Non-legislation / Market driven requirements Engineering August 2014

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

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

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

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

Company values Black Box Company policy Governments NGOs Clients Legislative compliance: - Consumer health and safety - Environment Black Box NGOs Company policy Public pressure: - Replace dangerous chemicals - Brands: responsibility for supply chain Purchase requirements: Social Product safety Environmental Quality Clients - Products according to specs - High quality assurance Consumers Consumer products Expect: Safe products Good circumstances Centre for the Promotion of Imports from developing countries

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

Non legislative requirements Most non legislative requirements deal with: Quality Product / market / buyer specific Social issues Product safety Environmental issues Centre for the Promotion of Imports from developing countries

Non legislative requirements These requirements are included in: Sector Codes Company Codes of Conduct Supplier Declarations Management systems Centre for the Promotion of Imports from developing countries

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

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

Examples Centre for the Promotion of Imports from developing countries

Example of non-legislative requirements NSK Centre for the Promotion of Imports from developing countries

Centre for the Promotion of Imports from developing countries

Centre for the Promotion of Imports from developing countries

Centre for the Promotion of Imports from developing countries

Centre for the Promotion of Imports from developing countries

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

CSR References Reference ISO 26000 The international guideline for CSR ILO The basis for most labour related CSR initiatives OECD Guidelines Expectations of governments with regard to the behaviour of multinational enterprises Global Compact An international CSR initiative which companies can join Centre for the Promotion of Imports from developing countries

ISO 26000 – Guidance on Social responsibility Developed by developed and developing countries To be used as an international reference on SR What is (C)SR? What do the issues mean? What is expected from companies? To be used as a guidance document How to identify stakeholders? How to implement CSR in the organisation? Not for certification (self declarations) Centre for the Promotion of Imports from developing countries

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

Social requirements Centre for the Promotion of Imports from developing countries

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

Social requirements - ILO ILO Conventions UN organization dealing with aspects of work International labour standards Governments are obliged to implement ratified Conventions in their own national policies. Many social requirements on labour conditions by the private sector are based on the ILO Conventions Which of the (185) ILO Conventions are being used by the private sector as market access requirements? Centre for the Promotion of Imports from developing countries

Social issues – 8 core ILO Conventions Right to union membership and to negotiate Non-discrimination Forced labour Minimum age Working hours Equal remuneration Minimum wages Occupational Health and Safety Centre for the Promotion of Imports from developing countries

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

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

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

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

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

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

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

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

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

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

Environmental requirements Centre for the Promotion of Imports from developing countries

Environmental requirements Focus of buyers on products Design for recycling / Reuse Use of hazardous substances (also as a result of RoHS, REACH, CE) Biobased / circular economy / Cradle to cradle Packaging Transport Centre for the Promotion of Imports from developing countries

Environmental requirements Focus of buyers on processes Emissions of hazardous substances Energy use Water use Impact on biodiversity ISO26000: Prevention of pollution Sustainable resource use Climate change mitigation and adaption Protection of the environment, biodiversity and restoration of natural habitats Centre for the Promotion of Imports from developing countries

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

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

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

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

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

ISO 14001 Market Impact The standard is widely used in many countries; also without actual certification ISO 14001 required / preferred by some buyers Integration in Public green procurement (certification not required) Centre for the Promotion of Imports from developing countries

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

Environmental labels Centre for the Promotion of Imports from developing countries

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

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

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

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

Centre for the Promotion of Imports from developing countries