© 2007 Business for Social Responsibility “Beyond Monitoring”: Creating a New Way Forward 28 January 2008

Supply Chain 2008 More industries Further down supply chain More collaboration More transparency More environment

A Decade of Progress… …Has Reached A Plateau Development of corporate codes of conduct Enhanced implementation efforts Innovative multi-stakeholder initiatives Greater transparency in some areas Heightened consumer awareness Some real improvements in working conditions

Creating a New Approach We know what is not working; let us envision what works better Create an approach that can impact the core structure of companies’ compliance programs Focus on buyers’ collective leverage Take some risks geared toward systemic change Verification will continue to be necessary, but must only be one part of a larger solution Avoid duplication, and look for collaborative opportunities

Beyond Monitoring Vision Public Policy Framework Worker Empowerment Supplier Ownership Buyer Internal Alignment Sustainable Supply Chain Practices

Participating Companies Chico’s The Walt Disney Company Ford Motor Company Gap Inc. Hallmark HP Ikea Johnson & Johnson Jones Apparel Group L.L. Bean Levi Strauss &Co. Microsoft Nau Nike Nordstrom Starbucks Time Warner Wal-Mart

Europe-Based Companies at November BeMo Dialogue* Adeo Group Burberry C & A Carrefour Camif Electrolux L’Oréal LVMH Monoprix Nestlé Okaidi PPR Group Sodexho Alliance Vodafone *Several more have expressed interest

Success factors Buyers’ commitment from compliance AND other internal departments to participate Willingness to integrate social/environmental questions into sourcing, design, production, and logistics Ability to work with suppliers as partners and respond to their inputs Start with small steps, but with global applicability built into the framework

The Project Mapping of internal “go to market” process: This project aims to identify and address root cause issues stemming from buyers’ supply chain practices. Deliverables include a process framework to integrate social and environmental aspects into supply chain decisions and a library of materials to help employees understand the impact of their actions and decisions on workplace conditions in factories. Shared root cause analysis: The main objective of this project is to create a joint forum between buyers and suppliers in which suppliers can voice their opinions on root causes and move toward a greater sense of ownership over compliance issues

The Project Road to Empowerment and Action in China: In partnership with the Asia Foundation, this project focuses on raising worker awareness of their rights and responsibilities. The effort will initially be based in China and will work to develop effective grievance systems and focus on in-factory and community based outreach to workers. One Voice: This effort aims to create common ground for dialogue on labor and environmental issues between international buyers and Chinese government agencies and entities. Transparency: This initiative is focused on creating a set of transparency policies that buyers can agree to in order to encourage honesty from suppliers regarding their current practices and facilitate continuous improvement.

Better Work: ILO and IFC Better Work is a partnership between the ILO and the IFC. The programme was launched in August 2006 to improve labour practices and competitiveness in global supply chains. Better Work supports enterprises in improving their labour standards based on core ILO labour standards and national labour law. Better Work is also developing both global tools and country level projects, with initial projects in Jordan, Lesotho, and Vietnam.

Trends to Come Significant attention to sustainability of extended supply chains in light of climate Debates/protocols over who “owns” emissions Increase in attention to water scarcity: both access and quality issues More focus on country specific efforts Cross industry efforts (e.g., auto/electronics, apparel/raw materials)