CSR in Eastern Europe - DIEH · CSR in Eastern Europe DIEH September 24, 2014 ... MSDS not...

Qinspect 2014 September, 2014 | 1

CSR in Eastern Europe DIEH September 24, 2014

www.qinspect.eu


Objectives

Provide background for better understanding of the different regions in Eastern Europe.

Provide insights on common non-conformities and risks.

We hope that there will be discussions and dialog.

At the end we hope we will be smarter and you will take away a better understanding of Eastern Europe.

Finally we hope for a continious dialog on new trends.


History and Religion in Eastern Europe

Clear religios split with historical root.

Not a driver for unethical business behaviour.

But a true cultural barrier that increases distance.


Religion in Eastern Europe – How Strong?

Denmark 31%

Germany 47%

Czech Rep. 19%

Slovakia 61%

Poland 80%

Bulgaria 40%

Romania 90%


Legacy of the communism era

Starting 1988-89 with 40 years of lack of development.

Then ”lights off”

”Democracy” with an admini-stration rooted in communism.

25 years after still widespread corruption and untrust in the public adminstration.

Why is this accepted and why does it go on for so long? People in Eastern Europe respond to corruption. In the same way as People in Denmark respond to tax increases.


Corruption Perception Index

Denmark / new Zeland is in top.

Estonia / Poland best performing EE count.

Czech Republic / Slovakia /China / Romania /Brazil

Moldova / Kosovo / India / Vietnam /Sri Lanka

Russia / Ukraine / Kazahstan / Pakistan

Turkmenistan / Uzbekistan

Source: http://cpi.transparency.org/cpi2013/

http://cpi.transparency.org/cpi2013/

http://cpi.transparency.org/cpi2013/


The Regions (as we see them)

1. Czech Republic, Slovakia, Poland, Hungary, Slovenia.

2. Lithuania, Latvia, Estonia.

3. Croatia, Serbia, Bosnia I Herzegovina, Montenegro, Macedonia, Kosovo, Albania.

4. Belarus

5. Romania, Bulgaria, Moldova

6. Russia, Ukraine, Kazakhstan


Typical Non-Conformities, Risks and insights

Typ

ical

No

n C

on

form

itie

s

Czech Republic,

Slovakia, Poland,

Hungary

Russia, Ukraine,

KazakhstanBelarus

Lithuania, Latvia,

Estonia

Croatia, Slovenia,

Serbia, Bosnia

Hercegovina,

Montenegro,

Macedonia,

Kosovo

Romania,

Bulgaria, Moldova

Child labor

Young workers0 1 0 0 2 2

Forced labor

2 0 0 0 0 0

Discrimination

0 2 3 0 0 0

Abuse and

Harassment0 0 0 0 0 0

Wages and

Benefits

4 5 1 3 5 5

Working hours

incl. overtime2 3 1 2 4 4

Freedom of

Association2 0 0 0 0 0

Health and

Safety

4 5 4 4 5 5

Environment

2 5 3 4 5 4

Business Ethics

3 5 1 2 3 3

Young workers PPE

Young workers / child laborAgriculture


Immigrant work-ers facilitated by middleman

Discrimination reg. access to benefits

Dictatorship -political discrimination

Hazardous waste not separated. (missing infrastructure) Disorder around the facility

Same issues +Agency workers

Over time hours exceed legal limits. Over time hours are not registered - or registered in full.Working time is not registered

Wages not specified in contract.Wages below legal min. wages.Over time not paid in full - or at allPart of wages paid unregistered

Over time not paid in fullpart wages paid unregistered

Highly regulatedMinimum wagesOver timefrequency of payments

Over timeAgency workerspart wages paid unregistered

Hazardous waste not separated No target reductions

-Obstructed f ire extinguishers -Expired f ire extinguishers -Not marked evacuation w ays and exits -Obstructed emergency exits -Emergency exits locked -Emergency exits not opened outw ards -Too narrow evacuation ways -No evacuation plans -No evacuation drills -Nobody trained in f irst aid -First aid

kits not equipped according to the List of medicals -List of medicals not available -Medicals expired - Hazardous substances not marked in local language -MSDS not available -No eyew ash stations -Personal protective equipment not available and/or not w orn -Injury book not available -Fire instructions not available -Emergency signs not posted -Exposed w iring -Not adequate number of toilets -Work environment does not appear clean -Temperature not adequate -Ventilation not adequate -Chemicals not properly stored -Shelves not marked by the maximal loading -Lifts not marked by maximum loading -

Equipment not guarded -Maintenance of buildings not adequate

Workers are "advised"

Especially Serbia and BIH: No or destroyed infra-structure-Direct disposal of waste waters into the environment-No control of air emissionsNo waste separation



Hazardous waste not separated.

