Non-legislation / Market driven requirements Engineering

1. Non-legislation / Market driven requirements Engineering August 2014

2. Non-legislation / marketdrivenrequirements What are market driven requirements? Social requirements Product safety Environmental requirements Centre for the Promotion of Imports from developing countries

3. Non-legislation / marketdrivenrequirements What are market driven requirements? Social requirements Product safety Environmental requirements Centre for the Promotion of Imports from developing countries

4. Legislation Consumer / User Health and Safety Environment CE Marking/HACCP E.g. Packaging, WEEE, RoHS, Cadmium SA 8000 / OHSAS Certificate Codes of conduct Social / Fair Trade labels ISO 9000 series Certificate EN / IS0 norms ECO Labels IS0 14001 Certificate Social accountability Quality Environment Market driven Centre for the Promotion of Imports from developing countries

5. Market access requirements (EU) Legislation: (EU) Buyer Requirements: Social issues Consumer Health & Safety Environmental Issues Product / packaging Environmental issues Manufacturing Impact abroad e.g. exporting country Direct impact in the EU 5 Centre for the Promotion of Imports from developing countries

6. Company values Governments Legislativecompliance: - Consumerhealth and safety - Environment Black Box NGOs Company policy Public pressure: - Replacedangerouschemicals - Brands: responsibilityfor supplychain • Purchase • requirements: • Social • Product safety • Environmental • Quality Clients - Productsaccording to specs - High quality assurance Consumers Consumer products • Expect: • Safe products • Goodcircumstances Centre for the Promotion of Imports from developing countries

7. Whycomply? Minimum requirements for becoming a supplier Preferred supplier & Niche markets Preferred supplier main stream markets Centre for the Promotion of Imports from developing countries

8. Non legislativerequirements Most non legislativerequirements deal with: Quality Product / market / buyerspecific Social issues Product safety Environmental issues Centre for the Promotion of Imports from developing countries

9. Non legislativerequirements These requirements are included in: Sector Codes Company Codes of Conduct SupplierDeclarations Management systems Centre for the Promotion of Imports from developing countries

10. Examples The Volvo Group prefers to work with component suppliers, consultants, distributors and other business partners that share the principles expressed in this Code of Conduct. Centre for the Promotion of Imports from developing countries

11. Examples Dutch sector association for the Metal sector 13000 SMEs in the Netherlands A CSR monitor to assist their members in integrating CSR in their policies and operations Centre for the Promotion of Imports from developing countries

12. Examples Centre for the Promotion of Imports from developing countries

13. Example of non-legislativerequirements NSK Centre for the Promotion of Imports from developing countries

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18. References, Management and performance ISO 26000 ISO 14001 OHSAS 18001 GRI SA 8000 labels ISO 26000 ILO OECD GRI Management Performance References Disclosure and compliance What is CSR? What to do and how? Continuousimprovement Centre for the Promotion of Imports from developing countries | September 2010

19. CSR References Centre for the Promotion of Imports from developing countries

20. ISO 26000 – Guidance on Social responsibility • Developedbydeveloped and developingcountries • To beused as an international referenceon SR • What is (C)SR? • What do the issues mean? • What is expectedfromcompanies? • To beused as a guidance document • How to identify stakeholders? • How to implement CSR in the organisation? • Notforcertification(selfdeclarations) Centre for the Promotion of Imports from developing countries

21. Companies use ISO26000 to develop their CSR policy Including requirements for suppliers Centre for the Promotion of Imports from developing countries

22. Social requirements Centre for the Promotion of Imports from developing countries

23. Socialrequirements Social issues have become increasingly important in international trade Negative publicity on labour conditions may have an impact on your clients’ reputation and sales → your sales It is not just about buyers’ requirements! Improved labour conditions will positively impact productivity, recrutement and retention of high quality personel It is a part of a responsible / decent business Centre for the Promotion of Imports from developing countries

24. Socialrequirements - ILO ILO Conventions UN organizationdealingwithaspects of work International labourstandards Governments are obliged to implementratifiedConventions in theirownnationalpolicies. Manysocialrequirementsonlabourconditionsby the private sector are basedon the ILO Conventions Which of the (185) ILO Conventions are beingusedby the private sector as marketaccessrequirements? Centre for the Promotion of Imports from developing countries

25. Social issues – 8 core ILO Conventions Right to unionmembership and to negotiate Non-discrimination Forcedlabour Minimum age Workinghours Equalremuneration Minimum wages Occupational Health and Safety Centre for the Promotion of Imports from developing countries

26. Social issues – example of BSCI Business SocialComplianceInitiative Focus on social issues+Compliance with environmental legislation Based on ILO One auditing system for the European retail and brands based on a common code ; no certificate Suppliers that are audited will be included in the CBI database BSCI members can use this database Centre for the Promotion of Imports from developing countries

27. BSCI Over 1000 members: retail, brands and manufacturers Centre for the Promotion of Imports from developing countries

28. BSCI Use the code as a benchmark for your organisation Also look at other codes of conduct! Centre for the Promotion of Imports from developing countries

