In July 2021, Ethical Consumer viewed the WHSmith PLC website for information on how the company managed workers' rights in its supply chain. From its Company policy page, a ‘Responsible Sourcing Policy’ report dated July 2020 was found. From this page a ‘Human Rights’ policy was also found.
Supply chain policy- good
A strong policy would include the following commitments: no use of forced labour, permission of freedom of association, payment of a living wage, the restriction of working hours to 48 hours plus 12 overtime (without exception), no use of a child labour (under 15 or 14 if ILO exempt), no discrimination by race, sex or for any other reason.
The ‘Responsible Sourcing Policy’ report stated that “We expect our partners, suppliers and manufacturers to commit to working towards compliance with these Responsible Sourcing Standards, both within their own operations and those of their suppliers”. Regarding child labour, Ethical Consumer viewed the company’s Responsible Sourcing Standards 2019/20 which stated that the “minimum age for employment shall be the legal age for completing education in the relevant country, or 15 years (or 14 years in countries where educational facilities are sufficiently developed), whichever is the higher”.
WHSmith also had adequate policies related to forced labour, freedom of association and non-discrimination and a living wage.
Regarding working hours, WHSmith stated that the working week should not exceed 48 hours and that overtime should be voluntary but the company stated that there were exceptions to this. The company was a member of the Ethical Trading Initiative and stated that the overtime exceptions had to be “allowed by national law”, “allowed by collective agreement freely negotiated with a workers’ organisation representing a significant portion of the workforce” and that “appropriate safeguards are taken to protect the workers’ health and safety”. In turn, Ethical Consumer considered this to be an adequate working hours policy.
Overall, as WHSmith had adequate policy on child and forced labour, against discrimination, for freedom of association, living wages and a 48 hour working week all of which applying across its supply chain the company was considered to have a good supply chain policy.
Stakeholder engagement (rudimentary)
Ethical Consumer deemed it necessary for companies to demonstrate stakeholder engagement, such as through membership of the Ethical Trade Initiative, Fair Labour Association or Social Accountability International. Companies were also expected to engage with Trade Unions, NGOs and/or not-for-profit organisations which could systematically verify the company's labour standards, and for workers to have access to an anonymous complaints system, free of charge and in their own language.
WHSmith was a member of the Ethical Trading Initiative. With regards to Trade Union, NGO/NFP engagement, the company stated that “Workers have the right to trade union or other appropriate representation at disciplinary hearings which may result in significant penalties or dismissal”.
However, the company did not specify if there was systematic input from NGOs and/or labour and/or not-for-profit in the country of supply into the verification of its labour standards.
Regarding the company’s complaints process, WHSmith stated in its Responsible Sourcing Policy that its “suppliers must provide a grievance mechanism”. “Suppliers must establish written disciplinary procedures and explain them in clear and understandable terms to workers” and that “suppliers must provide a grievance mechanism for workers to raise concerns, without fear of reprisal and with an option of anonymity”. Ethical Consumer viewed WHSmiths’ Sustainability Report 2020 which stated that it had a worker hotline, “to allow workers in our supply chain to report any issues to us in confidence”. However it was not clear if it was free, or if workers could report grievances in their first language.
Overall, as WHSmith was a member of a multi-stakeholder initiative, the company was considered to have a rudimentary approach to stakeholder engagement.
Auditing and Reporting (poor)
Ethical Consumer deemed it necessary for companies to have an auditing and reporting system. Results of audits should be publicly reported and quantitatively analysed. The company should have a scheduled and transparent audit plan that applies to their whole supply chain, including some second tier suppliers. The company should also have a staged policy for non-compliance. The costs of the audit should be borne by the company.
Regarding disclosure, Ethical Consumer viewed WHSmith 2019 Corporate Responsibility report which stated that its ethical trading programme involved “factory audits to assess supplier compliance with our Ethical Trade Code of Conduct”. WHSmith stated “The most frequent issues identified in our audits include health and safety problems, compliance with conditions relating to working hours and from missing paperwork.” However, the company did not provide a full and complete reporting of the results of audits.
