PART II: HUMAN RIGHTS DUE DELIGENCE

THE MANAGEMENT OF HUMAN RIGHTS RISKS

8. CODES OF CONDUCT

PROM Savada, NAIM Sakona, RADU Mares

Introduction

Businesses began adopting codes of conduct in the 1990s as reports about child labour, exploitative working conditions, land evictions and environmental degradation began to surface more and more. Such codes soon acquired a bad reputation for several reasons. They contained vague formulations and were not based on human rights and labour standards contained in international law. Often such codes were not even implemented in practice as companies failed to develop the needed procedures and systems. The codes therefore became a shorthand for nothing more than PR-driven attempts to deflect criticism and to ‘whitewash’ bad reputations. Such corporate ‘self-regulation’ carries risks that it could preempt public regulation as companies imply they can handle problems by themselves, voluntarily. As globalization gained speed in the 1990s, codes came to be associated with ineffective self-regulation and problematic de-regulation. Since then, codes have however become more rigorous. Today, codes are either adopted by multistakeholder initiatives for their member companies or designed by a company individually. Hundreds of codes adopted by TNCs now refer to international standards in human rights and environmental conventions. Civil society groups and experts are involved in the formulation of codes. Corporate codes are often accompanied by detailed guidelines for staff explaining what the provisions mean and entail in practice. Given that international soft law instruments (chapter 2) have in the last 10 years aligned with the UNGPs, there is now sufficient clarity on the general societal expectations businesses should address through their codes. From all the steps involved in human rights due diligence (chapters 8-14), codes of conduct are the least difficult one as general policies are easy to formulate but much more difficult to successfully implement in practice (see chapters 9-14).

In Cambodia, global brands such as Nike and H&M have taken measures to ensure compliance with their codes and impose requirements on their local suppliers. To evaluate supplier compliance, on-going reviews and investigations are conducted by those multinational global brands and/or third parties when necessary. The Cambodian government has supported several industry-level initiatives to create codes of conduct, for example, in the publishing sector to protect women’s and children’s right to privacy, and in the recruitment sector to protect migrant workers’ rights. Additionally, laws and regulations exist requiring Cambodian companies to adopt internal regulations to protect the rights of workers and maintain decent working conditions.

Main Aspects

• Types of codes of conduct (company codes, trade association codes, multi-stakeholder codes)
• Coverage of codes (own activities, suppliers, sub-contractors)
• Effects of codes (public relations or protection of human rights)
• Reasons for adopting codes of conduct
• Policy commitment to human rights (criteria for good quality)
• Corporate coherence (between respect for human rights and other business goals)
• Management systems (integrating commitment into corporate functions)
• Self-regulation
• Corporate voluntarism and relation to law (complementarity, conflict, positive interaction)
• Working hours (overtime)
• Harassment in the workplace
• Audit of suppliers
• Industries (extractives, garment, electronics, beverage)

Background

Jenkins, Corporate Codes of Conduct: Self-Regulation in a Global Economy^[1]

The 1990s saw a proliferation of corporate codes of conduct and an increased emphasis on corporate responsibility. These emerged in the aftermath of a period that saw a major shift in the economic role of the state, and in policies toward transnational corporations (TNCs) and foreign direct investment. Whereas in the 1970s many national governments had sought to regulate the activities of TNCs, the 1980s was a decade of deregulation and increased efforts to attract foreign investment. A similar trend occurred at the international level, where efforts at regulation had been unsuccessful. 

It is in this context that the recent wave of voluntary codes of conduct must be situated. US companies began introducing such codes in the early 1990s, and the practice spread to Europe in the mid-1990s. Voluntary codes of conduct range from vague declarations of business principles applicable to international operations, to more substantive efforts at self-regulation. They tend to focus on the impact of TNCs in two main areas: social conditions and the environment. A variety of stakeholders, including international trade union organizations, development and environmental NGOs and the corporate sector itself have played a role in the elaboration of codes of conduct for international business.

Several changes in the global economy have contributed to the growing interest in corporate social responsibility and codes of conduct. The growth of “global value chains”, through which Northern buyers control a web of suppliers in the South, has led to calls for the latter to take responsibility not only for aspects such as quality and delivery dates, but also for working conditions and environmental impacts. At the same time, the increased significance of brands and corporate reputation makes leading companies particularly vulnerable to bad publicity. Changing public attitudes are also an important part of the context in which corporate codes of conduct have been adopted. Companies in the North can no longer ignore the impact of their activities on the environment with impunity. Developments in global communications, which have enabled corporations to control production activities on an ever-widening scale, have also facilitated the international transmission of information about working conditions in their overseas suppliers, increasing public awareness and facilitating campaigning activities. (…)

Codes of conduct can be divided into five main types: company codes, trade association codes, multi-stakeholder codes, model codes and inter-governmental codes. Codes vary considerably in scope. Many do not even cover all of the International Labour Organization’s core labour standards. Company codes and trade association codes often have a more limited scope than those developed in conjunction with other stakeholders. There are also differences in the coverage of codes. Although many do cover the firm’s suppliers, they often do not extend all the way along the supply chain, and very rarely cover home-based workers. Provisions for the implementation of a particular code, and for effective monitoring, are crucial if it is to have any real impact. Here, too, one finds weaknesses, with only a small proportion of codes making provision for independent monitoring.

In evaluating corporate codes of conduct, several limitations need to be pointed out. Some of these are practical, arising from the way codes have (or have not) been implemented up to now. Others are inherent to corporate codes as an instrument, and therefore go beyond constraints related to the way codes have been applied in the past. Despite the recent proliferation of codes, their implementation remains relatively limited. Other shortcomings relate to the limited number of issues they address, and who such codes apply to. More deep-seated structural limitations of codes of conduct relate to the “drivers” that gave rise to their proliferation during the 1990s. Not only are they limited to particular sectors, where brand names and corporate image are important, but they are also mainly applied to firms engaged in exporting. Finally, there is a tendency for codes to focus on particular issues—those regarded as potentially highly damaging for companies to be associated with. In other words, issues that have a high profile in developed countries are likely to figure prominently in most codes.

Notwithstanding the limitations of codes, they can and have generated positive benefits for stakeholders. Examples where working conditions have improved show that codes can provide leverage on corporate behaviour. Furthermore, because of codes of conduct, firms increasingly accept responsibility for the activities of their suppliers as well as their own subsidiaries.

There is a danger, however, of codes being seen as something more than they really are, and used to deflect criticism and reduce the demand for external regulation. In some cases, codes have led to a worsening of the situation of those whom they purport to benefit. Concern has also been expressed that they may tend to undermine the position of trade unions in the workplace.

The limitations and dangers of codes of conduct identified in this paper are undoubtedly real. It is thus important to develop strategies to ensure that codes are complementary to government legislation and provide space for workers to organize. They are most likely to do so when they are multi-stakeholder codes, rather than when they are unilaterally developed by companies or trade associations. Codes of conduct should be seen as an area of political contestation, not as a solution to the problems created by the globalization of economic activity.

Rio Tinto, Why Human Rights Matter^[2]

Respecting human rights helps to underpin our business success. Rio Tinto understands that not doing so poses very real risks to the company such as operational delays, legal disputes, reputational harm, investor challenges, loss of social licence to operate and employee dissatisfaction. On the other hand, the actions we take in support of human rights help us to build enduring and positive relationships across the community and the world.

Instruments

UN, Guiding Principles on Business and Human Rights^[3]

Policy commitment

16. As the basis for embedding their responsibility to respect human rights, business enterprises should express their commitment to meet this responsibility through a statement of policy that:

(a) Is approved at the most senior level of the business enterprise;

(b) Is informed by relevant internal and/or external expertise;

(c) Stipulates the enterprise’s human rights expectations of personnel, business partners and other parties directly linked to its operations, products or services;

(d) Is publicly available and communicated internally and externally to all personnel, business partners and other relevant parties;

(e) Is reflected in operational policies and procedures necessary to embed it throughout the business enterprise.

Commentary

The term “statement” is used generically, to describe whatever means an enterprise employs to set out publicly its responsibilities, commitments, and expectations. (…)

The statement of commitment should be publicly available. It should be communicated actively to entities with which the enterprise has contractual relationships; others directly linked to its operations, which may include State security forces; investors; and, in the case of operations with significant human rights risks, to the potentially affected stakeholders.

Internal communication of the statement and of related policies and procedures should make clear what the lines and systems of accountability will be, and should be supported by any necessary training for personnel in relevant business functions.

Just as States should work towards policy coherence, so business enterprises need to strive for coherence between their responsibility to respect human rights and policies and procedures that govern their wider business activities and relationships. This should include, for example, policies and procedures that set financial and other performance incentives for personnel; procurement practices; and lobbying activities where human rights are at stake.

Through these and any other appropriate means, the policy statement should be embedded from the top of the business enterprise through all its functions, which otherwise may act without awareness or regard for human rights.

