Published on: December 10, 2008Guidelines designed to help global retailers and manufacturers adhere to social justice principles at every step in the supply chain are being released today by a consortium of companies meeting in Hong Kong.
The conference is of a group of the world’s biggest companies that has joined together to create the Global Social Compliance Programme (GSCP), described as a partnership of some of the world’s biggest companies working together for social justice and ethical treatment of workers throughout the supply chain. “GSCP is a business driven programme for companies that want to harmonise existing efforts,” the announcement says. “The aim is to deliver a shared, consistent and global approach for the continuous improvement of working conditions across all categories and sectors”
The announcement continues, “The Programme represents the most significant business alliance for social justice yet seen, not just because it is practical and inclusive but also because it has strong CEO support,” and notes that the companies joining the GSCP include Walmart, Carrefour, Tesco, Ikea, Hewlett-Packard, Metro and Migros.
CIES, the global food industry organization, is the major facilitator of GSCP, which is not limited to either the food industry or CIES members.
At the Hong Kong meetings today, the GSCP board has released a “reference code,” described as “the first of a series of reference tools that will help companies and existing initiatives work together to deliver a common message and reduce duplication and confusion. The Reference Code describes best practice and relies on international conventions and guidelines from which it sets generic requirements … Long-term and genuine change, beyond the mission statement, is best served when stakeholders and business get together in constructive dialogue. This challenge is not industry or country specific. It applies equally to all who buy and sell goods. International organisations, governments, trade unions, NGOs, and consumers are all in support of a new business model.
Terry Babbs, Tesco’s International Trading Law and Technical Director, is serving as chairman of GSCP, and engaged in the following exclusive e-interview with MNB.
MNB: My first question is simple. Why this and why now?
Terry Babbs: We’ve seen the development of codes and implementation systems deliver some real change. However, the number of codes has proliferated and approaches have diverged. This has led to duplication of effort and confusion amongst buyers and suppliers. The people in supply chains deserve better work. Also, buyers and policy makers need a clear framework to work efficiently. To help them, the current complexity needs to be simplified.
We want to develop a single, clear and consistent message for suppliers globally for the shared benefit of the companies, the existing monitoring initiatives, the civil society stakeholders and especially the workers.
MNB: Are there specific events or reports that created momentum to develop the GSCP Reference Code that is being released today, and what is the code designed to do?
Terry Babbs: As recently as twenty years ago, working conditions in global supply chains were considered by business to be the accountability of governments. Our shoppers thought otherwise. They expect us to do what we can.
We share these supply chains and our experience has been that addressing the root causes of these issues as individual companies does not deliver change. So, to answer your question, there was not really a specific event, more a growing realisation. We believe that working together, companies can improve their understanding and build trust. That will provide the foundation for real improvements.
The Reference Code provides a clear and common set of requirements for fair labor conditions in the global supply chain. It will enable retailers and brand manufacturers to work toward mutual recognition of audit results and will apply to their entire supply chains, including suppliers and sub-contractors.
MNB: In reading the materials, it seems like GSCP is very much about sustainability...but the human kind rather than the environmental kind. Are there ways in which GSCP dovetails with other sustainability efforts being undertaken by companies like Tesco?
Terry Babbs: It seems to me that sustainability in business is the outcome of responsibility in purchasing. That means that business is done with all issues being managed in partnership between the retailer or brand manufacturer and the supplier. That includes the social and environmental issues as well as quality, safety, legal and financial. I would very much agree that involvement in GSCP is a part of efforts on sustainability by the participating companies.
MNB: Why the decision to extend this effort beyond the food industry companies and CIES-related companies that ordinarily might band together on an effort like this?
Terry Babbs: CIES is a global professional organisation that brings together major companies in the retail and consumer goods business. Its mission is to promote best practice and common industry positions on strategic non-competitive issues. It offers a neutral platform for retail companies to work on common issues with their suppliers.
This problem needs to be considered as one of fundamental importance for business. It’s not just about clothes, or toys, or food. It’s not just about America or Europe or China. It’s not just about companies, or civil society or governments. It’s not just about factories or sweatshops or farms.
It’s about people and it’s about all products, all countries, all stakeholders and every level in the supply chain. The participating companies share supply chains and share consumers everywhere. We had to build the scope of GSCP to recognise the nature of the global marketplace.
MNB: GSCP, described as a challenge to uphold human rights in the workplace, seems like it could be a tough sell at the moment because of all the focus on the global recession. Do you have any concerns that its importance could be lost among the economic headlines?
Terry Babbs: Consumers have less money. They’re not buying so much and they’re also trading down as they look to balance their own budgets. It’s a tough time for business too. However, the problems of divergence and duplication represent a clear opportunity for business to improve efficiency. I think that makes this a good time to tackle the problem.
MNB: Beyond making recommendations related to social justice and human sustainability, what other efforts will GSCP be undertaking? Would you expect it to push for regulations or legislation that might have teeth, with consequences for companies that ignore these issues?
Terry Babbs: We believe we need to find a common understanding of the entire audit process through the development of the reference tools before we can effectively start dealing with training, capacity building and developing management systems.
As for other companies, they have to be accountable to their own shareholders and stakeholders for what they do. There are no plans to push for any regulations.
MNB: Five years from now, what kinds of results would you ideally like to see have emerged from GSCP?
Terry Babbs: I would like to see a clear framework to help all buyers and policy makers address social justice issues in supply chains. Also, the workers deserve better than they get. To help them, the current complexity needs to have been simplified through convergence. That means simpler buying, improved efficiency and better work.
MNB: Will membership in GSCP and compliance with its recommendations translate into a business advantage for those who take part? How so?
Terry Babbs: Participating companies will get a number of benefits. Their brand promise is likely to seek a fair deal for those who make, sell and buy their products. Their ability to deliver that promise will be improved. In addition, they will participate in a forum where they can openly discuss issues and challenges. Also, their experts will learn from others. Any business advantage should be measured in efficiency. There is a clear understanding that there will be no marketing activity around participation.
- KC's View:
- I think Babbs is right when he says that consumers hold retailers and manufacturers responsible and accountable for human rights violations in the supply chain. Which is why companies have to be aggressive – in the model proposed by GSCP – about making sure that things are done not just efficiently, but appropriately and correctly.