Lessons from the OECD Garment and Footwear Forum 2024
SAI was thrilled to connect with and hear from so many working to advance due diligence in supply chains at the 2024 OECD Due Diligence in Garment and Footwear Forum in Paris February 21-22. Across sessions dedicated to topics such as living wage, freedom of association, remediation, certification, capacity building, and more, we observed three key themes underpinning good due diligence practices. These were the importance of deepening buyer-supplier relationships, advancing wages, and increasing worker voice.
As the focus for sustainability has shifted in recent years from a compliance mindset to one of due diligence, the discussion focused on strategies that buyers—brands, retailers, and others—can take to enable better labor performance throughout the supply chain. For companies looking to strengthen their own due diligence program, SAI has rounded up our top recommendations in these three areas and linked to some resources to help you get started.
1. Deepening Buyer-Supplier Relationships
In a due diligence framework, buyers have a responsibility not only to verify compliance of their suppliers with labor standards, but further to actively support good labor practice in their supply chain. An employer’s ability to comply with labor standards is directly influenced by the realities of their business environment—in the global supply chain, these realities are most directly determined by buyers. Both supplier and buyer businesses benefit when they work closely together to manage and address labor risks. We heard during the Brand Due Diligence Strategies for Living Wages session that it is important for retailers and brands to see factories as partners and that suppliers do not yet widely understand the language of due diligence that has been adopted among international actors. Buyers can start by taking an active role in helping their suppliers understand this language and this shift in expectations.
What can buyers do?
- Commit internally to enabling compliance in your supply chain – Ensure that KPIs and practices across the company are consistent with strategies to support better supply chain social performance. Good due diligence will not be effectively prioritized if financial objectives do not take due diligence goals into account.
- Take a more active role with key suppliers – Start by identifying strategic suppliers. Seek to establish direct relationships and commit to acting as a partner in meeting expectations for social performance. Encourage an open dialogue on labor compliance challenges and demonstrate that you are a trustworthy and steadfast partner.
- Prioritize responsible purchasing practices – By re-assessing relationships with suppliers and practices for managing orders, buyers and suppliers can collaborate on sourcing and production processes that enable social compliance, benefiting both workers and the bottom line.
- Emphasize progress over perfection – Recognize that labor issues will arise. Demonstrate to suppliers that you reward transparency, open communication, and improvement. Reacting negatively to violations only incentivizes bad practice. Avoid zero tolerance policies that may just push bad behavior into the shadows.
- Support training and capacity building opportunities – Examine your social compliance program for opportunities to shift resources from auditing to capacity building.
Resources:
- Mutual Buyer-Supplier Code of Conduct – Develop a statement of shared responsibility that incorporates buyer purchasing practices, supplier labor conditions, and other responsibilities of both parties.
- Responsible Purchasing Practices Guidelines & Checklist – Improve purchasing practices to support better labor practices and worker wellbeing in supply chains.
- Responsible Subcontracting Overview & Guidelines – Understand the potential benefits of responsible subcontracting and how to enable these good practices in your supply chain.
- FairCapacity Tools for Suppliers – Practical tools to help suppliers improve subcontracting, overtime, production planning, and order management practices to improve working conditions and their business.
2. Advancing Wages
Poverty and poor wages are at the root of many of the most egregious compliance issues, including child labor, forced labor, and all types of exploitation. International standards and regulations increasingly recognize living wages as a baseline requirement for decent work. There have been significant advances in availability of living wage estimates in recent years, clearly demonstrating the enormous gap between minimum wage levels and true living wages in almost every location. Now what is needed is action toward wage improvement by all stakeholders and at every level. Buyers, suppliers, governments, and civil society all have roles to play in enabling a decent standard of living for workers—from improving wages and compensation to providing social services, managing cost of living, and investing in public goods. In the Brand Due Diligence Strategies for Living Wages session we heard from a company that has taken a multiphase approach to advancing wages, beginning with educating the brand. By seeking out trainings and dialogue with subject matter experts like the Anker Research Institute, the company has been able to activate a well-informed wage strategy. They have also learned the importance of sharing this knowledge with suppliers and educating them; citing the importance of long-term supplier relationships in advancing wages.
