance assessed on facts, not only relationships • Not just the product, but “HOW is it made?” • Demand to know common violations; industry specific… Answers not only WHO (factory) but WHAT (standards, industry, etc.) and WHERE (geographic location) • More segmented reporting - - includes country/regional performance • Legal changes requiring social reporting

17. Role of Transparency in Reporting • CalPERS • Users have ability to validate and disseminate reports • Growing number of ‘learned’ workers • Growing number of civil society organizations everywhere • Governance concerns

18. ‘If we hadn’t included stakeholders in reviewing and commenting on the report prior to its release, we would have had a very different response.’ Dan Henkle, VP, Gap Inc.

19. Global Social Compliance in 2010 Collaboration Accountability Standardization Transparency Greater influence in business & broader role in societal development. Worker Empowerment Social Benefit

20. Fast Forward … • Changing landscape of liability  moving from legal to moral dimension • Liabilities are not only current timeline goes into the future and into the past • In 10 years, CSR will play broader role in how companies are doing business • And, CSR will need to be seen as contributing to social development, not simply insulating a brand

21. Thank you!