UN High Commissioner of Human Rights, An Interpretive Guide^[4]

The term “policy commitment” is used here to mean a high-level and public statement by an enterprise to set out its commitment to meet its responsibility to respect human rights. It makes this commitment a clear, overarching policy that will determine its actions. The policy commitment is distinct from the operational policies and procedures referred to in subparagraph (e) of this Guiding Principle, which are typically not public, are more detailed in nature and help translate the high-level commitment into operational terms.

A policy commitment to meet the enterprise’s responsibility to respect human rights:

(a) Demonstrates both inside and outside the enterprise that management understands this is a minimum standard for conducting business with legitimacy;

(b) Clearly communicates the expectation of top management as to how all personnel, as well as business partners and others the enterprise works with, should act;

(c) Triggers the development of internal procedures and systems necessary to meet the commitment in practice;

(d) Is the first essential step for embedding respect for human rights into the values of the enterprise.

Unilever, Human Rights Policy Statement^[5]

We believe that business can only flourish in societies where human rights are protected and respected. We recognise that business has the responsibility to respect human rights and the ability to contribute to positive human rights impacts.

This is an area of growing importance to our employees, workers, shareholders, investors, customers, consumers, the communities where we operate and civil society groups. There is therefore both a business and a moral case for ensuring that human rights are upheld across our operations and our value chain. This Human Rights Statement contains over-arching principles which we embed into our policies and systems.

Our Policy

In line with the UN Guiding Principles on Business and Human Rights, we base our human rights policy commitment on the International Bill of Human Rights (consisting of the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights) and the principles concerning fundamental rights set out in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. We follow the OECD Guidelines for Multinational Enterprises and are a founding signatory to the United Nations Global Compact. We are committed to respecting all internationally recognised human rights as relevant to our operations.

Our principle is that where national law and international human rights standards differ, we will follow the higher standard; where they are in conflict, we will adhere to national law, while seeking ways to respect international human rights to the greatest extent possible. (…)

Responsible Sourcing

We have a large and diverse extended supply chain and we recognise the critical role our suppliers play in helping us to source responsibly and sustainably. Our Responsible Sourcing Policy sets out our expectations with regards to the respect for the human rights, including labour rights, of the workers in our extended supply chain.

We will only work with suppliers who implement our Responsible Sourcing Policy. They must agree to ensure transparency, to remedy any shortcomings, and to drive continuous improvement.

Our Responsible Sourcing Policy contains clear requirements and guidance on grievance mechanisms.

Our Governance

Our work in this area is overseen by the Unilever Chief Executive Officer, supported by the Unilever Leadership Executive including the Chief Supply Chain Officer, Chief Human Resources Officer, Chief Marketing and Communications Officer and the Chief Legal Officer and also the Chief Sustainability Officer and the Global Vice President for Social Impact. This ensures that every part of our business is clear about the responsibility to respect human rights. Board-level oversight is provided by the Corporate Responsibility Committee of Unilever PLC.

Rio Tinto, Human Rights Policy^[6]

Rio Tinto respects and supports the dignity, well being and human rights of our employees, the communities in which we live and those affected by our operations.

Our approach to human rights is based upon the Universal Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights. We undertake due diligence activities to identify, prevent and mitigate adverse human rights impacts of our operations. This includes conducting stand-alone studies where necessary, as well as integrating human rights into existing corporate processes.

Wherever we operate, we engage with communities to understand the social, cultural, environmental and economic implications of our activities. We provide communities with easily accessible complaints mechanisms and we listen to and take actions to address complaints. We work to optimise the benefits and reduce the negative impacts of our activities, both for local communities and the countries where we operate.

We acknowledge and respect Indigenous peoples’ connections to lands and waters, consistent with the UN Declaration on the Rights of Indigenous Peoples.

We reject any form of slavery, forced or child labour.

We support and implement the Voluntary Principles on Security and Human Rights and ensure relevant employees and contractors are trained in accordance with these principles. We impose strict controls on the use of force and limit the use of firearms on our sites as far as possible. We work with external stakeholders, as well as public and private security forces to promote understanding and implementation of the Voluntary Principles and avoid security arrangements at our sites contributing to human rights harm, including through misuse of our equipment and facilities.

Through appropriate contractual arrangements and procurement principles, we make our consultants, agents, contractors and suppliers aware of and expect their compliance with our human rights commitments. We strive to ensure our joint venture partners and non-controlled companies in which we participate also respect our commitments to uphold human rights.

This policy provides the foundation to our human rights approach. Our policies on Employment; Health, Safety, Environment and Communities and Inclusion and Diversity also contain human rights commitments.

BHP Billiton, Code of Business Conduct^[7]

Respecting human rights

BHP Billiton supports human rights consistent with the United Nations Universal Declaration of Human Rights. We seek to build mutually beneficial relationships and opportunities for inclusion and to respect the rights of our employees and individuals contracted by us, members of our host communities and other stakeholders directly impacted by our operations.

We believe that our contribution to development and community programs can further contribute to the realization of human rights.

We acknowledge our activities have the potential to impact on human rights and address this through our core business practices. This includes labour conditions, activities of security forces, resettlement and local community programs.

Our Community GLD is based on the UN Guiding Principles on Business and Human Rights.

We engage with communities and seek to understand the social, cultural, environmental and economic implications of our activities so that we can respond to concerns, reduce negative impacts and optimise benefits for the local community and the overall economy.

We undertake a human rights impact assessment at our assets to identify and understand our potential impacts and implement management plans to mitigate or eliminate them. We also have local complaints and grievance channels in place and undertake appropriate remedial actions where required.

We recognise the traditional rights of Indigenous peoples and acknowledge their right to maintain their culture, identity, traditions and customs. We encourage cultural sensitivity and recognise and respect sites, places, structures and objects that are culturally or traditionally significant.

Our commitment

BHP Billiton commits to the International Council of Mining and Metals (ICMM) Position Statement on Indigenous Peoples and Mining for engaging with Indigenous peoples in relation to new operations or major capital projects that are located on lands traditionally owned by, or under customary use of Indigenous peoples, and are likely to have significant adverse impacts on Indigenous peoples.

Our commitment is satisfied by the completion of host government processes or compliance with domestic laws where they are generally consistent with the principles of the ICMM Position Statement, including jurisdictions that follow International Labour Organisation Convention No. 169.

We are committed to maintaining the safety and security of our operations in a manner that upholds respect for human rights. Our security procedures are consistent with our commitment to the Voluntary Principles on Security and Human Rights.

Private security providers engaged by BHP Billiton must be signatories to, or agree in writing to align with, the International Code of Conduct for Private Security Service Providers. Written advice is given to our security providers outlining our commitment to the Voluntary Principles and our expectations of security providers.

If resettlement is required, it is undertaken in accordance with the International Finance Corporation Performance Standard 5: Land Acquisition and Involuntary Resettlement.

We have human rights related zero-tolerance requirements for suppliers of goods and services, including in relation to child labour, inhumane treatment of employees and forced or compulsory labour.

Always

• Consider the human rights implications of all our Company activities.
• Be prepared to adapt your behaviour according to local behaviours, practices and customs, providing it does not breach human rights or Our Charter.
• Report evidence of any human rights breach to your Corporate Affairs or Human Resources representative.
•  Investigate human rights concerns and complaints and report outcomes to relevant stakeholders.
• Undertake due diligence on our partners and contractors to assess their alignment with human rights.

Never

• Employ public or private agencies to provide security to a BHP Billiton site without confirming their compliance with the requirements and intent of the Voluntary Principles on Security and Human Rights.

Anglo American, Human Rights Policy^[8]

Anglo American has a strong commitment to human rights. Respect for human rights informs our guiding values as a business, and is stated explicitly in our Business Principles. Our commitment to human rights is further expressed through our being a signatory to the United Nations Global Compact and the Voluntary Principles on Security and Human Rights (VPSHR), and through being a supporter of the UN Guiding Principles on Business and Human Rights. Human rights principles are embedded in a number of internal policy documents, including those related to employment practices, exploration, environmental practices, social performance and security.

            We accept and support the corporate responsibility to respect human rights and actively seek to avoid involvement with human rights abuses. We aim to identify, assess and minimize potential adverse human rights impacts that we cause or contribute to, or that are linked to our business, through on-going due diligence and appropriate management, as stated in the UN Guiding Principles on Business and Human Rights. We also recognise that our host governments have a duty to protect the human rights of everyone within their jurisdiction and, where appropriate, we will work with states to build capacity in support of that objective.

Respected rights

Our commitment to respect human rights includes recognition of all internationally-recognised human rights, in particular: those contained in the International Bill of Human Rights (which includes the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights); the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work; and international humanitarian law, where applicable.

We commit to address both adverse human rights risks and impacts and to contribute positively to an enabling environment for human rights to be respected. We are also committed to paying special attention to the rights of potentially vulnerable groups.