Regarding an audit schedule, the company stated in its Corporate Responsibility 2019 report that it focused its audits on its own-brand products in Asia and that its supply chain comprised around 220 first tier suppliers, mostly based in China, and that it had the strongest influence over 15 of these suppliers. WHSmith stated that its in-house ethical sourcing team based in Hong Kong, Shenzhen and Shanghai audited suppliers for compliance with its Code of Conduct “at least every two years, using a risk-prioritised programme of announced and unannounced site visits and review of third party audit reports”. This audit schedule appeared to only apply to the China-based suppliers in WHSmith supply chain.
Regarding the supply chain, the company stated that it had “begun to map and investigate our Tier two supply chains and have established that many of our direct Tier one suppliers conduct some sort of audit or checks on their suppliers to ensure compliance with the ETI’s Base Code”. However, this suggested that its auditing policy does not currently involve systematic auditing of second tier suppliers.
Regarding remediation, WHSmith stated in its Responsible Sourcing Policy 2020 that if “serious non-conformances are discovered, then an improvement plan will be agreed and no further orders will be placed until the issue is resolved to our satisfaction“. The company also stated that “Over 70 issues have been identified across the 11 factories this year with nearly all of them being addressed and remedied successfully”. In its Sustainability Report 2020, the company also mentioned that it engaged with suppliers by “resolving specific problems identified during audits and on focusing on longer-term projects to improve the most common issues such as health and safety or worker representation.“ Overall, this was considered a staged policy for non-compliance.
Regarding costs of the audit, WHSmith failed to state who bore the costs of the audits.
Overall, as WHSmith only met the remediation criteria, the company was considered to have a poor approach to auditing and reporting.
Difficult Issues (reasonable)
Ethical Consumer also deemed it necessary for companies to address other difficult issues in their supply chains. This would include discussion of purchasing practices which could include ongoing scheduled training for agents, or rewards for suppliers meeting labour standards, or preference for long term suppliers. It would also include acknowledgement of audit fraud and unannounced audits, and measures taken to address the issue of living wages, particularly among outworkers, and illegal freedom of association.
Regarding purchasing, WHSmith stated that it had an “ethical trade programme” which had three elements, including training for buyers so that they understand the role they need to play. In its Sustainability Report 2020, WHSmith also stated that “For our most important lines, we have long-term strategic partnerships in place, with suppliers whom we know well and who know our business and what is required.” It was considered to adequately address purchasing practices.
WHSmith stated that a salient labour issue was freedom of association, and in its Responsible Sourcing Policy 2020 it stated that “Where the right to freedom of association and collective bargaining is restricted under law, the employer facilitates, and does not hinder, the development of parallel means for independent free association and bargaining.” It also stated that “Eleven of our largest suppliers are currently engaged with our Worker Representation Initiative”. This initiative involved the company working with factory managers “to develop better worker representation and engagement processes”. The aim of the project was said “to help some of our key suppliers to develop fully functioning worker management committees to represent workers on any matter affecting their rights and to resolve problems as they arise”. It was therefore considered to have a systematic approach to the issue of illegal freedom of association.
Regarding audit fraud, the company did mention that its in-house ethical sourcing team based in Hong Kong, Shenzhen and Shanghai audited suppliers for compliance with its Code of Conduct using a risk-prioritised programme using both announced and unannounced site visits.
The company did not appear to have taken any measures to address living wages other than what it stated in its code of conduct.
As it adequately met the criteria on purchasing, audit fraud, and illegal freedom of association, it was considered to have a reasonable approach to difficult issues in the supply chain.
Overall, WHSmith received Ethical Consumer's best rating for Supply Chain Management.
WHSmith Responsible Sourcing Policy 2020 report (10 August 2021)