What should buyers do?
- Invest in developing an ambitious and realistic living wage strategy – Recognize that wage improvement and especially achievement of living wages on a wide scale are important, but will require a long-term, multi-stage strategy. Begin with a risk assessment and start taking action where you identify the greatest risks of low wages in your supply chain.
- Seek to understand, but don’t get stuck at this stage – Begin with internal education and understanding, but don’t expect perfect information. Move forward with supply chain mapping and wage assessment; engage suppliers in dialogue, education, and capacity building; get creative about closing gaps through a variety of approaches, including changes to your pricing practices; conduct pilots to assess feasibility.
- Advocate and collaborate within and across sectors – Connect with other companies working toward living wages or help inspire others to begin their own journeys. Seek opportunities to learn from others’ experiences and to reinforce each other’s efforts. Identify areas where your combined influence may be able to multiply impact and then take action.
- Emphasize progress over perfection – Recognize that achieving living wages is not a destination, but a continual process. Do your part to enable wage improvement and reward suppliers for investing in and making progress.
Resources:
- Living Wage Corporate Sponsorship Program – Help support research on living wages and sustainable livelihoods by the Anker Research Institute and join a community of companies who are all at different stages of their living wage journey, but who share a commitment to active learning and dialogue.
- On-demand training – SAI’s Living Wage: Making it a Reality and Assessing Current Wages trainings introduce the basic concepts of living wage, how to calculate and find estimates, and how to assess living wage gaps in your operations or supply chain.
- Custom training – SAI can work with you to customize and deliver living wage training for your staff or supply chain actors, wherever you are in your living wage journey.
- Custom projects – Get help from SAI’s team of experts, from developing a living wage strategy, to implementation and action.
Contact Hannah Crane, Senior Manager of Corporate Programs and Training to learn more about custom trainings and projects.
3. Elevating Workers’ Voices
Like inadequate wages, suppression of workers’ voices in the workplace is a root cause of most other labor risks. Freedom of association in particular, is a powerful enabling right, empowering workers to voice their needs and concerns and participate in defining the conditions of their employment. In addition to being good for morale, engagement, loyalty, and reputation, elevating workers’ voices and involving workers is integral to effective due diligence. Effective engagement of workers allows businesses to identify the most salient risks before they become adverse impacts and understand the types and scale of solutions needed to mitigate them. During a session on Responsible Supply Chains in MENA & Türkiye, a company representative shared that an important first step for them in initiating the conversation around due diligence at the supplier level was to better understand worker’s’ perspectives on issues like gender balance, sexual harassment, and decent wages. This company started with worker surveys to better understand the issues.
What should buyers do?
- Demonstrate a commitment to supporting FOA – Establish a policy of not interfering with union activities and engaging in negotiations in good faith. Apply this policy in your own operations and consider ways to incentivize constructive union engagement among suppliers
- Invest in capacity building and take action yourself – Help suppliers understand the importance and benefits of worker voice and good practices. At the same time, take matters into your own hands by implementing overarching worker voice mechanisms with multiple channels. Find ways to make these known to workers in your supplier facilities and get creative with how to seek worker feedback, including by sending representatives to speak with workers in person.
- Emphasize progress over perfection – Sensing a pattern? Good worker voice practices produce feedback – both positive and negative. Be prepared to see a greater number of grievances and treat these as an important and positive opportunity for improvement.
Resources:
- Tensquared – A structured, 100-day accelerated change program that unites workers and managers to collaboratively address root causes of workplace issues and measurably improve on a specific challenge, while breaking down institutional hurdles to change and fostering a culture of continual, sustainable improvement.
- Custom training and projects – SAI can work with you to develop custom training for your team, suppliers, or workers to help support worker voice initiatives. We can also provide technical assistance and guidance for assessing gaps, developing policies and procedures, implementation and more.
- Focused projects – Depending on your industry and sourcing countries, you may be eligible to participate in one of our fully funded worker voice initiatives. To see an example, visit the MY Voice project, which is working to elevate workers’ voices in the palm oil and garment industries in Malaysia.
Contact Hannah Crane, Senior Manager of Corporate Programs and Training to learn more about these opportunities.