We recognise that the nature of mining operations, from the earliest stages in the life of our mines, creates the potential for a wide range of human rights risks and we seek to mitigate the risk of any breaches. As part of our commitment to respect human rights and to a comprehensive approach, we will also undertake appropriate due diligence throughout the lifecycle of mining operations. Where we have caused or contributed to adverse human rights impacts we will contribute to their remediation as appropriate. We will inform and engage appropriately with affected and potentially affected persons on risks, impacts and management measures and keep them involved in monitoring performance.

We will make particular effort to ensure that we engage with those most vulnerable, in particular where they encounter challenges in voicing their opinions or having them heard, and to identify any additional specific measures to avoid, prevent or mitigate impacts on them.

Delivery and implementation

We commit to embed this policy into our corporate culture and practices. Our efforts will be guided by the relevant sections of the UN Guiding Principles on Business and Human Rights and will include:

• actively communicating this policy to internal and external stakeholders, including awareness raising and training on human rights related issues;

• incorporating ongoing human rights due diligence into relevant business processes as appropriate, such as impact assessments;

• engaging with relevant, potentially affected stakeholders in assessing and addressing impacts;

• including human rights-related requirements within contractual arrangements with business partners and host governments as appropriate; and

• collaborating with or providing access to remedy through effective complaints and grievances procedures.

We will continue to play an active and constructive role in relevant human rights-related multi-stakeholder initiatives, including the VPSHR whose continued implementation is an important pillar of the human rights approach set out in this policy.

Anglo American will always comply with applicable laws and respect the rule of law. In situations where there is a conflict between domestic legal requirements and international human rights norms, we shall seek to uphold our company values. In doing so we will consider all options; this may include refraining from new, or exiting from existing, investments in the respective jurisdiction.

Scope and governance

This policy applies to our relationships with our employees, contractors and other public and private sector business partners in what they do on our behalf. In those situations where Anglo American does not have full management control, we will exercise our available leverage to influence compliance with this policy. This policy has been approved by Anglo American’s Corporate Committee and will be reviewed periodically. Accountability for implementation of this policy lies with the Group Chief Executive and with the Chief Executives of the business units. In case of questions, or for guidance on reporting on suspected / alleged human rights-related incidents, please contact Group Government and Social Affairs.

International Council on Mining & Metals, ICMM Principles^[9]

Membership of ICMM requires a commitment to our ICMM 10 Principles. These serve as a best-practice framework for sustainable development in the mining and metals industry.

We expect all member companies to implement the principles in full and to transparently report on performance.

To ensure their robustness, the principles have been benchmarked against leading international standards. These include: the Rio Declaration, the Global Reporting Initiative, the Global Compact, OECD Guidelines on Multinational Enterprises, World Bank Operational Guidelines, OECD Convention on Combating Bribery, ILO Conventions 98, 169, 176, and the Voluntary Principles on Security and Human Rights.

3. Respect human rights and the interests, cultures, customs and values of employees and communities affected by our activities

• Ensure fair remuneration and work conditions for all employees and never use forced, compulsory or child labour.
• Engage constructively with employees on matters of mutual concern.
• Implement policies and practices designed to eliminate harassment and unfair discrimination in all our activities.
• Ensure all employees, including security personnel, are provided with appropriate training and guidance on cultural issues and human rights.
• Minimise involuntary resettlement, and compensate fairly for adverse effects on the community where resettlement cannot be avoided.
• Respect the culture, customs and heritage of local communities, including indigenous peoples.

9. Pursue continual improvement in social performance and contribute to the social, economic and institutional development of host countries and communities

• Engage at the earliest practical stage with all likely affected parties to discuss and respond to issues and conflicts concerning the management of social impacts.
• Ensure that appropriate systems are in place for continual interaction with affected parties; ensure that minorities and other marginalised groups have equitable and culturally appropriate means of engagement.
• Contribute to community development from exploration to closure in collaboration with host communities and their representatives.
• Encourage partnerships with governments and non-governmental organisations to ensure that programmes (such as community health, education, local business development) are well designed and effectively delivered.
• Enhance social and economic development by seeking opportunities to address poverty.

10. Proactively engage key stakeholders on sustainable development challenges and opportunities in an open and transparent manner. Effectively report and independently verify progress and performance

• Report on economic, social and environmental performance and contribution to sustainable development.
• Provide timely, accurate and relevant information.
• Engage with and respond to stakeholders through open consultation.

Fair Labor Association, Code of Conduct^[10]

Preamble

The FLA Workplace Code of Conduct defines labor standards that aim to achieve decent and humane working conditions. The Code’s standards are based on International Labor Organization standards and internationally accepted good labor practices.

Companies affiliated with the FLA are expected to comply with all relevant and applicable laws and regulations of the country in which workers are employed and to implement the Workplace Code in their applicable facilities. When differences or conflicts in standards arise, affiliated companies are expected to apply the highest standard.

The FLA monitors compliance with the Workplace Code by carefully examining adherence to the Compliance Benchmarks and the Principles of Monitoring. The Compliance Benchmarks identify specific requirements for meeting each Code standard, while the Principles of Monitoring guide the assessment of compliance. The FLA expects affiliated companies to make improvements when Code standards are not met and to develop sustainable mechanisms to ensure ongoing compliance.

The FLA provides a model of collaboration, accountability, and transparency and serves as a catalyst for positive change in workplace conditions. As an organization that promotes continuous improvement, the FLA strives to be a global leader in establishing best practices for respectful and ethical treatment of workers, and in promoting sustainable conditions through which workers earn fair wages in safe and healthy workplaces.

Employment Relationship

Employers shall adopt and adhere to rules and conditions of employment that respect workers and, at a minimum, safeguard their rights under national and international labor and social security laws and regulations.

Nondiscrimination

No person shall be subject to any discrimination in employment, including hiring, compensation, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, social group or ethnic origin.

Harassment or Abuse

Every employee shall be treated with respect and dignity. No employee shall be subject to any physical, sexual, psychological or verbal harassment or abuse.

Forced Labor

There shall be no use of forced labor, including prison labor, indentured labor, bonded labor or other forms of forced labor.

Child Labor

No person shall be employed under the age of 15 or under the age for completion of compulsory education, whichever is higher.

Freedom of Association and Collective Bargaining

Employers shall recognize and respect the right of employees to freedom of association and collective bargaining.

Health, Safety and Environment

Employers shall provide a safe and healthy workplace setting to prevent accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employers’ facilities. Employers shall adopt responsible measures to mitigate negative impacts that the workplace has on the environment.

Hours of Work

Employers shall not require workers to work more than the regular and overtime hours allowed by the law of the country where the workers are employed. The regular work week shall not exceed 48 hours. Employers shall allow workers at least 24 consecutive hours of rest in every seven-day period. All overtime work shall be consensual. Employers shall not request overtime on a regular basis and shall compensate all overtime work at a premium rate. Other than in exceptional circumstances, the sum of regular and overtime hours in a week shall not exceed 60 hours.

Compensation

Every worker has a right to compensation for a regular work week that is sufficient to meet the worker’s basic needs and provide some discretionary income. Employers shall pay at least the minimum wage or the appropriate prevailing wage, whichever is higher, comply with all legal requirements on wages, and provide any fringe benefits required by law or contract. Where compensation does not meet workers’ basic needs and provide some discretionary income, each employer shall work with the FLA to take appropriate actions that seek to progressively realize a level of compensation that does.

Fair Labor Association, Compliance Benchmarks^[11]

Employment Relationship (ER)

Workplace Code Provision: Employers shall adopt and adhere to rules and conditions of employment that respect workers and, at a minimum, safeguard their rights under national and international labor and social security laws and regulations.

(…)

ER.27 Work Rules and Discipline

ER.27.1 Employers shall have written disciplinary rules, procedures and practices that embody a system of progressive discipline (e.g. a system of maintaining discipline through the application of escalating disciplinary action moving from verbal warnings to written warnings to suspension and finally to termination).

ER.27.2 Employers shall ensure managers and supervisors are fully familiar with the workplace disciplinary system and in applying appropriate disciplinary practices.

ER.27.2.1 The disciplinary system shall be applied in a fair and nondiscriminatory manner and include a management review of the actions by someone senior to the manager who imposed the disciplinary action.

ER.27.2.2 Employers shall maintain written records of all disciplinary actions taken.

ER.27.3 Disciplinary rules, procedures and practices shall be clearly communicated to all workers. Any exceptions to this system (e.g. immediate termination for gross misconduct, such as theft or assault) shall also be in writing and clearly communicated to workers.

ER.27.3.1 Workers must be informed when a disciplinary procedure has been initiated against them.

ER.27.3.2 Workers have the right to participate and be heard in any disciplinary procedure against them.

ER.27.3.3 Workers must sign all written records of disciplinary action against them.