Poland bestperforming.

Corruption wide spread reg. state tenders.

Normal to pay bribe to be listed = win business.



Culture and thinking is different.

We have a strong leader who cares about us

Estonia best performing.

large grey -black economy.

Slovenia bestperforming.


Normal to pay bribe to be listed - win business.

Corruption wide spread reg. state tenders


Large grey -black economy.

VAT / TAX avoidance

Rating 0 (very low risk) to 5 (Very High risk)


Labor and People

Czech Republic,

Slovakia, Poland,

Hungary

Russia, Ukraine,

KazaksthanBelarus

Lithuania, Latvia,

Estonia

Croatia, Slovenia,

Serbia, Bosnia

Herzegovina,

Monte Negro,

Macedonia,

Kosovo

Romania,

Bulgaria, Moldova

Child labor

Young workers0 1 0 0 2 2

Forced labor

2 0 0 0 0 0

Discrimination

0 2 3 0 0 0

Abuse and

Harassment0 0 0 0 0 0

Young workers PPE



Immigrant work-ers facilitated by middleman

Discrimination reg. access to benefits

Dictatorship -political discrimination


Wages, Working hours and Labor Unions

Czech Republic,

Slovakia, Poland,

Hungary

Russia, Ukraine,

KazaksthanBelarus

Lithuania, Latvia,

Estonia

Croatia, Slovenia,

Serbia, Bosnia

Herzegovina,

Monte Negro,

Macedonia,

Kosovo

Romania,

Bulgaria, Moldova

Wages and

Benefits

4 5 1 3 5 5

Working hours

incl. overtime2 3 1 2 4 4

Freedom of

Association2 0 0 0 0 0

Same issues +Agency workers

Over time hours exceed legal limits. Over time hours are not registered - or registered in full.Working time is not registered

Wages not specified in contract.Wages below legal min. wages.Over time not paid in full - or at allPart of wages paid unregistered

Over time not paid in fullpart wages paid unregistered

Highly regulatedMinimum wagesOver timefrequency of payments

Over timeAgency workerspart wages paid unregistered

Workers are "advised"


Heath & Safety and Evironment

Czech Republic,

Slovakia, Poland,

Hungary

Russia, Ukraine,

KazaksthanBelarus

Lithuania, Latvia,

Estonia

Croatia, Slovenia,

Serbia, Bosnia

Herzegovina,

Monte Negro,

Macedonia,

Kosovo

Romania,

Bulgaria, Moldova

Health and

Safety

4 5 4 4 5 5

Environment

2 5 3 4 5 4


Hazardous waste not separated No target reductions

-Obstructed f ire extinguishers -Expired f ire extinguishers -Not marked evacuation w ays and exits -Obstructed emergency exits -Emergency exits locked -Emergency exits not opened outw ards -Too narrow evacuation ways -No evacuation plans -No evacuation drills -Nobody trained in f irst aid -First aid

kits not equipped according to the List of medicals -List of medicals not available -Medicals expired - Hazardous substances not marked in local language -MSDS not available -No eyew ash stations -Personal protective equipment not available and/or not w orn -Injury book not available -Fire instructions not available -Emergency signs not posted -Exposed w iring -Not adequate number of toilets -Work environment does not appear clean -Temperature not adequate -Ventilation not adequate -Chemicals not properly stored -Shelves not marked by the maximal loading -Lifts not marked by maximum loading -

Equipment not guarded -Maintenance of buildings not adequate

Especially Serbia and BIH: No or destroyed infra-structure-Direct disposal of waste waters into the environment-No control of air emissionsNo waste separation



Hazardous waste not separated.


Business Ethics

Czech Republic,

Slovakia, Poland,

Hungary

Russia, Ukraine,

KazakhstanBelarus

Lithuania, Latvia,

Estonia

Croatia, Slovenia,

Serbia, Bosnia

Herzegovina,

Monte Negro,

Macedonia,

Kosovo

Romania,

Bulgaria, Moldova

Business Ethics

3 5 1 2 3 4

Poland bestperforming.





Culture and thinking is different.

We have a strong leader who cares about us

Estonia best performing.

large grey -black economy.

Slovenia bestperforming.



Corruption wide spread reg. state tenders


Large grey -black economy.

VAT / TAX avoidance


Some Typical Dilemmas

Situation Dilemma

Overtime performed exceeds the legal maximum allowance for overtime.

The overtime is wanted and in many cases needed for the families to support themselves.

