Corporate Responsibility and Ethics in the Global Supply Chain affecting Kenya

The role of CSR Codes of Conduct

How can we use this development proactively?

By Henning Høy Nygaard

SUSBIZ Kenya

What is a code of conduct?

• A code of conduct refers to a company’s set of principles on social (and environmental) issues that the company and its suppliers have to comply with

• Codes of conduct are not enforced by any authority

The codes are often used as:

• Appendix to contracts with suppliers

• Base for supplier audits

• Base for co-operation with suppliers

• Principles for good governance in own company

Why Codes of Conduct?

1. Consumer pressure in Europe

2. Media exposure

3. Management tool – we work after the same standards all the time

4. We can show our buyers our comittment

5. Easier to varify

6. Possibility to point out zero

tolerance and other principles

Risk Management or Business Development

Codes of conduct as tool for

1. Risk management

2. Business development– Streamline your business strategy– Promote productivity and growth– Access new markets– Attract qualified staff– Drive innovation

The Background of Codes

1. UN conventions – The Universal Declaration of Human Rights

– The ILO’s declaration on Fundamental Principles and Rights at Work

– The Rio Declaration on Environment and Development

– The United Convention against Corruption

2. National law

The Background of Codes

GLOBAL COMPACT - UN• Ten principles for responsible business within four main areas

– Human rights– Labour Standards– Environment– Anti-Corruption

• Today, approximately 7000 companies are member of Global Compact, and – XXX in Denmark– XXX in Kenya

Codes of conduct supporting initiatives in Denmark

The CSR compass

Common content of Danish Codes

– Forced labour– Freedom of association and right to collective bargaining – Child labour (light work, remediation programmes)– Non-discrimination– Wages – Working hours – Health and Safety (differences in level of detail, and

training/management system)

Content of Codes

Additional issues– Housing conditions – Management system – Harrassment or abuse – Environmental standards– Sub-suppliers

Wages – an example of divergence

Living wage or minimum wage?

”…In any event, the supplier shall always provide a ’living wage’, which enables workers to meet basic needs of themselves and their dependents and to provide some discretionary income”

”It is expected that all our suppliers likewise pay wages and provides benefits consistent with national and local remuneration laws or prevailing industry standards”

From Paper to Reality

Step by step…..

Code of conduct

Implementation

Monitoring, Enforcement and Implementation

• External monitoring and/or internal monitoring?

• Self assessment, external auditors, non-announced audits, shadow audits, etc

• Training?

• Assistance?

• How to communicate?

CoC – from suppliers’ perspective• ”Unstable order placing and harsh buying practice from our

customers make it impossible to uphold labour standards as dictated in the codes”

• ”Our customers are behaving as policemen and are interfering too much in our business”

• ”Buyers only care about cost and delivery time”

• ”Is our customer complying with his own code of conduct?”

CoC – from buyers’ perspective

• ”It is difficult to control the suppliers’ compliance with the codes. We do not know if the suppliers have double book keeping system and are showing us the wrong book!”

• ”The suppliers do not have the same ethical values – they do not understand the code”

• ”It is the suppliers’ responsibility to implement the code of conduct. We cannot help all 50 suppliers and 400 sub-suppliers”

Do Codes of Conduct Make a Difference?

OR how do we ensure that the codes make a difference?- The codes cannot stand alone!

- Strategies for enforcement and implementation- Communication between buyer and supplier- Assistance and help to the supplier- Management systems should be a part of the codes to ensure a

continuous process

What needs to be done?

Buyers need to1. Make sure that the audit process is about learning and

not just ”policing”

2. Provide support and assistance to suppliers

3. Show the link between social/environmental improvements and business development

What needs to be done?Suppliers need to

1. Develop their own code

2. Develop new policies and procedures

3. Allocate responsibilities at all levels

4. Train staff

5. Establish a review process

CoC exercisePrepare a small presentation containing:

1.Do you work with codes or do you receive requirements from costumers?

2.Can you see the benefit of integration of a CoC in you management system?

3.Work with the Child Labour case for 60 min and explain how to work with CoC standards.