ER.27.3.4 Records of disciplinary action must be maintained in the worker’s personnel file.

ER.27.4 The disciplinary system shall include a third party witness during imposition, and an appeal process.

Ethical Trading Initiative, The ETI Base Code^[12]

The Ethical Trading Initiative (ETI) is a leading alliance of companies, trade unions and NGOs that promotes respect for workers’ rights around the globe. Our vision is a world where all workers are free from exploitation and discrimination, and enjoy conditions of freedom, security and equity.

6. Working hours are not excessive

6.1 Working hours must comply with national laws, collective agreements, and the provisions of 6.2 to 6.6 below, whichever affords the greater protection for workers. Sub-clauses 6.2 to 6.6 are based on international labour standards.

6.2 Working hours, excluding overtime, shall be defined by contract, and shall not exceed 48 hours per week.*

6.3 All overtime shall be voluntary. Overtime shall be used responsibly, taking into account all the following: the extent, frequency and hours worked by individual workers and the workforce as a whole. It shall not be used to replace regular employment. Overtime shall always be compensated at a premium rate, which is recommended to be not less than 125% of the regular rate of pay.

6.4 The total hours worked in any seven day period shall not exceed 60 hours, except where covered by clause 6.5 below.

6.5 Working hours may exceed 60 hours in any seven day period only in exceptional circumstances where all of the following are met:

• this is allowed by national law;
• this is allowed by a collective agreement freely negotiated with a workers’ organisation representing a significant portion of the workforce;
• appropriate safeguards are taken to protect the workers’ health and safety; and
• the employer can demonstrate that exceptional circumstances apply such as unexpected production peaks, accidents or emergencies.

6.6 Workers shall be provided with at least one day off in every seven day period or, where allowed by national law, two days off in every 14 day period.

* International standards recommend the progressive reduction of normal hours of work, when appropriate, to 40 hours per week, without any reduction in workers’ wages as hours are reduced.

Responsible Business Alliance, Code of Conduct^[13]

The Responsible Business Alliance (RBA), formerly the Electronic Industry Citizenship Coalition (EICC), Code of Conduct establishes standards to ensure that working conditions in the electronics industry or industries in which electronics is a key component and its supply chains are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. (…)

Participants must regard the Code as a total supply chain initiative. At a minimum, Participants shall also require its next tier suppliers to acknowledge and implement the Code.

Fundamental to adopting the Code is the understanding that a business, in all of its activities, must operate in full compliance with the laws, rules and regulations of the countries in which it operates. The Code also encourages Participants to go beyond legal compliance, drawing upon internationally recognized standards, in order to advance social and environmental responsibility and business ethics. In no case can complying with the Code violate local laws. If however, there are differing standards between the RBA Code and local law, the RBA defines conformance as meeting the strictest requirements. In alignment with the UN Guiding Principles on Business and Human Rights, the provisions in this Code are derived from key international human rights standards including the ILO Declaration on Fundamental Principles and Rights at Work and the UN Universal Declaration of Human Rights.

(…)

E. Management Systems

Participants shall adopt or establish a management system whose scope is related to the content of this Code. The management system shall be designed to ensure: (a) compliance with applicable laws, regulations and customer requirements related to the participant’s operations and products; (b) conformance with this Code; and (c) identification and mitigation of operational risks related to this Code. It should also facilitate continual improvement.

The management system should contain the following elements:

1) Company Commitment

A corporate social and environmental responsibility policy statements affirming Participant’s commitment to compliance and continual improvement, endorsed by executive management and posted in the facility in the local language.

2) Management Accountability and Responsibility

The Participant clearly identifies senior executive and company representative[s] responsible for ensuring implementation of the management systems and associated programs. Senior management reviews the status of the management system on a regular basis.

3) Legal and Customer Requirements

A process to identify, monitor and understand applicable laws, regulations and customer requirements, including the requirements of this Code.

4) Risk Assessment and Risk Management

A process to identify the legal compliance, environmental, health and safety3 and labor practice and ethics risks associated with Participant’s operations. Determination of the relative significance for each risk and implementation of appropriate procedural and physical controls to control the identified risks and ensure regulatory compliance

5) Improvement Objectives

Written performance objectives, targets and implementation plans to improve the Participant’s social and environmental performance, including a periodic assessment of Participant’s performance in achieving those objectives.

6) Training

Programs for training managers and workers to implement Participant’s policies, procedures and improvement objectives and to meet applicable legal and regulatory requirements.

7) Communication

A process for communicating clear and accurate information about Participant’s policies, practices, expectations and performance to workers, suppliers and customers.

8) Worker Feedback, Participation and Grievance

Ongoing processes, including an effective grievance mechanism, to assess employees’ understanding of and obtain feedback on or violations against practices and conditions covered by this Code and to foster continuous improvement.

9) Audits and Assessments

Periodic self-evaluations to ensure conformity to legal and regulatory requirements, the content of the Code and customer contractual requirements related to social and environmental responsibility.

10) Corrective Action Process

A process for timely correction of deficiencies identified by internal or external assessments, inspections, investigations and reviews.

11) Documentation and Records

Creation and maintenance of documents and records to ensure regulatory compliance and conformity to company requirements along with appropriate confidentiality to protect privacy.

12) Supplier Responsibility

A process to communicate Code requirements to suppliers and to monitor supplier compliance to the Code.

Coca-Cola, Human Rights Policy^[14]

Respect for Human Rights

Respect for human rights is a fundamental value of The Coca-Cola Company. We strive to respect and promote human rights in accordance with the UN Guiding Principles on Business and Human Rights in our relationships with our employees, suppliers and independent bottlers. Our aim is to help increase the enjoyment of human rights within the communities in which we operate. (…)

The Human Rights Policy is overseen by The Coca-Cola Company’s Board of Directors, including the Chief Executive Officer.

Land Rights and Water Resources

We recognize the significant implications regarding respect for human rights that land use and water use across our value chain may have, which we address through specific policy and action.

While we do not typically purchase ingredients directly from farms, we are compelled, based on our values as a major buyer of several agricultural commodities, to take action and to use our influence to help protect the land rights of local farmers and communities.

We respect the human need for sustainable water supplies, safe drinking water, and protection of both ecosystems and communities through proper sanitation. Through our water stewardship program, we pursue a rights-based approach to water that mitigates risk by assessing local water risks, consulting and partnering with governments, communities and other stakeholders to develop water stress solutions where and when needed, and also implementing source water protection plans at our facilities.

Healthy Lifestyles

We are committed to providing transparent nutrition information and a range of beverage options to enable consumers to make informed choices consistent with a healthy lifestyle.

Egels-Zandén, Do Codes of Conduct Improve Worker Rights in Supply Chains?^[15]

The rise of private regulation of sustainability in global production networks has led to intensive debates about the impact of this regulation at the point of production. Yet, few empirical studies have systematically examined this impact in practice. Based on multiple factory audits of 43 garment factories conducted by the multi-stakeholder initiative Fair Wear Foundation (FWF), we show that codes of conduct improve (although marginally) worker rights on an overall level but that few significant results are found for specific worker rights. Our findings also lend support to the widespread argument that codes have uneven impact. Furthermore, we show that even rigorous multi-stakeholder factory audits are unable to identify process rights violations (such as those affecting freedom of association and discrimination), and that auditing is thus is more fundamentally flawed than assumed in previous research. (…)

If codes only have limited overall impact, why do companies (and multi-stakeholder initiatives) continue to invest in codes and auditing? Are corporate managers knowingly investing in codes and auditing with limited impact simply to minimize brand risk and avoid activist campaigns? Although this is a possibility, a less cynical interpretation is that sustainability managers and representatives of multi-stakeholder initiatives actually perceive that codes and auditing do make a difference at the point of production. (…)

The finding that suppliers move in and out of compliance shows that the main problem with codes and auditing is not that they are incapable of addressing non-compliance, since our results show that they actually do exactly this. Instead, the main problem is that codes and auditing are unable to sustain compliance, i.e., unable to make a compliant supplier stay compliant. One interpretation of this finding is that codes and auditing are unable to hinder contradictory tendencies in the garment industry such as flexibilization of labor markets, declining purchasing prices, and shorter lead times. In other words, as these tendencies increase, they undermine the effects of codes and audits by turning compliant suppliers into non-compliant suppliers. This opens the door to the positive interpretation that codes and auditing potentially either mitigate this performance decline and/or improve areas not affected by contradictory tendencies. (…)

Another interpretation of why codes are perceived as improving worker rights while this and other studies find no or limited improvements is that codes mainly have a pre-first-audit impact on worker rights. In other words, managers correctly perceive that suppliers improve, but this improvement is made between the initial informal contact with the supplier and the first formal factory audit. Both these interpretations reconcile the contradictory finding in previous research that suppliers exposed to codes show better worker rights compliance, even though codes either fail to improve worker rights over time or only improve worker rights to a limited extent, as shown in our FWF study.

