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BLIHR | Case Studies

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DRAFT FOR APPROVAL

Purchasing practices - Gap Inc. is working towards better human rights compliance by improving supply chain operations and embedding labor standards directly into business practices. Ultimately, Gap believes garment manufacturers, most of whom are multinational corporations, must take responsibility for conditions in the factories they own and operate. To encourage them to take that responsibility seriously, Gap is developing a formal tool that will enable them to consider a garment manufacturer’s compliance record – along with criteria such as cost, speed, quality, and innovation – when deciding where to place orders. At the same time, Gap recognizes that its own business practices can have an impact on compliance, and is actively exploring better ways to work with its manufacturers. To avoid contributing to excessive overtime, Gap is making a greater effort to ensure that garment manufacturers have accurately assessed their capacity and capabilities before orders are placed with them. Gap is also working to reduce inefficient purchasing practices such as rush orders and last-minute changes.

StatoilHydro’s business decision making processes and procedures include an evaluation of the human rights impact at every stage of a project. Additional processes include social monitoring the supply chain and the implementation of the Voluntary Principles on Security and Human Rights.

Gap Inc. views SA8000 as a premier set of global labor standards towards which they hope garment manufacturers will aspire. A few of their suppliers have already received SA8000 certification. As a member of Social Accountability International’s Corporate Involvement Program, Gap Inc. recently conducted a gap analysis of their Code of Vendor Conduct relative to the SA8000 standard and are examining areas in which they can bring their policies and program into closer alignment with SA8000. In addition, they have asked their entire internal monitoring team to take the SA8000 auditor course.

Lending assessments - Human rights issues such as the rights of indigenous peoples, the rights to safe and health working conditions, and the rights to freedom of association are included in the Equator Principles which define social and environmental criteria that apply to project financial transactions (see the Appendices for details). Barclays was one of the original group of banks to adopt the Principles in June 2003 and while the criteria is specific to project-related lending, Barclays extends environmental and social risk reviews when assessing other types of lending.

Performance standards for resettlement - The International Finance Corporation (IFC) has adopted a set of performance standards that it requires its clients to adhere to as a condition of lending. One of the perfor­mance standards addresses involuntary resettle­ment – a process in which governments move people to make way for projects in the public interest such as roads or water treatment plants. In preparing the new performance standard, IFC reviewed the human rights protections in the right to housing and incorporated those aspects of the right to housing that the private sector can take action on within a project context. For example, anyone moved must be provided with security of tenure in their new location, even if they did not have security of tenure in their previous location. This reflects the right to housing with emphasis on providing everyone with security of tenure – i.e. protection against illegal eviction. If an IFC-financed project involves involuntary resettlement, the company must prepare a detailed plan for resettlement, including plans for providing informal settlers with security of tenure in a new location. IFC then reviews and approves the plan as a condition of financing. As a further condition of financ­ing, the client must implement the plan, monitor and ensure that the actions taken achieve the objectives set out in the performance standard and the resettlement plan. If the resettlement is sufficiently large or difficult, IFC will require an independent third party to monitor implementa­tion of the resettlement activities.

Scheduled and unscheduled inspections - Li & Fung (Trading) Limited, based in Hong Kong, is a global trading group that manages the supply chain for high-volume, time-sensitive consumer goods – particularly garments, furnishings, gifts, home products, toys, and sporting and travel goods. From Hong Kong, it co-ordinates the manu­facture of goods through a network of offices in almost 40 countries. All suppliers to Li & Fung are required to commit to the Code of Conduct to Vendors, which has 14 principles, including no child labor and non-discrimination principles. A signed copy must be returned to Li & Fung within 30 days, and failure to give a timely response will cause it “to review its relationship with [the sup­plier].” The code is enforced through scheduled and unscheduled inspections of Vendors’ facilities.

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