The BSCI asserts itself to improve the working conditions at the manufacturing companies in cheap labour countries. The initiative that is funded by the economy has in the meantime become the decisive compliance criterion in the B2B business of Central Europe and is also establishing itself more and more within the promotional products industry. A systematic control system is offered, as opposed to a test seal.
It is as though it is a relapse into the dark ages of colonialism, and yet it is indeed present reality. At the end of May earlier this year, the Australian human rights organisation, the Walk Free Foundation, published the results of the third Global Slavery Index. According to which 45.8 mil. people in 167 country currently live in a modern form of slavery across the globe: They are forced to work in factories, mines or on farms, sold for sex or born in slavery.
Notifications like these or reports about forced or child labour, about employees, whose wages don’t cover the livelihood of their families, about the lack of fire extinguishers in factories or the wretched accommodation of hired hands or migrant workers show the ugly face of globalisation and call upon the economy to take action. Since every serious manager would like to prevent his company being tarred with the reputation of being an exploiter, because their suppliers in Vietnam or Bangladesh are abusing the rules. So, in addition to NGOs or the ILO (International Labour Organisation), a special United Nations organisation, more and more non-profit organisations and industry-run initiatives assert themselves for the improvement of the working conditions in the cheap labour countries. The currently most well-known at least in the B2B sector are SEDEX (Supplier Ethical Data Exchange), an English-language database that is primarily widespread in the Anglo-Saxon region, as well as the BSCI (Business Social Compliance Initiative), which has meanwhile particularly established itself in Central Europe.
The BSCI is not a legal entity, but instead an activity of the FTA (Foreign Trade Association) that was founded in 1977. Originally launched by diverse associations and companies in Germany, France, the Netherlands and Belgium in order to lobby for free market access and the elimination of trade restrictions in Brussels, the theme of sustainability and social standards became a more and more important issue on the agenda for the FTA at the turn of the century. “In some cases desolate conditions prevailed in the factories,” explained Lorenz Berzau, Coordinator of the German Contact Group, FTA Sustainability. “In order to protect themselves, many companies had thus introduced their own conduct code that the suppliers had to comply with.” Since the manufacturers in the Far East often produce goods for several buyers in Europe, this leads to a multitude of different standards and tests and in some cases to absurd situations. “Some production sites were audited 80 to 100 times a year,” reported Berzau, “and the owners no longer knew which criteria was valid for which audit. Sometimes several hooks hung on the wall for the fire extinguisher – depending on which auditor came, the fire extinguishers were then hung at the corresponding prescribed height.“
Around 25 FTA members strove to achieve an alignment of the testing processes and decided to launch the BSCI in 2003. Around one year later – after a uniform code of conduct, uniform testing process and the corresponding manuals as documentation had been agreed upon – the first activities got underway. According to Berzau, the BSCI has around 1,800 members today, over 40,000 manufacturers from 35 manufacturing markets such as Bangladesh, Vietnam, Thailand or Turkey are listed in the database – the majority of them (approx. 70%) come from China. The strongest member country is Germany with around 700 members, followed by the Netherlands with over 300 members. The product focus lies in the areas, clothing, textiles and shoes, but also on toys, electronic items and furniture.
From code of conduct to membership
More and more companies in the promotional products industry are recognising the benefits a BSCI membership brings with it. For example, the umbrella specialist from Remscheid, Fare, has been a member of the BSCI since 2013. The authorised signatory, Lutz Albrecht, commented “We have been asserting ourselves for the theme of socially responsible production as an individual company for a long time, we introduced our own code of conduct for this purposes, pursued this for years and established it in our supply chain. Our compliance team in Shanghai provided us with intense support here. However, we thought it was important for an independent third organisation to check the working conditions locally, so we joined the BSCI.” Giving Europe is one of the most recent members of the BSCI. The Dutch full-stockist joined the BSCI at the end of 2015. Furthermore, since September 2016, Greta Sommer, who previously worked for the BSCI, has joined Giving Europe as an expert for product compliance and CSR. “We were one of the first global players to introduce the process for switching over to a socially-responsible production several years ago and we now look at joining the BSCI as a continuation of our company’s own code of conduct,” confirmed Stef van der Velde, CEO of Giving Europe.
