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Labor/Human Rights Audits Accordia Global Compliance Group Accordia - - PowerPoint PPT Presentation
Labor/Human Rights Audits Accordia Global Compliance Group Accordia - - PowerPoint PPT Presentation
Labor/Human Rights Audits Accordia Global Compliance Group Accordia Established 2002 Agriculture Apparel Food Processing Operates in 22 Major Sourcing Countries Americas Asia Subcontinent Southeast Asia Annual Global Audit
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Social Auditing
All Major Retailers and Brands Want to be seen as ‘Socially Responsible’
- Commitment to labor and human rights laws, regulations and
practices from the top level of their organizations
- Driven by Shareholder Pressure, Customers, NGOs, Labor
Organizations, Media Attention
- “Push” Compliance Through their Supply Chain
- Integrating Ethics into Core Business Practices of their Own
Companies as well as their Suppliers
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Social Auditing
Compliance is a Result of Industrial Revolution
– Initially Protection of Workers Health and Safety – Then Protection of Workers Wages, Overtime – Then Child Labor, Civil Rights, Unionization, etc.
1990’s – Gain Influence among Media and Government
– Rallying point for Students, Labor Unions, Fledgling NGOs looking for a cause
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Social Auditing
1990’s (Awareness)
Media Driven, Labor Unions Stoked the Flames
2000 – 2005 (Development of Codes/Standards)
Retailers Searched for Best Practices and Auditable Codes and Standards to Prove Compliance
2005 – Present (Auditing & Sustainable Practices)
Walmart, SMETA, Costco & others
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Social Auditing
Today - Four Drivers for Retailers
- 1. Integrating ethics into core business practices
– Supplier selection, terms of agreements, ‘buy-in’
- 2. Identify Problems in the Supply Chain
– Risk assessing and sharing, monitoring and evaluation, worker complaint mechanisms
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Social Auditing
- 3. Improvement Actions Enabling Remediation
– Timebound actions, tackling root causes
- 4. Transparency
– Fair and accurate reporting and response to violations
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When it Becomes Burdonsome
Audit Impacts:
– Preparation Consumes Resources (time & money) – Interruption to Business and Production Processes – Creates Worry among Managers and Workers – Costly
Repetitive Auditing Impacts are Exponential
– Add: Audit Fatigue – Add: Diminishing Benefits
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Case for a Multiple Audit Event
Auditing will Remain a Supply Chain Tool for Retailers and Brands for the Future Most Codes and Standards Converge Covering 90%
Child Labor, Forced Labor, Wages, H&S, Environment
Social Audit Protocols by Firms are Almost Identical
Walmart, SMETA, Costco, Walgreens, Starbucks, etc.
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Case for a Multiple Audit Event
SMETA Audit is Becoming Most Widely Accepted in Agriculture and Food Processing Industries Problem Brands may Not Accept SMETA as a Substitute for their own Assessments Recommendation: Wherever Practical, Conduct Combination Audits of SMETA and Brand/Retail Code Audits
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Case for a Multiple Audit Event
Benefits: 1. Cost Reduction – Pay for one audit, multiple reports are written 2. Reduced Visits – Frequency of audits may be reduced from 5 or 6 per year to 1, 2 or 3 per year 3. Preparation/Resource – Reduce Audit Preparation Time, Conserves Resources
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Changes to Walmart Program
Walmart will be moving to a ‘risk based’ approach
Use data from the World Bank Governance Indicators report of 215 countries to create 3 risk level categories Auditing requirements for each facility in thesupply chain will be based on the category of the country in which the facility is located Category 1 – Lower Risk Category 2 – Medium Risk Category 3 – Higher Risk Walmart reserves the right to audit any facility in their supply chain regardless of category risk rating
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Changes to Walmart Program
While the approach to auditing is changing, many aspects
- f the overall program and requirements remain the
same.
- All Suppliers (excluding Approved Brands) are still
required to disclose their facilities producing product for Walmart.
- All Suppliers (including Approved Brands) and all of
their facilities producing goods for Walmart are expected to adhere to Walmart’s Statement of Ethics and Standards for Suppliers.
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Changes to Walmart Program
Accordia’s interpretation
Audits in North America will be reduced in:
– Number of audits – Frequency of reaudits
Historically high risk industries (agriculture – child labor) will likely continue to have audits performed
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