|Implementation of Apparel Industry Codes of Conduct ( Chapter II)|
|Education Apparel Industry Research Directory for Fashion & Textiles Clothing Factories Human Rights Apparel Search Child Labor|
Child Labor Report 2005
II. Codes of Conduct in the U.S. Apparel Industry
F. Implementation of Apparel Industry Codes of Conduct
Fundamentally, a code of conduct relies on its credibility; the extent to which it is taken seriously by industry, unions, consumers and government. 77
Implementation is a crucial determinant of a code's credibility. This section will describe the various ways that companies attempt to ensure that their stated policy on child labor is adhered to in the facilities that produce their apparel overseas. It will begin with a general discussion of the challenges that companies face in implementing a code of conduct or policy with provisions on labor standards. Next, it will review the various elements of code implementation that are employed by the importers of garments who responded to the survey. These elements include efforts by manufacturers and retailers to streamline their supplier base, efforts to increase transparency of implementation, active inspection and monitoring programs, the use of certification of compliance or contractual language with suppliers and inspection, and research on prospective contractors. The section will conclude with a discussion of the various ways that the respondents have handled or plan to handle violations of their child labor policies.
1. Implementation Challenges
a. Organization of production
The challenges of implementing a child labor policy for a given company in the apparel industry differ greatly and depend on how production is organized. Generally, the closer the relationship between the importer and the company actually producing the items, the greater the ability to influence labor conditions, including prohibitions on child labor, in the production facilities. Conversely, the longer the chain of production, and the more levels of contractors, subcontractors and buying agents used, the more complex and challenging is the implementation. If, however, there is commitment to effective implementation, this can be accomplished under any organization of production.
To illustrate, a manufacturing company that produces most of its imports in wholly-owned facilities abroad has more control over production conditions and can more easily implement its child labor policy than can a firm whose production takes place in the facilities of hundreds or even thousands of contractors and subcontractors. Some of the manufacturers surveyed have different policies for wholly owned plants and contractors. A manufacturer or retailer with an ongoing relationship with a contractor and that accounts for a large percentage if not all of that contractor's orders can more easily ensure its child labor policy is being respected by that contractor than can a manufacturer or retailer that only uses that contractor for an occasional order.
Retailers are often - but not always - more removed from the production process than are manufacturers. However, the large retailers, because of the enormous bargaining power they wield over suppliers, also have the ability to require vendor compliance with any child labor standard they develop. In addition, retailers that directly contract out the manufacture of private-label merchandise overseas can directly influence the labor conditions in the contractors' facilities.
Often, entities all along the garment production chain - retailers, domestic-based manufacturers, buying agents and foreign manufacturers - each have their own policy regarding child labor in overseas production. For example, members of the apparel export industry of Guatemala have developed a code of conduct intended to apply to all exporters in the country.78 Apparel manufacturers' associations in Honduras and El Salvador are also developing their own codes of conduct. On the one hand, the development of many different codes - with differing standards on child labor - may be confusing and complicate implementation. On the other hand, the proliferation of codes creates growing opportunities for cooperation among the various actors along the supply chain in developing and implementing standards on child labor and other working condition issues.
b. Streamlining of supplier base
As discussed earlier, U.S. manufacturers and retailers often procure apparel products from hundreds, even thousands, of suppliers all over the world. These suppliers may also subcontract parts of the production to other manufacturers or sewing shops. The sheer numbers of contractors used - as well as the use of subcontractors - present definite challenges to companies with codes of conduct or policies banning the use of child labor in the production of the apparel they sell. Many companies that responded to the survey indicated that they expect subcontractors to comply with their policies, but often did not specify how this was to be achieved.
Some of the companies that responded to the survey have sought to tighten their control over the production process through streamlining their supplier base - limiting or even eliminating the use of subcontractors, reducing the number of contractors they use, and in some cases, establishing long-term relationships with their suppliers. While, at times, these efforts have come about as a result of the development and implementation of codes of conduct, some companies indicated that they are part of their normal business decisions and make the most sense from a quality and efficiency standpoint.
Certain respondents stated that they encourage the development of long-term, strategic alliances with vendors:
c. Impact of textile import restrictions
Some companies raised the issue of apparel import quotas, which limit the amount of merchandise that can be shipped into the United States, and the effects these quotas have on their choice of contractors.
An important issue regarding the implementation of corporate codes is their transparency, or the extent to which foreign contractors and subcontractors, workers, the public, nongovernmental organizations and governments are aware of their existence and meaning. Contractors, subcontractors, workers, and other interested parties who are familiar with codes can enhance their implementation and effectiveness. Transparency reinforces the message of codes and leads to more credible implementation. When transparency is lacking, interested parties cannot benefit fully from a code of conduct.
There are several concrete ways by which U.S. companies add transparency to the implementation of their codes of conduct:
Most of the respondents with child labor policies indicated that they have distributed copies of their policies to all suppliers, but few stated that they had communicated their existence to a wider audience or engaged in efforts to train those who are responsible for implementation. Many respondents stated that they did not know whether workers were aware of the existence of their codes. The following is an overview of the respondents who indicated that they had actively engaged in communicating their policies to contractors, plant managers, employees, and workers:
A few respondents indicated that they have special programs to inform their own managers and/or other employees about their code or policy.