For managers, the findings are both positive and distressing, since they present a somewhat more positive picture than Locke et al., but still question the ability of even the most rigorous codes and factory auditing to, at least in the garment industry, substantially improve worker rights in global production networks. It is therefore likely that the less rigorous codes and audits that most companies, in the garment and other related consumer industries, invest in have similarly limited impact. Managers have to decide if they should move beyond the compliance model of codes into, for example, more cooperative models, although such cooperative models also face criticism; whether they should abandon codes for other forms of private regulation (such as certifications); or whether there are ways to make codes effective. Regardless of the chosen path forward, managers are well advised not to accept the status quo since codes and factory auditing in the present form have difficulties in substantially improving worker rights.

Mares, Global Corporate Social Responsibility, Human Rights and Law^[16]

Corporate social responsibility (CSR) is often understood as an inherently voluntary corporate endeavour that inhabits the area stretching ‘beyond compliance’ with law. However, a growing number of writers and practitioners deem this understanding of CSR inaccurate and unproductive. In this article, the notion of CSR as ‘beyond compliance’ is questioned on logical, descriptive and normative grounds; once freed from its conceptual straitjacket, CSR research is encouraged to look more deeply into the mutual interaction between corporate voluntarism and law. (…)

Corporate voluntarism and law coexist and interact to shape regulatory regimes. A great part of what counts in CSR is about the practices of leading businesses actually defining and helping to shift the legal baselines applicable to other companies. In the last 10 to 15 years, leading companies and their stakeholders have engaged in a bottom-up process of rule-making around the corporate and the governance baselines. ‘CSR’ is not merely about persuading each and every company to ‘self-regulate’. It is about proactive companies that, through successful self-regulatory efforts and lessons learned from unsuccessful ones, legitimise and specify slowly emerging norms that interact with law and facilitate good governance dynamics. The law—in host states, in home states and at the international level—has a crucial role to play in the institutionalisation of these two baselines.

It is unproductive to hold an unrealistic assumption about law at both its formative and implementation stages, particularly in developing countries, and to overlook dynamics that can strengthen the functioning of legal regimes. CSR as ‘beyond compliance’ misrepresents the nature of CSR (emphasising voluntarism instead of discretion), deceives on the range of policy instruments compatible with CSR that are available to policymakers (acknowledging public policies as part of CSR but not hard law), and forecloses the analysis of law-CSR interactions.

CSR as ‘beyond compliance’ is not untrue because it captures well the scenario of companies acting exclusively, with no or minimal discretion, because of the deterrent power of law. But it is partial because it remains oblivious to the dynamics and effects of CSR and law-making and it is wrong in discouraging a fuller examination of CSR from a regulatory perspective. Because CSR is a broad concept applicable to both developed and developing countries and covering areas as diverse as social, environmental and economic impacts with their particular challenges and solutions, sensitivity to context is paramount. Most notably, the specific context of respecting human rights in developing countries throughout the operations of large corporate networks such as MNEs requires an attuned concept of CSR and an informed understanding of CSR’s relation to law. A view of CSR as ‘beyond compliance’ obscures the interaction between CSR and law-making and thus fails to grasp the role of leading businesses in institutionalising the effective protection of rights.

Once the polarised voluntary-mandatory view of dealing with MNEs and the limiting concept of CSR as ‘beyond compliance’ are overcome, a start can be made—as this article has sought to do—on the systematic examination of the mutual interaction between CSR and law through which responsible business practices strengthen the operation of regulatory regimes and law reinforces the CSR goal of respect for human rights.

Background (Cambodia)

Human Rights Now, Call for Improvements among Global Sportswear Brands^[17]

Human Rights Now has released a statement expressing our deep concerns with the working conditions among global sportswear brands, such as ASICS, Puma and Nike following mass fainting by female workers at factories. (…) After the release of the Danwatch report, ASICS, Puma, and Nike publicly released their policies on working environments. For example, ASICS announced that in its Global Code of Conduct it promises to provide a safe and sanitary environment and requires global business partners to provide the same for their workers by maintaining a decent temperature and ventilation system. However based on the findings of the investigation, these policies were evidently not being enforced in the factories where successive faintings took place. (…)

Instruments (Cambodia)

Cambodian Labour Law^[18]

Article 22. Every employer of an enterprise or establishment, set out in Article 17 above, who employs at least eight workers shall always establish an internal regulation of the enterprise.

Article 23. Internal regulations adapt the general provisions of this law in accordance with the type of enterprise or establishment and the collective agreements that are relevant to the sector of activity of the aforementioned enterprise or establishment, such as provisions relating to the condition of hiring, calculation and payment of wages and perquisites, benefits in kind, working hours, breaks and holidays, notice periods, health and safety measures for workers, obligations of workers and sanctions that can be imposed on workers.(…)

Article 25. The articles of internal regulations that suppress or limit the rights of workers, set forth in laws and regulations in effect or in conventions or collective agreements applicable to the establishment, are null and void.

            The Labour Inspector shall require the inclusion of enforceable provisions in virtue of laws and regulations in effect.

Joint Prakas, Media Code of Conduct for Reporting on Violence against Women^[19]

Article 1. The purpose of the joint Prakas is to establish a media Code of Conduct for reporting on violence against women, including physical, mental, sexual and economic violence, in order to prevent reporting of violence again women for entertainment or comical purposes and to change social attitudes towards the elimination of violence against women, to be in compliance with the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), the Neary Rattanak Strategic Plan IV and the National Action Plan to Prevent Violence Against Women (NAPVAW) 2014-2018.

Article 2. Reporters shall not report in a way that describes in detail, shows or depicts in detail violent acts related to violence against women or rape that causes unnecessary distress to the victim, viewers or those involved.(…)

Article 7. Reports shall respect the privacy and dignity as well as ensure the protection and safety of victims/ survivors no matter where the images or videos are sourced from, including:

• Avoid graphic images/videos of death, injury, naked bodies or shock resulting from violence against women,
• Not reveal names and specific locations where violence against women occurs,
• Not show images/videos of victims/survivors of violence against women or reveal information that could lead to the identification of victims/survivors, including the names and address of victims/survivors or their relatives etc, and not divulge the address of victims or perpetrators. For example, when violence occurs in commune „A‟ or district „B‟ the commune or district is named if necessary rather than the specific address or specific village).

Association of Cambodian Recruitment Agencies, Code of Conduct^[20]

1. Introduction

To ensure more responsible and ethical recruitment practices, support sustainable business development, and to further develop the positive reputation and prestige of private recruitment agencies, the Association of Cambodian Recruitment Agencies (ACRA), and the Manpower Association of Cambodia (MAC), have developed and adopted this Code of Conduct (CoC), with the cooperation of and technical support from the MoLVT and ILO. The CoC is to be used by Cambodian Private Recruitment Agencies to effectively manage recruiting, training and sending workers for overseas employment. The CoC plays an important role in ensuring accountability, by requiring private recruitment agencies to comply to the national law and international labour standards. The application and implementation of the CoC will improve the experiences of Cambodian migrant workers overseas, by protecting and promoting their rights, and it will greatly benefit agencies’ business development.

            The MoLVT highly appreciates the establishment and implementation of an ethical and professional CoC and encourages agencies to fully apply the principles of the CoC. The Ministry considers that the application of the CoC is an important indicator in evaluating and ranking the performance of private recruitment agencies. It is also an opportunity for agencies to improve their practices, and in doing so, potentially expend their domestic and international presence. (…)

2. Operational Principle of the Code of Conduct

Consisting of 12 articles

1. Respect for, and implementation of, national laws, and fundamental principles and rights at work.
2. Respect for, and communication of, reality and transparency in advertising.
3. Respect for, and reduction of, costs and fees for migration.
4. Respect for, and enforcement of, recruitment and employment contracts.
5. Respect for, and protection of, confidentiality and data.
6. Respect for, and recognition of, skills and qualifications.
7. Respect for, and delivery of, migration information and pre-departure orientation requirements.
8. Respect for, and provision of, dispute settlement mechanisms.
9. Respect for, and operation within, the Memoranda of Understanding agreements endorsed by the relevant authorities.
10. Respect for, and protection of, workers’ rights, while employed in destination countries.
11. Respect for, and support during, repatriation and reintegration.
12. Respect for, and safeguard of, freedom of movement at all stages of migration.

Kimmarita, Ministry Launches Code of Ethics to Protect 1.2M Migrant Workers^[21]

The Ministry of Labour and Vocational Training on Wednesday launched a code of ethics for private recruitment agencies to follow in order to better protect migrant workers. Minister Ith Sam Heng said during the event that the ministry was ready to support the recruitment agencies to implement the code of ethics in an effective manner to promote and protect the rights of all migrant workers. “This code of ethics must be put in place beginning with the agencies themselves, who must constantly follow it and care about the rights of migrant workers,” he said.