Wages are paid late – but are paid in full. Many small enterprises are suffering cash flow issues due to payment terms requested by – or forced by customers not paying on time.

Foreign workers applied through labor agencies are suffering poor condition below the normal conditions on the labor market.

Unfortunately the labor market in CZ does not offer them any alternatives.

Overtime and/or other parts of the wages are paid unregistered i.e. tax avoidance and will hurt the employees social benefit later in life.

Very common in countries with ceiling on social taxes e.g. Bulgaria. But also common in other countries for reason of VAT and income tax avoidance.


Coffee Break

After the Coffee Break:

About Qinspect.

UN Global Compact / Guiding Principles.

Improving impact and collaborating with multi-stakeholder organizations.

And this will support towards Compliance with the UN Guiding Principles.


Our History

2000 2004

Q-Inspect Ltd.

Founded by Radek Lambl in Prague, CZ after more than 10 years in the business.

Intertek Alliance

Contract to build up and operate Intertek’s business in Eastern Europe for consumer goods

2006 2010 2012

Expanding coverage of Eastern Europe and Russia.

Operational in 10 countries with 450+ man days spend on audits and inspections

Contious Growth.

Operational in 15 countries performing 900+ man days of Audits and Inspection. Intertek aquires Moody (2011).

Transfer of consumer goods Russia.

Qinspect continues with Intertek Russia, but activites related consumer goods are transferred to Intertek

2013

Decision to go to market.

The new constallation Intertek / Moddy is limiting the growth. Further Qinspect wish to expand in Scandinavia.


Indutries

Textiles

Shoes

Glass

Electronics and home appliances

White goods

Office supplies

Metal Products

Wet Blue (Leather)

Themes

Social Responsibility

Health & Safety

Sustainability

Security

Risk Management

Training & Courses

Services

Audit

Inspection

Testing

Consultancy

Certification

Training


Social Compliance Audit / Technical Audit Experience (since 1989, Auditor experience)

3000+ Audits – social audits, technical audits, BRC, CTPAT in the following countries - in alphabetical order - in Austria, Bosnia I Herzegovina, Bosnia I Herzegovina – Republika Srpska, Belarus, Belgium, Bulgaria, Canada, Chile, China, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Latvia, Lithuania, Malaysia, Mexico, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Switzerland, Sweden, Tatarstan, Thailand, Turkey, UK, Ukraine, USA.


Inspection Experience (since 1989)

5000+ man days of inspection: Inspections of Hard goods, soft goods, Electrical appliances - in alphabetical order - in Austria, Belarus, Bosnia I Herzegovina, Chile, China, Croatia, Czech Republic, Estonia, Germany, Hungary, Italy, India, Indonesia, Latvia, Lithuania, Poland, Serbia, Slovakia, Slovenia, Spain, Russia, Ukraine, Thailand.

Inspected EE product categories: TVs, radios, mobile phones, refrigerators, washing machines, vacuum cleaners, different other electrical small home appliances lighting video equipment spare parts for electronic industry electrical parts for automotive industry electrical toys (plus risk analysis and testing).

Inspected soft product categories: Textile, clothes, footwear, fabrics.

Inspected hard product categories: Toys, DYI products, garden products, plastic products, metal products, glass products, paper products, pools, school products, writing products.


Training Experience (since 1998)

Trainings performed in these countries:

In alphabetical order: Belarus, Bosnia I Hercegovina, Bosnia I Hercegovina – Republika Srpska, Bulgaria, Croatia, Czech Republic, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, South Africa, Thailand, Ukraine.

Training focused on: training of social auditors, technical auditors, Security Auditors and inspectors in different product categories – e.g. automotive, hard goods, soft goods – apparel, textile, EE, food.


Client Programs

Qinspect is currently approved for a total of 58 client programs counting leading companies renowned for good practice and compliance highest social standards.

Sample Client Statistic – Key clients

Client

Number of

Audits

2013

Year of

first Audit

Total

Audits

US / Global 42 2004 > 200

SE / Global 24 2012 >50

UK / SEDEX 98 2000 >500

FR / Global 23 2005 >200

US/ Global 2 2009 >100

US/ Global 9 2000 >100

US/ Global 12 2006 >100


The Q-CSR Program

Apart from the SMETA audits. Qinspect also offers an internally developed program based on the experiences and best practices from working with 50+ strong client programs.

Training

- CSR Awareness

- Audit Preparation

- CSR Manager Training

- Internal Auditor training.

Self assesment

Pre-Audit

Audit

Audit Report

CAP

Implement

Follow Up


What Makes Qinspect Different

We are a lean company with a large corporations experience. Enabling us to deliver equal services, but with unparallelled flexibility and adaptability.

