I recently attended the 2016 Ethical Sourcing Forum (ESF) in NYC. Held annually for over a decade, the ESF focuses on issues, best practices, and trends in ethical global sourcing – mostly for the apparel/fashion industry although there were also representatives from the toy, electronics, and food/beverage industries. I was inspired by such a wonderful community of CSR professionals and I came away with renewed optimism about the effectiveness of social compliance programs – the strategies a company takes in addressing the health and safety of its employees and its accountability for meeting health and safety standards.
A company’s social compliance program typically includes strategies such as implementation of a code of conduct or standards of compliance and an auditing program. However, one of my key takeaways from the 2016 Ethical Sourcing Forum was the movement to go “beyond auditing” in social compliance programs. Speakers from The Gap, PVH, West Elm, and the American Apparel and Footwear Association talked about moving social compliance programs beyond codes of conduct and supplier/factory auditing towards the ideal situation of self-directed continuing improvement. In addition, Marsha Dickson (University of Delaware) and Doug Cahn (The Cahn Group, LLC) presented their work on The Better Buying Initiative – a platform for 360-degree feedback whereby suppliers/factories would rate buyers/brands just as buyers/brands rate factories.
Therefore, I offer the following Hierarchy of Social Compliance Programs (think Maslow’s Hierarchy of Needs) with four levels to use in evaluating current and future strategies for social compliance programs:
· Code of Conduct and Supplier Auditing Checklist – at the basic level a buyer/brand has a code of conduct or standards of compliance and relies on 1st, 2nd, or 3rd party audits for risk management assessment associated with sourcing.
· Building a Relationship with the Supplier/Factory Management – at this next level, relationships are built between the buyer/brand and supplier/factory management. This partnership between the brand/buyer and supplier/factory results in increased communications and capabilities for mutual problem-solving. At this level social compliance programs are considered to be more than a risk management assessment strategy for the buyer/brand.
· Capacity Building – at this next level, workers are brought into the process through increased worker education and worker-management communications. The buyer/brand becomes involved with the community and strives to improve conditions outside the walls of the factory. The use of mobile technologies for worker feedback may be incorporated.
· Self-Directed Continuing Improvement – at the highest level, suppliers/factories would engage in self-directed continuing improvement strategies to the point where audits would no longer be needed. In addition, 360-degree feedback processes would allow suppliers/factories to rate and provide feedback on buyers/brands just as buyers/brands to rate and provide feedback on suppliers/factories.
Based on my analysis of social compliance programs, I am aware of programs at the first three levels with only a few that are moving towards the fourth level. In many cases, aspects of several levels are being implemented at once. Indeed, even at the highest level risk management may not want to eliminate audits all together. And so I ask -- at what level is your social compliance program? What would it take to move it to the next level?