            Although this code of ethics does not provide for any punishment, MAC president Orn Bunhak said it would contribute to strengthening all agencies before the law. “This code of ethics will be a tool and a reference point to be used in daily operations of private recruitment agencies in their recruiting, training and managing of workers in a responsible manner,” he said.

            Bridge JC Co Ltd CEO Mar Chansim, who sends workers to Japan, said the code can play a role in supporting accountable and competitive work by the agencies in line with the law. Chansim said he is worried that not all agencies will follow the code in its entirety. He suggested that authorities make sure they do.

            Anna Engblom, the International Labour Organisation’s senior manager for the Triangle Programme in the Asean region, said it is still too costly for many migrant workers to find work aboard. She said once tallied, the expenses sometimes eat up nine months of their salaries or more. This is why the code is important as it will ensure expenses are reduced, she said. “To make this code of ethics valuable, we have to have a system to monitor and evaluate it, which we will create next year,” she said.

FLA, Fast Retailing: Assessment for Accreditation^[22]

In 2017, Fast Retailing [Japan-based company^[23]] contacted the FLA with concerns of the potential closing of a factory in Cambodia. FLA requested further information to understand the situation and provided recommendations on ensuring workers receive their legally owed severance packages. In the end, the factory ownership decided not to close its operations; however, FLA also had inquired about Fast Retailing’s responsible exit strategy. The FLA provided guidance materials on how to strengthen the strategy and recommended Fast Retailing discuss with other accredited FLA brands on how they have implemented their own responsible exit strategies to mitigate risks of retrenchment and closures. Following receiving the guidance materials and having calls with other accredited FLA brands, Fast Retailing improved its responsible exit strategy and included it in its Responsible Purchasing Practices Policy. Additionally, this strategy is used by the Business Ethics Committee when decisions to exit or to significantly reduce business volume a facility need to be made. The exit strategy is also included in Fast Retailing’s training on responsible purchasing practices. (…)

            Cambodia: To address risks of Child Labor and improve age verification programs at factories, Fast Retailing is engaging with the Asia Society for Social Improvement and Sustainable Transformation (ASSIST) Cambodia. Additionally, Fast Retailing is engaging with ACT Cambodia to better understand issues of fair compensation and collective bargaining. Fast Retailing has also supported with the FLA’s and American Apparel & Footwear Association’s (AAFA) engagement with the Cambodian government to voice concerns for civil society and workers’ rights. Fast Retailing’s member joined a meeting with the FLA and AAFA in Cambodia that set the foundation for the FLA and AAFA to more strongly express concerns later in 2018 about the labor conditions and the criminal charges against members of civil society.

Workplace Standards

In 2016, following affiliation with the FLA, Fast Retailing aligned its Production Partners Code of Conduct with the FLA Workplace Code of Conduct. Fast Retailing revised its standards on Nondiscrimination, Harassment/Abuse, Health, Safety & Environment (HSE), and Compensation from its original 2004 code of conduct. To operationalize its code of conduct, Fast Retailing utilizes draft compliance benchmarks in their audit tool and supplier training materials. FLA verified the draft compliance benchmarks are implemented in the current FR monitoring program, further discussed under Principle 5.

Principle 3: Supplier training

Supplier Commitment

All Fast Retailing factories are required to sign Fast Retailing’s Code of Conduct for Production Partners, in which factories agree to be assessed by third party audits and undertake corrective actions. Fast Retailing allows audits by approved third-party service providers, including FLA assessments. In addition to the Code of Conduct of Production Partners, suppliers receive the Fast Retailing Supplier Guidebook. The Supplier Guidebook explains the Fast Retailing workplace standards, FLA affiliation, and the FLA assessment process. The FLA verified the use of the supplier agreements and Supplier Guidebook, maintained for each supplier through Fast Retailing’s online sustainability platform. The FLA has observed the Fast Retailing Supply Chain Labor Management Team regularly communicate with its suppliers regarding FLA standards and assessment methodology.

Conditioning Future Business on Suppliers’ Improvement of Working Conditions

The Fast Retailing Code of Conduct for Production Partners agreement includes a policy that if a production facility does not agree to corrective actions for identified labor violations, the production partner can be found in violation of the agreement. The FLA verified the agreement also allows Fast Retailing to cancel orders or terminate the business relationship if a production partner is found in violation of the agreement. Fast Retailing established the Business Ethics Committee to review cases in which production partners are found in violation of the supplier agreement and to determine how to address suppliers that fail to uphold their commitment to workplace standards. The Business Ethics Committee Chairperson is the Sustainability Group Senior Vice President and the committee includes representatives from Fast Retailing Production, Merchandising & Design and legal departments, and statutory auditors as observer. (…)

Workplace Standards Training & Accessibility for Workers

Fast Retailing provides translations of its code of conduct in Arabic, Bahasa, Bengali, Bulgarian, Burmese, Chinese, Creole, English, French (EU), Hindi, Italian, Japanese, Khmer (Cambodia), Korean, Malagasy, Malay, Mauritian Turkish, Portuguese (Brazilian), Sinhalese, Spanish (Peru), Spanish (EU), Romanian, Thai, Urdu, and Vietnamese. The FLA verified these translations cover all employee languages spoken in Fast Retailing’s Tier 1 sourcing countries. To confirm workers, managers, and supervisors are trained on Fast Retailing’s workplace standards, Fast Retailing Sustainability staff conduct audits with worker interviews to verify training and training effectiveness. Through the audit field observations, the FLA observed Fast Retailing began to incorporate the FLA’s recommendation that auditors ask more detailed questions on worker training. The Fast Retailing supplier guidebook notes the company provides workplace standards training to all workers during orientation and annually.

C&A, Sustainability Report^[24]

Our Supplier Code of Conduct

What we expect of suppliers is clearly laid out and communicated through our Supplier Code of Conduct and checked using regular audits by our Sustainable Supply Chain (SSC) team, which comprises nearly 90 people worldwide, including 36 auditors and 25 development officers. We update the standards expected within the Supplier Code of Conduct as appropriate, such as we did in 2017, when we made our standards on fire safety, environment, and working hours more stringent. When there are breaches of our Supplier Code of Conduct, we invite suppliers, C&A employees, and workers in our supplier’ factories to let us know through our Fairness Channels, where breaches can be escalated to management anonymously. All our suppliers are required to sign our Code of Conduct as part of our contractual relationship and purchasing agreements, Records are kept and documented in our supplier management systems, where each supplier is asked to reconfirm their acceptance of the terms at least annually. (…)

Incentivising our employees to support social and environmental stewardship

As part of how we ensure that our code of conduct is followed and improvements are made, we rate suppliers across a number of performance areas including social and environmental compliance. Supplier ratings are used in the performance review as the basis for bonus compensation of key individuals like our sourcing and buying teams. Currently, social and environmental performance is weighted at 25% in the supplier rating and is translated into the annual bonus scheme. (…) Our Supplier Code of Conduct describes in more detail what C&A expects from our suppliers regarding legal compliance, labour practices, environmental performance, and anti-corruption. (…)

Validating our programme

Our Sustainable Supply Chain (SSC) team is made up of expert practitioners and located in different sourcing hubs – including Bangladesh, Brazil, Cambodia, China, Hong Kong, India, Myanmar, Mexico, Pakistan, and Turkey. (…) In 2015, C&A set up a third-party relationship with a professional services provider to carry out ongoing human rights due diligence in our supply chain, using the UN Guiding Principles for Business and Human Rights to verify whether the current SSC programme is fit for purpose against the requirements outlined in the C&A Supplier Code of Conduct. (…)

Case study

Recent years have seen unrest in the Cambodian garment industry. Protesters have taken to the streets, clashing with security forces and union leaders have been dismissed as they planned to organise strikes. Unions have repeatedly described repression of workers’ rights by company management and anti-union crackdowns. Engaging with suppliers on freedom of association and collective bargaining is a high priority for us. (…)

            In 2018, C&A convened two roundtable meetings with suppliers in Cambodia to discuss freedom of association, collective bargaining and wages. Together with our previous round tables, we have now held eight round table discussions on the issue of freedom of association, focusing on building healthy labour/management relations with senior management representatives all of our Cambodian suppliers. During the round tables, we emphasised that C&A aims to work only with production units that fully comply with our Supplier Code of Conduct. We encourage suppliers to enable open communication to solve disputes amicably and are willing to support them with technical knowledge if they have difficulties resolving a dispute.

CENTRAL et al, Bestseller: Lack of Transparency and Workers’ Rights^[25]

The research provided a test on how well the suppliers performed in meeting the Bestseller’s own “Sustainability Commitment”, the Cambodian and Indian Labour Law and ILO’s Core Conventions. (…) Bestseller must speed up its engagement on several issues dealt with in this report. However, some core problems at the factories concerned urgently need to be resolved. Based on Article 73 of the Cambodian Labour Law (1997), workers with two years’ seniority have the right to permanent employment. Looking at the length of the employment relationship of workers interviewed at Bestseller’s Cambodian supplier, all the short-term contracts of the workers appear to be illegal.