The BSCI membership is also interesting for promotional products agencies that concentrate on the full-service business, such as the Wormsbased company Global Brand Concepts (GBC). “Many large customers confronted us with 100- page contracts over ten years ago, which also governed minimum social requirements,” reported the CEO, Michael Weissenrieder. “So we made it one of our priorities early on to assess all of our factories in terms of social compliance guidelines and to cut all ties with suppliers, who weren’t prepared to meet the requirements.” Global Brand Concepts has been a BSCI member since 2013, for Weissenrieder “the compliance criterion within the promotional products industry.”
Rights and obligations
The BSCI is based on three pillars: Monitoring in the form of standardised audits at the suppliers’ premises, further education through training the manufacturers as well as political work. The latter attempts to improve the local working conditions long-term through upholding a permanent dialogue with governments, NGOs and employer and employee associations – including grievances such as statutory minimum wages that lie under the poverty line. Training and audits on the other hand affect the daily business of the BSCI members. Depending on the company’s turnover, membership costs between 3,000 and 30,000 Euros a year. Companies that become members have the opportunity to use the comprehensive database, where among others the results of the audits that have been carried out in the factories of the producers are listed. Furthermore, the members are allowed to use the logo of the BSCI for their own PR work. However, this does not suffice as Weissenrieder stressed: “It is not enough for the BSCI members to merely make reference to the homepage. One also has to identify oneself with the goals and live these out internally 100%.” This ties up resources. Three members of GBC’s 18-man team in the Far East occupy themselves with the theme of working conditions, a further full-time job in Worms is dedicated to coordinating the respective processes. It is similar at Giving Europe: “We currently employ the same amount of employees in Product Management as in the CSR departments. This reflects the priority of the theme.” And Annika Beyersdorff, responsible for custom-made designs at Fare, points out a whole series of obligations that a member has to comply with. “One has to actively accompany the factories on their way to the audits, everything has to be documented, log in regularly, remain up-to-date, check that the audits really do take place, set deadlines, carry out follow-up discussions, etc.” “Before and after the audits – it is really hard work for both the factories and for the European importers,” says Berzau speaking from experience.
Companies that don’t take the issue seriously or that are only members for marketing reasons, might as well forget it from the start and will possibly even be excluded by the BSCI. Most of the members are thus on board out of conviction: “Ultimately, we do it all primarily because it is important to us,” stated Albrecht. Van der Velde also stressed: “The cost side is irrelevant for us, because looking ahead at the future years we see the necessity in committing to the BSCI. So, we didn’t need to discuss our decision to join the BSCI for very long.” Even though a whole row of processes had to be changed in the daily business routine on the buying side. “Because now it is not about searching for the cheapest item,” explained Puchtler, “we have to search for the cheapest and yet most sustainable one. We have had to stop working with some suppliers, who didn’t want to or who were not able to comply with this process.” Fare had few problems with their regular suppliers, but covers its own back when looking for new manufacturers by having pre-audits carried out by the BSCI team of the parent company JCK Holding in advance. Global Brand Concepts takes a similar approach. “Before we include a new supplier in our pool, we first of all carry out unannounced audits ourselves, during the course of which the working conditions of real factory life are checked. If we are of the opinion that they could fit in with us, we prepare the supplier for the BSCI audits,” explained Weissenrieder, who estimates the success rate to be around 1:10 – from ten producers Global Brand Concepts visits, one remains that meets the company’s and the BSCI’s requirements in terms of quality, price, safety and social responsibility. A figure that underlines how much still has to be done.
In order to achieve a sustainable improvement of the overall situation, the BSCI obliges the contractors to support their suppliers in passing the audits. Berzau emphasises the procedure of the BSCI approach: “BSCI is not a certification, symbol or label. We can’t guarantee that something is one hundred percent okay either. One has to understand the BSCI is a development model that aims to improving the working conditions through the dialogue between the manufacturers, importers and agencies.”
On the test bench
Depending on the size of the factory, an audit that has to be carried out by BSCI-approved testing organisations such as TÜV, SGS or the Bureau Veritas takes at least one and a half working days. The auditor talks with the employer, but also with representatives of the employees and with individual staff members, in order to get the most realistic picture possible. He looks at the files, checks the remuneration and social security contributions, checks whether the legally prescribed minimum wage is paid, but also beyond this whether dependent on the “living wage” of the region a fair and sufficient income is paid to cover the living costs. He looks at the time cards and checks whether overtime has been paid accordingly. He also does an inspection of the company to see whether the work protection measures are carried out, whether the workers wear gloves or earplugs, how chemicals are stored, whether fire drills are carried out and whether accidents at work are documented, whether there are rest rooms and in what state the sanitary facilities are. Finally he awards each of the areas of performance a grade from A (best grade) to E. An overall ranking is determined from the individual assessments – also from A to E.
