How we rate companies
Most companies that we rate in our product guides will have had their supply chain management assessed. The criteria on which this assessment is based is listed below.
As you will see the rating is broken down into the four areas (policy, engagement, reporting, and difficult issues) each with a certain set of criteria that a company must fulfil to get top marks.
Small companies (turnover less than £8m) with an effective if not explicit practice addressing workers' rights in its supply chain are exempt.
So are companies whose products are all certified - or where necessary marketed - as fairtrade.
- 1. SUPPLY CHAIN POLICY (SCP)
1.1 Coverage of six key issues
A code for labour standards in the supply chain exists that covers all International Labour Organisation (ILO) core conventions, without qualification, and the code includes a clear living wage provision and an hours of work provision that is consistent with ILO conventions [48hrs per week +12 hour overtime]
1) no use of forced labour
2) freedom of association
3) payment of a living wage
4) working week limited to 48 hours and 12 hours overtime
5) eliminations of child labour (under 15 years old, or under 14
if country has ILO exemption)
6) no discrimination by race, sex etc
1.2 Plus a statement that it applies to the whole supply chain
The code is clearly stated to apply to the entire breadth of the supply chain, plus some depth (e.g. some second tier suppliers).
Company has good SCP (Requires: Children, Forced labour, Discrimination, Freedom of association, Living Wage, Max 48hrs, whole SCP statement.)
Company has reasonable SCP (5 or more of the above )
Company has rudimentary SCP (Children, Forced, Discrimination, TUs )
Company has no/poor SCP or did not reply
- 2. STAKEHOLDER ENGAGEMENT (SE)
2.1 Membership of multi-stakeholder processes (MSI)
The company is a member of the Ethical Trading Initiative (UK or Norway), the Fair Labor Association, the Fair Wear Foundation, or Social Accountability International.
2.2 Trade Union/NGO/NFP Engagement
There is third party involvement that includes systematic input from NGOs and/or labour and/or not-for-profit in the country of supply into the verification of labour standard audits.
2.3 Complaints Process
There is evidence that workers can, on a regular basis, provide anonymous feedback on working conditions to the retailer or brand at no cost and in their first language, ideally independently investigated and governed by a formal agreement with a global union.
Company has good SE (Requires: multistakeholder initiative (eg ETI), NGO involvement and employee complaints mechanism)
Company has rudimentary SE (one of two of the above)
Company has poor SE, no evidence of SE or did not reply
- 3. AUDITING AND REPORTING(A&R)
There is full and complete reporting of the results of audits including quantitative analysis of audit findings at the factory or supplier level.
An auditing work plan has been scheduled, the process is transparent (e.g. 75% of factories in Vietnam by June 2010) and is based on risk assessment, and is currently being implemented and reported upon, and the company has ideally publicly disclosed the names and addresses of the facilities producing its products.
3.3 Whole supply chain
There is a policy committing the company to auditing labour standards across the entire breadth of the supply chain, plus some depth (e.g. some second tier/some suppliers of internal products). OR the auditing program applies to the vast majority of the breadth of the supply chain, plus significant depth.
There is a policy for handling instances of non-compliance with the code, and this policy includes a staged approach to dealing with violations.
All or part of the costs of an audit are paid by the buying company.
Company has good A&R policy (Requires: discolsure of audit results, schedule or audit plan, commitment to audit the whole SC, remediation strategy and costs)
Company has reasonable A&R (3 or more)
Company has rudimentary A&R details (2 or more)
Company has no/poor A&R details or did not reply
There is ongoing, scheduled training for buying agents on labour standards in the supply chain and/or financial rewards for suppliers meeting labour standards, and/or a preference for long- term supplier arrangements has been demonstrated.
4.2 Audit Fraud
There is acknowledgement that problems of audit fraud exist and a systematic approach to addressing audit fraud, e.g. use of unannounced audits/quality auditors with high risk suppliers.
One or more of the following:
There is explicit acknowledgement of the problems of freedom of association in countries where independent trade unions are restricted/illegal (e.g. China, Bangladesh and Belarus) and a systematic approach to addressing this problem.
Outworkers (where relevant)
There is explicit acknowledgement of the problems stemming from the use of homeworkers/outworkers/subcontractors and a systematic approach to addressing this problem. Living wage project might help.
Other measures which are considered significant
4.4 Living wage
Company is taking measures to address living wages (other than inclusion of living wage clause in code of conduct)
Company has good DI policy - addresses all DIs (DIs = Audit Fraud, purchasing practices, living wage + homeworkers where relevant, trade unions in china etc)
Company has reasonable DI policy - addresses some DIs (2 or more)
Company has rudimentary DI policy - addresses 1 DI
Company addresses no DIs or did not reply