CSR SliderWhat applies for the global economy, definitely also applies for the comparatively manageably sized promotional products industry: And as far as Corporate Social Responsibility is concerned the industry has some catching up to do. In the meantime though many industry representatives are showing considerable commitment and can demonstrate a good CSR balance. Codes of Conduct are the attempt to standardise a more and more tangled mass of seals, testing institutes and testing methods. Small, but important steps on a long path that is often difficult to assess.

CSR

People who take a critical look at the shopping miles of any European big city will certainly notice how correct everything has become compared to five years ago. There is no major textile or furniture chain, food or cosmetic brand that doesn’t aggressively emphasise that they pay their manufacturers fair wages and that they place high value on ethically responsible production conditions. Corporate Social Responsibility has finally arrived in the midst of corporate culture – at least as far as the PR work and marketing are concerned. But, how much genuine commitment and above all how much progress really lies behind the full-blown marketing slogans and skilfully designed advertorials is a different matter altogether. Unfortunately, it usually has to come to a catastrophe to remind us that globalisation often leaves horrible traces behind – as in November last year for example when a textile factory in Bangladesh that produced garments among others for C&A, Kik and Walmart burnt down, claiming the lives of more than 100 workers. For a while the over 5,000 textile factories on the Bay of Bengal were the focus of media coverage, the press took a look behind the scenes of the manufacturers and uncovered countless grievances – even at locations where audits had already been carried out on behalf of a wide range of testing institutes.

A discourse that also affected the promotional products industry of course, because their procurement sources are often identical to those of the retail giants – in both good and bad cases alike. “We are just getting started, there is still so much more that could and has to be done,“ assessed Hans van der Ouw, CEO of the Dutch company, Staat & Co, member of the international distributor group IGC (International Gift Council). “A lot of the material on the market remains quite critical. Many customers still merely want everything to be cheaper, cheaper, cheaper, which puts the manufacturers under pressure and makes them start having bad thoughts.“ In fact the pressure already starts much higher up: “Unfortunately most distributors are struggling in the current economic environment so they are happy to take any sale,” commented Evan Lewis, CEO of the supplier companies Eco Promo and Everything Environmental. “Any demand for ethical and environmental items is driven by the users that are keen to show their commitment, not from distributors being proactive.” To show their commitment, however, is something that is important for a rising number of companies. “Compliance” has become the key theme – particularly at the big multinationals that act as the pace-makers. “Strict compliance is currently mainly an issue for large multinational clients who are positively raising the industry’s standards on the whole due to their requirements,” said Florence Mosnier, General Manager of Ippag Global Promotions. Van der Ouw made a similar observation: “Large companies are more frequently aware what consequences ‘bad products’ can have for their brand. And there really are big corporations, whose audits are very strict. I have often heard the phrase ‘Coca Cola-compliant‘ or ‘L’Oreal-compliant‘ – and this is not without good reason.”

Good examples

The middlemen – the importers in this case – are those who are faced with the task of satisfying the compliance demands. And there are several examples of companies who take this task very seriously within the promotional products industry – which is small compared to other industries. “Hardly anyone in the import business can afford not to go a step further than just fulfilling the legal requirements,“ reported Kai Gminder, CEO of the textile importer, Gustav Daiber GmbH, which as part of the JCK Holding group is not only subject to strict rules, it also has them tested and substantiated via the BSCI (Business Social Compliance Initiative).

“We started off ten years ago practically from scratch and were a ‘disposable industry’ with very many people importing from ‘who-knowswhere‘, which is horrible to look back on. Today, most of the big importers know exactly what has to be done and some of them take on a role model function,“ commented van der Ouw, whose company has committed itself to the CSR policy of the IGC. “We work together with the testing institute, SGS, and internally we have a very intense exchange regarding manufacturers. This includes also a black list, which is where all the manufacturers we have problems with land.“ Ippag deals with the theme in a similar way: “Our 25 members collaborate together to identify and share reliable suppliers,” reported Mosnier. “Having 25 times sourcing experience and knowledge is invaluable within our industry. The group also follows common purchasing guidelines for auditing – information which is also shared. For audits, Ippag recommends following the Smeta framework, and works with the certification company SAI (Social Accountability International) to help suppliers follow the United Nations Guiding Principles.”