The supplier has the opportunity to improve individual points within a certain period of time, a complete audit is repeated after around two years. The benchmark standards are oriented on those of the SA 8000. Hence, producers who are SA 8000-certified, don’t need to undergo a BSCI audit. The costs for an audit depend on the size of the company tested. Normally the manufacturers have to bear the costs themselves, however the BSCI does not regulate the cost allocation. It is evident that as a result of the costs caused by the audits, the prices of the products become more expensive. On top of that there is the extra effort of the contractors and of course the fairer wages of the employees. “The BSCI alignment of the production adds between 20 to 25% onto the price,” calculated Weissenrieder. This makes it even more problematic when cheap manufacturers that don’t comply with the stipulations of the BSCI or similar institutions supply the European market. “We know that such manufacturers still provide Europe and some of our famous market players. I hope that despite all of the price pressure, the trade partners learn to differentiate between who sticks to the rules of the game and who doesn’t,” warned van der Velde.
From a buyer’s point of view it is definitely worth paying the higher price, because companies that comply with the BSCI rules demonstrate a real awareness for the problem area of socially responsible working conditions. However, a BSCI membership isn’t a hundred percent guarantee that the purchased goods originate from socially responsible production. “Social audits are always just a snapshot,” stressed Berzau, apart from that it is difficult or nigh on impossible to check the supply chain down to the lowest stage. “And experience also shows that the risks in the lowest stages of the supply chain are always higher.” That is why BSCI 2.0 was introduced in 2014 – in the attempt to penetrate further down into the supply chain and to make the producers in the Far East inform their upstream suppliers and invite them to attend training courses. Advertising agencies that offer the products in premium programmes have to overcome a further obstacle. The brand owners often refuse to allow their production sites to be visited, so no audits can be carried out there. Regarding the compliance guidelines of the big promoting companies an exception is often made for the integration of well-known European brands, i.e. dispensing with BSCI membership.
However, for many renowned companies, BSCI membership is a prerequisite for supplying goods at all: “For Fare BSCI membership is in the meantime a must-have. It is irrelevant whether this makes the products more expensive – without the membership we wouldn’t get many of the jobs in the first place,” explained Albrecht. Weissenrieder also reported that many full-service customers actively demand BSCI membership. “We haven’t lost a single customer here because we were too expensive. However, especially in the drop-ship business, where often the price is the only deciding factor, hardly any attention is paid to BSCI membership.” Whereas, in most of the full-service calls for tender of the renowned big players, BSCI membership is in the meantime defined as a standard. That is good news for the works in the factories of Asia and Africa, does however sometimes bear strange fruit. In the meantime, several European manufacturers have become members of the BSCI, even though they don’t have any suppliers in the Far East. “We have our products made exclusively in Europe, manufactured to almost one hundred percent in Germany and thus meet higher legal standards than required by the BSCI code of conduct. But we still decided to become a BSCI member last autumn,” explained for example Wolfgang Schmidt from the plastic specialist, Promowolsch, who names the tendering practices of many companies as the main reason for this. In the case of the distributors it is also often the calls for tender that convince them to apply for membership at short notice. Although since it takes several years before the distributors have got their supplier partners to comply with the BSCI standard as a rule, Weissenrieder advises promoting companies to pay attention to how long a company has been a BSCI member.
In spite of such aberrations – the success of the BSCI systems cannot be dismissed. Albrecht did indeed note that “the consumers are hardly familiar with the BSCI logo,” and thus can’t evaluate the fact “that the promotional products that receive it contribute towards the improving the working and living conditions of the people, who make the goods,” but also sees “that initiatives like the BSCI have got things moving over the past ten years.“ “Things have improved a lot in many countries, the results of the audits also underline that, but there is still plenty to do,” summed up Berzau. The latter is unfortunately all too true, as long as reports about the worldwide slavery are still part of our everyday life.
// Mischa Delbrouck
photos: © FTA