            Bestseller should immediately, in cooperation with independent trade unions, identify the prevalence of FDCs [Fixed Duration Contract] – legal or illegal – at their suppliers. The brand should announce a zero tolerance policy for illegal contracts and monitor the rapid implementation of permanent contracts for workers engaged beyond two years at the same facility. Clear timelines for contract conversion need to be set and communicated to workers’ representatives. Only by taking this step will workers at the Cambodian supplier enjoy a minimum of predictability regarding their employment. The same policy and practice should be implemented at all of Bestseller’s suppliers as the continuation of illegal contracts is violating the Cambodian Labour Law. As well, Bestseller should declare its non-tolerance policy to attempts by the factory management to silence or put pressure on workers, using the threat of non-renewal of short term contracts.

            Bestseller’s current Code of Conduct says nothing about workers’ contracts apart from the following sentence “A signed working contract must be available for all employees, which is provided by the supplier in a language that is understandable to the employee.” The multinational brand must immediately, as a minimum, adjust its Code to Ethical Trading Initiative’s Code, which states that: “To every extent possible work performed must be on the basis of recognised employment relationship established through national law and practice. Obligations to employees under labour or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labour-only contracting, sub- contracting, or home-working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed-term contracts of employment.”

Human Rights Watch, Work Faster or Get Out^[26]

The primary responsibility to improve labor conditions in the Cambodian garment industry rests with the Cambodian government. But a number of other influential actors—brands, Better Factories Cambodia (BFC), the Garment Manufacturers Association of Cambodia (GMAC), and unions—play an important role in ensuring that working conditions in factories adhere to the Labor Law and international standards. While paying attention to individual labor rights concerns, the structural issues that underlie a range of labor rights problems—hiring practices, union-busting strategies, and unauthorized subcontracting—need urgent attention. The vast majority of workers are women and the issues affecting women workers are of particular concern. (…)

Recommendation: To International Brands

On transparency and approach to subcontractor factories

• (…)
• Revise the Code of Conduct for Suppliers to protect workers in subcontractor factories.

On labor compliance and industrial relations

• (…)
• Review the Code of Conduct for Suppliers and, if not already specified in the code, add provisions on the following:
• A clause that forbids illegal use of casual contracts and FDCs [Fixed Duration Contracts], including as a method of bypassing labor protections.
• Language limiting the use of FDCs to seasonal or temporary work for all workers and incentivizing the adoption of undetermined duration contracts. Communicate with all suppliers that primarily employing male workers only on short-term FDCs is discriminatory.
• A clause drawing a distinction between reasonable and unreasonable production targets that disregard worker rights. (…)

Brand response

Gap prohibits modifying or terminating worker contracts to avoid paying benefits in its Vendors’ Code of Conduct. Gap did not provide specific information about the use of FDCs in its supplier factories in Cambodia or how the brand’s 700 performance indicators integrated these in factory audits. Nevertheless, Gap confirmed that “FDCs are a common practice in Cambodia” and reiterated its commitment to the Arbitration Council’s ruling limiting use of short-term contracts.

H&M’s Code of Conduct does not explicitly prohibit the repeated use of short-term contracts. But its 2008 Guidance for Implementation of Good Labour Practice, which is currently being updated, advises that the “employment contract must never include clauses stating conditions that are below the legal requirements,” “may not be used as a means to restrict the worker’s right to compensation and or employment security,” and that “short-term contracts may not be used as a measure to deprive workers of social benefits.”

The Armani Supplier Social Code of Conduct states that “the use of contract, temporary or other non-full-time employment schemes shall not be used to systematically avoid the payment of worker benefits.”

The 2009 Supplier Code of Conduct of Loblaw Ltd., which owns Joe Fresh, states that suppliers “should reflect the commitment of Loblaw to fair and reasonable labour and employment practices” and “are expected to comply with all local and applicable labour laws and employment standards.” As of mid-January 2015, it carries no explicit prohibition against the repeated use of short-term contracts or casual hiring arrangements that can be used to defeat other labor rights protections.

Adidas representatives explained that retaliation against workers for providing information to the brand is treated as a “threshold issue” in their code of conduct enforcement guideline. They said that they would examine the facts of each case and decide about the nature of protection needed but emphasized early intervention to prevent retaliation.

CENTRAL et al., When ‘Best’ Is Far from Good Enough^[27]

H&M is not only one of the leading fast fashion brands, but also has a long record of verbal commitments in the field of ensuring better working conditions for the workers stitching their clothes. Before entering a business relationship with H&M suppliers and business partners have to sign the brand’s Sustainability Commitment which holds legal requirements. (…)

H&M’s Sustainability Commitment

H&M started to work with their Code of Conduct in 1997. The Code has been revised several times since, probably due to external pressure leading to internal policy change and external reputation management. In early 2016 the Code was replaced by the H&M “Sustainability Commitment” comprising three areas: “Healthy workplaces”, “Healthy ecosystems” and “Animal welfare”. H&M outlines the idea behind their commitment: “We want to make sustainability an integrated part of all our global business relationships and work closely with our suppliers and business partners in order to achieve long lasting impacts across our entire value chain. Signing our Sustainability Commitment is mandatory for any supplier or business partner before entering a business relationship with H&M.”

            H&M further states that “Compliance with the law is the fundamental level for all businesses” and has introduced two levels of commitment in their new code: The fundamental level “… is the basic compliance level that is expected of all business partners before doing business with H&M” whereas the aspirational level “… shows where we want to go long term, and that compliance is only the first step in creating a sustainable business. This means going beyond compliance with legal requirements and focusing on constant improvements.”

            H&M has made it a precondition for doing business that its suppliers comply with national legislation. However, our research shows that H&M has a long way to go before its suppliers can be said to comply even with this most fundamental level of compliance. (…)

Ways forward

H&M have made several commitments under their various sustainability initiatives. Is it time for those commitments to become a reality, for relevant laws to be respected and for real and tangible benefits to be realized by H&M supply chain workers. (…)

Freedom of Association

The problem: Lack of independent unions at suppliers, lack of freedom of association, illegal deduction of membership fee.

            Recommendation: H&M must make sure that workers at all their suppliers in Cambodia and elsewhere «… have the right to join or form a trade union of their own choosing and to bargain collectively» as stated in H&M’s Sustainability Commitment and safeguarded in ILO’s core conventions. H&M should communicate explicitly to its suppliers that the brand has zero tolerance to any obstacles blocking the formation of independent unions, or blocking workers from joining a union of their own choice, or any other legal union activity (…)

Contracts

The problem: Illegal use of fixed duration contracts. There are reasons to believe that two of H&M’s suppliers, both classified as platinum suppliers, are engaging workers on fixed duration contracts (duration of two to six months). This is also the case where workers have been working beyond two years. Such practice is obviously violating H&M’s code of conduct regarding employment. It also shows that the management of the same factories falls short of offering all workers permanent employment in line with the H&M’s aspirational commitments.

            Recommendation: H&M should immediately and in cooperation with workers’ representatives identify the prevalence of FDC [Fixed Duration Contract] – legal or illegal – at their suppliers. The brand should announce a zero tolerance policy for illegal contracts and monitor the rapid implementation of permanent contracts for workers engaged beyond two years at the same facility. Clear timelines for contract conversion need to be set and communicated to workers’ representatives. Contract conversion at Eastex and Vanco factories should be a priority, and should be completed before 1 October 2016. (…)

Deductions from wages

The problem: Unfair deductions from wages for arriving late.

            Recommendation: H&M should, in line with their Sustainability Commitment, demand that standard penalties applied when workers arrive late to work are abolished with immediate effect. In other words, H&M’s suppliers should be asked to follow best practice from the industry. Reactions concerning repeated, serious delays should be dealt with in discussions between the factory management and the local union.

van Cranenburgh, Heineken and Cambodian ‘Beer Promoters’^[28]

In 2000 a few local NGOs drew attention to the spread of HIV in Cambodia, including among what they called “indirect sex-workers”, such as beer promoters. One NGO, Sirchesi, told the media that beer promoters were pressured by male clients to sit down and drink alcohol in exchange for tips. Most beer promoters found this difficult to resist because of the highly competitive working environment. The NGO also said that beer promoters were being underpaid by the major international beer companies.