In the jungle of seals
Independent and superordinate bodies that carry out testing and certify compliance are the be all and end all. It is namely these who reliably prove whether a manufacturer adheres to the agreed ethical and social principles, which also in turn ensures credibility among the customers. “Independent seals are the only ones to look at, selfcertification is not worth the paper it’s written on,” said Lewis and Gminder agreed: “The wording ‘an own office in the Far East‘ always sounds great, but it can mean a lot of things and is of course also difficult to evaluate. A serious certification such as the BSCI is much more concrete.“
But, which organisations are serious, which standards do they use, which certifications are demanded by the respective customers and markets and which option should I ultimately opt for? These are difficult questions to answer. “There are lots of different standards that cover ethical production including SA 8000 and Smeta, these two are general standards but there are also industry-specific ones covering for example the football or T-shirt industries. Those that run each standard will say they are the most robust and it’s often hard to tell them apart,” explained Lewis and recommended: “Check with your client which one they recognise before investing money in the wrong one. Make sure they are undertaken by experienced well-known auditors like SGS or Bureau Veritas to mention just two.”
Furthermore, an importer often has to consider which market he wants to sell to – whereas a BSCI seal is a good choice for Germany, the well-known counterpart in the USA is WRAP (Worldwide Responsible Accredited Production), in Europe the most popular platform is Sedex (Supplier Ethical Data Exchange).
One thing is certain though: There is a wide range of standards, policies and seals. Even if many of them are based on similar principles – these are nearly always among others the guidelines of the ILO (International Labour Organisation) and the United Nations Global Compact – there is no clear overview and definitely no standardisation. This often leads to the situation that some manufacturers are “over-audited” – with absurd consequences as Gminder reported: “In one of our factories subjected to a BSCI audit, a hook for a fire extinguisher was checked. However, right next to it, just a few centimetres lower down was a second hook that had been demanded during the course of a different audit. We need a uniform standard, otherwise the manufacturers won’t be able to escape from all this auditing.“

Efforts are currently being undertaken to establish a uniform standard for the promotional products industry – like the ones that have been implemented in other industries, as in the case of the toy industry for example: At the beginning of the year the EPPA (European Promotional Products Association) presented a Code of Conduct (see also the interview with EPPA President Hans Poulis on pg. 32 et seq.), which is open to all companies within the European industry. “The challenge here was to create a standardisation while at the same time taking the specific demands of the promotional products market into account,“ reported Christof Achhammer, Mid Ocean Brands, who was involved in the process of developing the code. “We explored many existing programs or generic standards like BSCI or SA 8000. We also reviewed other industries. As we have a broad range of products in our industry we checked toys and clothing. We also looked at the retail sector as some retailers have a similarly wide product portfolio.”

If the Code of Conduct can be established wide-scale, there is a good chance of the processes becoming standardised. The more companies that become certified, the higher the external impact the industry will have – provided that the Code of Conduct also becomes firmly implanted in the minds of the users – Achhammer: “Communication of the program is just as important as setting the right standard.“

Be there!

In spite of the lack of clarity in the matter – there is no doubt at all that Codes of Conduct and certifications are useful because over the last few years a lot of progress has been made in many places. “China is making big steps, factory by factory,“ judged van der Ouw and Gminder agreed: “I travelled to China for the first time in 1998. Since then the conditions in the production regions I know have done a 180 degree turn. In the hinterland it is still often difficult to assess the situation, of course in many places there are still bad conditions there today. However, on the coast most of the factories are safe.“

Nevertheless, everyone agrees that there is still plenty to be done. “In India the situation is very difficult, and also in China some factories remain lousy,” van der Ouw conceded. Mike Oxley, CEO of Ippag and the British Ippag member Lesmar said: “A lot does come down to the individual factories and their managers’ or owners’ approach. Our biggest challenge regarding ethical labour practices in China relate to the working hours. Relatively speaking the working conditions tend to be less of a problem now, certainly compared to before, however with labour shortages working hours are a major issue.”