Active in all of Europe and are growing our presence in India, US, Asia.

Our domestic market is Eastern Europe where we are active locally with highly experienced auditors in 19 including Ukraine and Russia.

Global network enabling end-to-end solutions.

Lower cost base.


Our Aspiration

Qinspect is committed to be a leader and a trend setter in programs and services to improve product quality and corporate social responsibility programs. Enabling our clients to constantly improve operational sustainability and social impact on society.

Next level in CSR Programs compliant with UN Guiding

Principles.

Note added from the meeting:

• Focus on Processes.

• Cascade to sup-suppliers / Agencies.

• Compliant with UN Guiding Principles.


Source: UN Global Impact Year Report 2013


Improve Supply Chain compliance is key

Source: UN Global Impact Year Report 2013


UN Guiding Principles On Business and Human Rights

I. THE STATE DUTY TO PROTECT HUMAN RIGHTS

II. THE CORPORATE RESPONSIBILITY TO RESPECT HUMAN RIGHTS

III. ACCESS TO REMEDY

A. Foundational Principle

B. Operational Principle


THE CORPORATE RESPONSIBILITY TO RESPECT HUMAN RIGHTS Foundational principle

A. Avoid causing or contributing to adverse human rights impacts through their own activities, and address such impacts when they occur.

B. Seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.


UN Guiding Principles The corporate responsibility


Typical CSR Process

Corporate

CSR Policy

&

Governance

Implementation &

Realization Monitoring

Review &

Corrective Action

Communication &

Training

Audit Report & Rec. Internal Audit

Supplier to Implement CAP

Set Targets

Plan DO Check Act


Typical CSR Process

Corporate

CSR Policy

&

Governance

Implementation &

Realization Monitoring

Review &

Corrective Action

Communication &

Training

Audit Report & Rec. Internal Audit

Supplier to Implement CA

Set Targets

• Allignment of Methods and focus areas.

• Experience Exchange

• Knowlegde & Best practice sharing

• Collaborate with external expert to improve programs and optimize impact.

Support from local Stakeholders:

• Provide local expert support to suppliers

• Industry vs. Single supplier approach

• Industry association / State support

• Fundings for elaborated improvement programs.

• E.g. Bulgaria

X X

Plan DO Check Act

Stake Holder Opportunities


Typical Audit, CAP & Follow Up Process

Audit Corrective

Action Plan

Follow Up

Audit

Corrective Action Implemen-tation


Improve Impact Through Collaboration

Audit Corrective

Action Plan

Follow Up

(Audit)

Corrective Action

Preventive Action

Multi

Stakeholder

Collaboration

Industry View Root Cause

Comprehensive Change Programs:

• Local stake holder support

• EU / State funding

• Industry impact

• Sustainable results

Local Stake Holders:

• Labor organizations / branch of ILO

• Industry Associations

• Investors

• Ministeries / State Organizations

• Fire Brigade / Department

• Environment Organizations

• Local NGO’s

Implemen-tation


Practical Coverage of the UN Guding Princibles

Operational Principles Comments Coverage

Due Diligence

1. Business relationships

2. Vary in Complexity

3. Ongoing

1. CSR Audit

2. Supplier Finacial Assesment

3. References.

4. Verification of CSR performance by sub-

suppliers and man-power agencies.

Gauge Risk

Actual and Potential adverse

1. Draw on Expertise Internal or External

2. Involve meaningful Consultation /

Stakeholders

1. Extend Audit to include risk analysis.

Take Appropriate Action

(Internal Integration)

1. Assign Appropriate Resources /

Responsibilities.

2. Appropriate Action will Vary

depending size, leverage and nature of

involvement

1. Proper Review of Audit Report.

2. Capability training.

3. Organization changes.

4. Stakeholder collaboration

Verification and Tracking

1. Appropriate Indicators (Reporting)

2. Feedback from Internal and External

sources incl. Stakeholders

1. Define Indicators

2. Follow Up Audit. And Reporting on

Indicators.

3. Review of internal Audits.

4. Review of trends.


Bottom Line

Current programs do not cover this.

Leaders recognize that improved programs are needed.

We will not effectively get there on our own.

We are ready.

Thank You For Your Attention


Contact Details

Q-Inspect Ltd.

K rozvodně 260/6

154 00 Prague 5

Czech Republic

Phone: +420 251 812 810

Email: [email protected]

web: www.qinspect.eu

Radek Lambl

Mobile: +420 724 334 655

[email protected]

Bjarne Moeller

Mobile: +420 724 391 097

[email protected]

mailto:[email protected]

mailto:[email protected]

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