When Heineken learned about the pressure from the organisation, it first asked its local partners, the employers of the beer promoters, to respond. They said the working environment for beer promoters was not “unusual or problematic” in Cambodia. But Heineken global headquarters felt the need to respond, even though it did not directly hire the beer promoters. Heineken launched a programme aimed at creating safer workplaces by training and informing the beer promoters about dealing with harassment and other risks on the job. The company also installed female supervisors and provided them with health insurance. (…)

            After documenting this case, I conclude that Heineken and the NGO never managed to converge on finding solutions. Heineken’s managerial responses were motivated by their global policies and corporate values and identity. This made the company willing to improve worker conditions. But complying with all the activists’ demands did not make sense for Heineken, which said the wages for beer promoters were competitive, and HIV treatments were already widely and freely available in the country. (…)

            As a solution I propose that businesses shift from the traditional stakeholder model to a new model of corporate responsibility that puts sustainable development, or the SDGs, at the heart of managerial decision making. In this model the company is just one of the stakeholders that contributes to the SDGs in a certain area, and together with other stakeholders they form the spokes that keep the sustainable development wheel spinning.

Questions

1. Why are corporate codes of conduct important for the protection of human rights and understanding corporate responsibilities?
2. What are the advantages and disadvantages of corporate codes of conduct versus national regulations?
3. Do codes of conduct have any legal effects?
4. What are the main points that should be given priority in codes of conduct in Cambodia?
5. Do codes of conduct adopted by multinational companies interfere with Cambodia’s national sovereignty?

Further Readings

• Global Compact and the UN High Commissioner for Human Rights, A Guide for Business How to Develop a Human Rights Policy (2011) https://www.ohchr.org/Documents/Publications/DevelopHumanRightsPolicy_en.pdf.
• Institute for Human Rights and Business, ICT Sector Guide on Implementing the UN Guiding Principles on Business and Human Rights (2012) https://www.ihrb.org/pdf/eu-sector-guidance/EC-Guides/ICT/EC-Guide_ICT.pdf.
• Ralf Rogowski, The Emergence of Reflexive Global Labour Law (2015) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2620181.
• Jodi Short et al., Beyond Symbolic Responses to Private Politics: Codes of Conduct and Improvement in Global Supply Chain Working Conditions (2018) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2806966.
• Patrick C. Leyens, Self-Commitments and the Binding Force of Self-Regulation with Respect to Third Parties in Germany (2017) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3087417.
• Annabelle A. Belasco, Nike: From Sweatshops to Leadership in Employment Practices (2014) http://www.academia.edu/download/34358656/Nikeaweatshop.doc.
• Frédéric Bourdier, From Confrontation to Mediation: Cambodian Farmers Expelled by a Vietnamese Company (2019) https://journals.sagepub.com/doi/pdf/10.1177/1868103419845537.
• Henrik Lindholm et al, Do Code of Conduct Audits Improve Chemical Safety in Garment Factories? Lessons on Corporate Social Responsibility in the Supply Chain from Fair Wear Foundation (2016) https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5137553/.

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^[1] Rhys Jenkins, Corporate Codes of Conduct: Self Regulation in a Global Economy, UNRISD (2001) www.unrisd.org/80256B3C005BCCF9/search/E3B3E78BAB9A886F80256B5E00344278.

^[2] Rio Tinto, Why Human Rights Matter (2013) www.riotinto.com/documents/ReportsPublications/Rio_Tinto_human_rights_guide_-_English_version.pdf.

^[3] Human Rights Council, UN Guiding Principles on Business and Human Rights, Seventeenth Session (2011) http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf.

^[4] UN Office of the High Commissioner of Human rights, The Corporate Responsibility To Respect Human Rights – An Interpretive Guide (2011) http://www.ohchr.org/Documents/Issues/Business/RtRInterpretativeGuide.pdf.

^[5] Unilever, Human Rights Policy Statement (undated) https://www.unilever.com/Images/unilever-human-rights-policy-statement_tcm244-422954_en.pdf.

^[6] Rio Tinto, Human rights policy (2015) www.riotinto.com/documents/Human_rights_policy.pdf.

^[7] BHP Billiton, Working with integrity – Code of Business Conduct (2014)

http://www.bhpbilliton.com/~/media/bhp/documents/aboutus/ourcompany/code-of-business-conduct/160310_codeofbusinessconduct_english.pdf?la=en

^[8] Anglo American, Human Rights Policy (2014)

www.angloamerican.com/~/media/Files/A/Anglo-American-PLC-V2/documents/approach-and-policies/social/hr-policy-document-english.pdf.

^[9] International Council on Mining & Metals, Sustainable Development Framework – ICMM Principles (2015) https://www.icmm.com/website/publications/pdfs/commitments/revised-2015_icmm-principles.pdf.

^[10] Fair Labor Association, Code of Conduct (2011) www.fairlabor.org/our-work/labor-standards.

^[11] Fair Labor Association, Workplace Code of Conduct and Compliance Benchmarks (2011) http://www.fairlabor.org/sites/default/files/fla_complete_code_and_benchmarks.pdf.

^[12] Ethical Trading Initiative, The ETI Base Code (2014) https://www.ethicaltrade.org/resources/eti-base-code.

^[13] Responsible Business Alliance, Code of Conduct (2018) http://www.responsiblebusiness.org/standards/code-of-conduct/.

^[14] Coca-Cola, Human Rights Policy (2014) https://www.coca-colacompany.com/our-company/human-rights-policy

^[15] Niklas Egels-Zandén, Henrik Lindholm, Do Codes of Conduct Improve Worker Rights in Supply Chains? A Study of Fair Wear Foundation (2014) (Note: references in text were removed) https://fek.handels.gu.se/digitalAssets/1494/1494749_egels-zanden-and-lindholm–2014—-do-codes-of-conduct-improve-worker-rights-in-supply-chains.pdf.

^[16] Radu Mares, Global Corporate Social Responsibility, Human Rights and Law (2010) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920759.

^[17] Human Rights Now, Cambodia: HRN calls for improvements in working conditions and prevention measures among global sportswear brands, such as ASICS, Puma and Nike following mass faintings by female workers at factories (2018), https://hrn.or.jp/eng/news/2018/03/06/cambodia-mass-faintings/#_ftn21.

^[18] Cambodia, Labour Law (1997) http://www.cambodiainvestment.gov.kh/the-labor-law-of-cambodia_970313.html.

^[19] Cambodia, Joint Prakas on Media Code of Conduct for Reporting on Violence Against Women (2017), http://ngocedaw.org/wp-content/uploads/2014/10/Media-Code-of-Conduct-for-Reporting-on-Violence-Against-Women-English-Translation.pdf.

^[20] Association of Cambodian Recruitment Agencies and Manpower Association of Cambodia, Code of Conduct for Cambodian Private Recruitment Agencies (2020), https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—sro-bangkok/documents/publication/wcms_735867.pdf

^[21] Long Kimmarita, ‘Ministry Launches Code of Ethics to Protect 1.2M Migrant Workers’, Phnom Penh Post (2020) https://www.phnompenhpost.com/national/ministry-launches-code-ethics-protect-12m-migrant-workers.

^[22] Fair Labour Associatiyon (FLA), Fast Retailing Co., Ltd. Assessment For Accreditation (2019),  https://www.fairlabor.org/sites/default/files/documents/reports/fast_retailing_accreditation_report_public.pdf.

^[23] Fast Retailing Group, Code of Conduct for Production Partners, available in Appendix A of Fair Labour Associatiyon (FLA), Fast Retailing Co., Ltd. Assessment For Accreditation (2019) https://www.fairlabor.org/sites/default/files/documents/reports/fast_retailing_accreditation_report_public.pdf.

^[24] C&A, Global Sustainability Report 2018 – Global Supply: Raising Standards and Building Capacity (2018), https://sustainability.c-and-a.com/uk/en/sustainability-report/fileadmin/pdf-sustainability/generate/globalsustainabilityreport2018/en/chapter-sustainablesupply-en.pdf.

^[25] Central et al, Bestseller – a Good Deal for All?: Lack of Transparency and Violations of Workers’ Rights at Two of Bestseller’s Suppliers in Cambodia and India (2017), https://www.central-cambodia.org/wp-content/uploads/2017/05/Bestseller_a-good-deal-for-all.pdf.

^[26] Human Rights Watch, Work Faster or Get Out (2015), https://www.hrw.org/report/2015/03/11/work-faster-or-get-out/labor-rights-abuses-cambodias-garment-industry#_ftn316.

^[27] Joel Preston, CENTRAL and Carin Leffler, Future In Our Hands, When “best” is far from good enough: Violations of workers’ rights at four of H&M «best-in-class» suppliers in Cambodia (2016), https://cleanclothes.org/resources/national-cccs/when-best-is-far-from-good-enough-violations-of-workers2019-rights-at-four-of-h-m-best-in-class-suppliers-in-cambodia.

^[28] Katinka C. van Cranenburgh, How Heineken Got into Hot Water by Helping Cambodian ‘Beer Promoters’ (2016), https://www.reutersevents.com/sustainability/analysis-how-heineken-got-hot-water-helping-cambodian-beer-promoters.