29. Social issues – Conflict minerals Due diligence and traceability Partners: Nokia, Blackberry, Philips, HP, Motorola, Tata steel, etc. Centre for the Promotion of Imports from developing countries

30. Managing social issues: OHSAS 18001 Occupational Health and safety Assessment Series A framework for managing occupational health and safety responsibilities Tools to identify elements of your business that have an impact on health and safety Designed for all sectors Non-accredited certificates Implementation is structured along the lines of ISO 14000 It is a tool to improve on OHS and show commitment Centre for the Promotion of Imports from developing countries

31. Performance on social issue: SA 8000 SA8000 International standard for working conditions The first auditable social standard / independent Standards: what is considered social accountability? & Requirements for a management system: implementation of the standards in business policy Certification by means of independent verification Applicable to all industries Centre for the Promotion of Imports from developing countries

32. SA 8000 Standards based on ILO and other human rights conventions 9 core areas: 1. child labour 2. forced and compulsory labour 3. health and safety 4. free association and collective bargaining 5. discrimination 6. disciplinary pratices 7. working hours 8. remuneration (compensation) 9. management systems (incl. supplier control and stakeholder engagement) Centre for the Promotion of Imports from developing countries

33. Product safety requirements Centre for the Promotion of Imports from developing countries

34. Product safety Companies tend to require more than what is legally obligatory: risk management Longer lists of hazardous substances More stringent requirements Pro active on legislation (e.g. SVHC in REACH) Codes of Conduct Substances restrictions Centre for the Promotion of Imports from developing countries

35. Product safety - example “Policies can be developed that may go beyond legislative compliance based on scientific evidence and stakeholder consultation” “Each supplier is required to ensure product compliance with this list” Centre for the Promotion of Imports from developing countries

36. Environmental requirements Centre for the Promotion of Imports from developing countries

37. Environmentalrequirements Focus of buyersonproducts Design for recycling / Reuse Use of hazardoussubstances (also as a result of RoHS, REACH, CE) Biobased / circulareconomy / Cradle to cradle Packaging Transport Centre for the Promotion of Imports from developing countries

38. Environmentalrequirements Focus of buyersonprocesses Emissions of hazardoussubstances Energy use Water use Impact onbiodiversity • ISO26000: • Prevention of pollution • Sustainable resource use • Climatechangemitigation and adaption • Protection of the environment, biodiversity and restoration of naturalhabitats Centre for the Promotion of Imports from developing countries

39. Environmental issues - example Centre for the Promotion of Imports from developing countries

40. Environmental issues – example Volvo Suppliers also responsible for sub-suppliers Comply with applicable legislation Have knowledge of Volvo’s policy ISO 14001 or EMAS Able to report on environmental work Maintain an open dialogue with Volvo for improvements Environmental data must be available on request Chemicals and materials involved must meet Volvo standard requirements Centre for the Promotion of Imports from developing countries • Comply with REACH • Minimize impact of packing materials • Handle excess and rejected materials with minimal impact • Consider use of recycled/recyclable materials • Supply specified chemical and material content on request according to the International Material Data System

41. Environmental issues - Philips Centre for the Promotion of Imports from developing countries

42. Environmental issues - Management ISO 14001 Centre for the Promotion of Imports from developing countries

43. ISO 14001 Why ISO 14001? Improved perceptionof the key environmental issues by employees and a better (greener) public image of the organization An increase in the efficiency and use of energy and raw materials Improved ability to meet compliancewith environmental regulations Dependence on a systemrather than just the experience and capabilities of an individualto manage the environmental function of an organization. But: No guarantee for good environmental performance! Centre for the Promotion of Imports from developing countries

44. ISO 14001 Market Impact The standard is widelyused in manycountries; also without actualcertification ISO 14001 required / preferredbysomebuyers Integration in Public green procurement(certificationnotrequired) Centre for the Promotion of Imports from developing countries

45. Showing performance: environmental labels Communication tool: Business to business or consumer Mainly niche markets, increasingly mainstream in food Mostly on products, not on components Some environmental product labels in the EU Centre for the Promotion of Imports from developing countries

46. Environmental labels Centre for the Promotion of Imports from developing countries

47. Labels… How to use them? To use to identify key issues & best in class To benchmark your products / processes To show compliance with specific social & environmental requirements in the supply chain (B2B) To show that you perform better than the competition Some labels required by legislation (like CE) Centre for the Promotion of Imports from developing countries

48. How to keep track? Check for your products and potential export countries! Use the CBI website Centre for the Promotion of Imports from developing countries

49. So what to do? Select initiatives relevant to your product or sector 2. Useselfassesments & audits to benchmarkyour performance 3. Assess CSR Position and ambition 4. Use the tools to improve, comply and market Centre for the Promotion of Imports from developing countries

50. And….. To prevent yourself from running from one buyer requirement to another… develop your own Code of Conduct! Make sure your workers understand why CSR is important and integrate it in business operations You are not just doing it for the market! Efficiency, productivity, innovation & You want to run a responsible business Centre for the Promotion of Imports from developing countries