Which is why, if one wants to be really sure, audits and certifications don’t suffice. “Sedex is a good focal point but not to be viewed as an end in itself – which I would expect they would agree with. It’s a good place to start but the journey is long,” commented Oxley.

“When BSCI, Sedex and WRAP certifications became a theme, many of the manufacturers claimed immediately that they were already certified. Of course some companies cheat, especially if advance notification is given before the audits. Then they have enough time to clear up or manipulate the situation,“ reported Gminder. “There are factories in Bangladesh, where a worker sits next to the time clock and forges the clocking-in cards.“ Van der Ouw added: “I know that it is possible to bribe the right people. One still has to be very careful, and moreover one shouldn’t generalise.“ Lewis recommended: “Don’t just ask if they have an audit, ask for a copy and read through it properly.“

Anyone, who wants to be 100 percent certain, has to take a closer look himself. “You have to be present on-site,“ Gminder pointed out. “Our parent company has offices in Dhaka and Shanghai, where social compliance teams monitor the implementation of the demanded standards at the manufacturer’s premises. Furthermore, we also regularly travel to China and Bangladesh ourselves to keep an eye on things. Before a factory is audited, we visit it without prior warning.“

Establishing partnerships

According to Gminder long-term partnerships are the objective: “Only companies who have regular suppliers can guarantee security. Companies that frequently change their producers – for deadline orders for instance – or who are too trusting, will end up having a problem. Of course we are also reliant on long-term partners as a result of our warehouse stocks and quality standard. Each follow- up order has to be absolutely identical to the previous batch. ‘Supplier hopping’ is definitely no go here. So if the conditions at one of our partner’s are not in order, we seek a dialogue with him and try to persuade him to make the necessary changes.“

However, it doesn’t just suffice to monitor the company that one has a contract with: “We also visit the suppliers of our main suppliers, i.e. the weaving and dying companies,“ continued Gminder. “And of course one should also make sure that orders are not passed on to subcontractors, over whom one has no control at all – this is particularly a special task in Bangladesh. The contracts with our manufacturers forbid them to outsource our orders to subcontractors. Of course this means that we have to reserve our capacities in order to guarantee our annual requirement. With regards to our customers this also implies that rush jobs are almost impossible in Bangladesh, if one wants to guarantee appropriate conditions. This always has to be kept in the back of one’s mind. An order from Bangladesh takes five to six months, end of the story.“

Finally, Gminder explained that one should never forget the framework conditions in the respective production countries. “It doesn’t work to simply apply European benchmarks. One mustn’t forget that the factories are employers. And it is not cynical to claim that a 15-year-old – who incidentally is no longer obliged to attend a school in Bangladesh – is probably much happier to sit behind a sewing-machine rather than to be without an opportunity to earn money.“

The limits of control

However, one should also bear in mind that it is impossible to control a supply chain down to the last detail. Mosnier: “It is unrealistic to think that 100% of the suppliers can be compliant, hence the importance of sharing and cooperation. The variety of products purchased and order volumes are too broad and scattered – as opposed to retail.” Van der Ouw pointed out: “Even if I spent a month in China, I still wouldn’t be able to check out every individual manufacturer in detail, who was involved in the supply chain of a specific product.”

After all every certification only provides information on the production processes and producers – never about the product itself. Which is why “100% clean”, “correct” or “good products” are actually an illusion. Yet, it is a truism that the price of a product says a lot about its balance. “Some goods are still offered on the market for such rock-bottom prices that every logically thinking person must ask himself how it is even possible to sell the item at that price without someone getting lost along the way,” stated Gminder.
The buzzword compliance: It remains to be a very complex phrase. For a process that doesn’t begin with an audit at one end and which ends with full-blown marketing slogans at the other. It starts with peeling off the surface – and ends with one’s own conscious.