A few respondents have special training for buyers or internal auditing staff:
Only a very few respondents indicated that they have tried to ensure that production workers in overseas facilities know about their code or policy by specifically requiring that copies of such a statement be posted. Only three companies stated that they unconditionally require contractors to post their code:
Some companies include information on the posting of who to contact in the case of problems or questions regarding implementation of the code:
Finally, a few companies have made an effort to communicate information on their codes of conduct and monitoring programs to the general public, including their shareholders:
b. Transparency of Implementation Process
Many consumer and other non-governmental organizations have stressed the need for transparency in the process of implementing codes of conduct. Some groups have called on companies to make public the findings of their factory investigations, which are discussed in the monitoring section below.80
Some companies have actively solicited input from international organizations, NGOs, government agencies and academics in developing and implementing their codes of conduct:
Monitoring is critical to the success of a code of conduct: it gives the code credibility in the eyes of consumers and other interested parties. Yet, most of the policies we have examined do not contain detailed provisions for monitoring and implementation, and many companies do not have a formal monitoring system in place.
a. Monitoring of Codes of Conduct in the Apparel Industry
The companies surveyed indicated that they utilize a variety of means to monitor that their codes of conduct or policies on child labor are respected by their suppliers. Figure II-4 illustrates the structure of monitoring relationships in the apparel industry.
Few companies have a formal system for monitoring compliance with their codes of conduct. Monitoring is usually part of a larger process that includes issues such as quality control and delivery coordination. For this reason, it is not always clear to what extent site visits focus on the code implementation. A few companies check employment records and other documents relating to the workforce during their site visits, but very few companies indicated that they interview workers as part of monitoring.
Some companies monitor their codes more actively than do others. Active monitoring may consist of site visits and inspections by company staff, buyer agents or other parties, to verify that suppliers are actually implementing the importing company's policy on child labor. Companies also may use contractual monitoring, whereby they rely on the guarantees made by suppliers, usually through contractual agreements or certification, that they are respecting a company's policy and not using any child labor in production. This may be seen as "self-certification" by contractors or suppliers. Most of the companies that responded to the survey utilize a combination of active and contractual monitoring. Some companies, however, rely exclusively on contractual provisions without any significant active monitoring.
i. Models of Active Monitoring
There are four active monitoring models that are being used by U.S. corporations with respect to their codes of conduct: (i) internal audits by company personnel (who may or may not be trained in monitoring compliance with labor standards), (ii) external monitoring conducted by buying agents or suppliers, (iii) outside audits conducted by independent firms hired by the company, and (iv) NGO monitoring, conducted by human rights, consumer and/or labor groups. These models may be used in various combinations. (Table II-4 shows the type(s) of monitoring used by the companies that indicated they have a system of active monitoring.)
Internal Monitoring: A number of companies have developed internal monitoring systems to implement their codes of conduct. These systems use local or regional company personnel or employees from U.S. corporate offices to monitor labor practices. Internal monitoring may be used by companies that are reluctant to grant access to their facilities, procedures and business practices to outside monitors.81 It is most common among large companies that are vertically integrated, i.e., those in which the corporation owns or directly controls all steps of the production process.82 Internal monitoring is less common for companies, particularly retailers, that do not own or control the factories that make the products they sell. Some retailers internally monitor only those plants producing private-label merchandise which they import directly. U.S. retailers and manufacturers who use hundreds or thousands of foreign contractors may find it a logistical or financial hardship to monitor all of the facilities from which they source.
External Monitoring: Some U.S. companies rely on their buying agents to monitor compliance with their corporate code. This procedure avoids the financial and logistical burden of performing monitoring functions, but also removes the U.S. corporation from the direct line of control in implementing its policy.
Outside Audits: The central reason for monitoring the implementation of a corporate code of conduct is generating credibility. Corporations that conduct internal monitoring or depend on monitoring by buying agents or contractors are sometimes seen as having a vested interest in not finding anything wrong in their production systems.
TABLE II - 4
Monitoring Strategies for Compliance with International Child Labor Policies
( Based on Responses to Department of Labor Questionnaire )
The outside monitoring of another company's corporate code of conduct is a relatively new endeavor. Accounting and auditing firms have a long tradition of making field visits and reviewing financial records of client corporations. Based on this expertise, some U.S. accounting and auditing firms have expanded their functions to include monitoring of compliance with corporate codes of conduct. Representatives of these companies say that their expertise in examining payroll records, for instance, gives them a comparative advantage in checking for compliance with child labor and other provisions of codes of conduct. Other types of companies offering their services include firms engaged in compliance with safety and health regulations, investigative consulting firms, and specialized companies that have been created for this very purpose. However, since all such auditing and consulting firms are normally hired - and paid for - by the U.S. importer or the vendor being monitored, their total independence is subject to challenge.
NGO Monitoring: Critics of internal, external and outside auditing point to the fact that company representatives, buyer agents or outside auditors may not be in the best position to ascertain that a contractor has violated a company's code. Aside from the charge that these auditors may have a vested interest in not finding violations, some have noted that corporate representatives and auditing firms may not speak the local language, and workers or plant managers may not feel entirely comfortable discussing their work situation with them. To ease these problems, some companies are developing monitoring systems where they use local and international NGOs, or religious or human rights groups to conduct or assist in monitoring. Some companies may adopt such monitoring in response to negative publicity or with the hope of preventing crises from arising. This is a very new practice, however, and has only been tested in a few cases. Furthermore, there are certain issues - including financial ones - that need to be resolved for this approach to be sustainable.
You can go back to our main page to learn more about the Apparel Industry