Everywhere you look there are articles on how auditing your factories is an important part of a good CSR factory monitoring program. What we don’t see very often is what brands and their supply chain partners are doing to actually improve their factories after an audit has been conducted. In fact, there is very little information out there on how to do this critical work and achieve sustainable compliance where non-compliances cease to appear in subsequent factory audits.
So why is the “improvement” or “remediation” phase of the CSR factory monitoring program so critical? Why is remediation work so difficult and complex? And what are some of the key elements that support a successful remediation program?
Having seen hundreds of programs both on the brand and supplier sides, I hope to shed some light on these questions and bring awareness to the fact that all too often we aren’t spending enough time, focus and funding on our remediation efforts.
Remediation is Critical to Success
The goal of a CSR factory monitoring program is to (1) improve workers lives in the workplace and protect the natural world; (2) identify and reduce risk for the brand and supplier in the human rights and environmental space (and other areas, like animal welfare, depending on what link in the supply chain you are talking about); and (3) facilitate transparency on supply chain practices to your customers and other stakeholders. The ultimate goal of your program is that all of your products are transparently made under conditions where no human rights were violated and with minimal or no environmental impact.
Audits are an important tool to find issues, but audits alone do not correct issues. There must also be a “corrective action plan” (CAP) or “remediation” phase that follows. An effective remediation program gets brand and suppliers’ manufacturing sites to the final end-game goal of zero non-compliances (i.e. safe, fair and environmentally sound working conditions). The only way a brand or supplier can have a successful factory monitoring program is if the non-compliances are sustainably corrected.
It’s critically important that brands and suppliers spend most of their time and budget on the remediation part of the CSR program or their program will NEVER achieve its goals and be successful. In fact, I would argue that if you are not spending enough time in the “remediation” phase and are more focused on doing audits to understand risk, or are “glossing over” this key step, then you are wasting your time and money.
Good Remediation is Often Complex and Challenging
Sustainably correcting non-compliances can be either very simple, like charging up a fire extinguisher, or very complex, like correcting child or forced labor. The remediation phase becomes complex and challenging with more systemic, egregious issues. Systemic remediation work is daunting and there are few experts that know how to permanently fix these issues. Suppliers and brands who are trying to overcome serious human rights or environmental issues are arguably taking on the most difficult, challenging and complex work of their careers. This work can take years to see progress and can require heavy collaboration with the supplier, other brands, experienced consultants, civil society organizations and even government agencies. The complex issues are difficult to remediate because they originate from deep, multi-layers of actors and long held unfair political systems and industry practices that create human rights and environmental issues. Eradicating child and forced labor (especially human trafficking), discrimination, low wages and excessive working hours are challenges that even national governments and our society as a whole are not able to solve as of yet (so kudos to all of us that take this work on!). Having engaged directly in complex remediation initiatives for 24 years, I’m not exaggerating the scale of work needed to make a difference.
Key Elements of an Effective Remediation Program
Thinking through the successes and failures of remediation efforts in my career, there are several best practice elements that contribute to a successful remediation program. The most important of these are provided below.
- Strong supplier vetting process: Implementing a social and environmental screening process for new potential suppliers and a system to responsibly exit existing, persistent non-compliant suppliers are two of the most important ingredients to an effective CSR program that directly affects the outcome of your remediation efforts. This is because with a screening process you only allow in suppliers committed to social and environmental compliance that have a willingness to improve over time both in their practices, funding and core CSR management systems, and you screen out suppliers that may never be on board with your program. This stops the incoming flow of factories in your supply chain that you spend all your time and funding with that may never be compliant and makes room for time and budget that could be spent on other advanced projects like living wages or reducing carbon emissions.
It is difficult to achieve a sophisticated, CSR compliant supply chain if suppliers are allowed to enter your supply chain based solely on price, capability, capacity and quality alone.
- Finding experienced remediation consultants: It’s becoming easier to find trained and experienced auditors, however, as mentioned, it’s difficult to find experienced capacity building and remediation experts that can help you sustainably correct an egregious issue, especially in the area of human rights. There’s a scarcity of experts because there is no college degree or “factory remediation” classes or certifications that help practitioners build these special skills and, also, in my opinion, there are not as many opportunities for practitioners to work on big, complex projects to gain the needed experience. The few experts out there have learned on the job over the span of their career. A good remediation program will closely vet consultants and ensure they have proven in-field experience remediating serious, systemic issues like child labor, forced labor, precarious employment, etc. Asking for case studies they can share, resumes, references and time spent auditing and consulting in the supply chain will help identify the right consultant to tackle your project. Some brands even have their own questionnaires that they send to consulting and auditing firms to understand who is most experienced and appropriate for their project.
In addition (and this may sound simple), but also key to any remediation (and audit) process is that your outside expert, the brand and the supplier have a comprehensive list of the local labor and environmental laws they must be in compliance with. You’d be surprised how many factories, brands and audit and consulting firms don’t have updated laws because it’s time-consuming to find and maintain this information with any accuracy. Audits and remediation efforts completely break down without this basic information because you can miss critical issues that can cause harm to workers and the environment and keep you from improving factory conditions. In a worst-case scenario, your factory is shut down because a law wasn’t known or followed correctly which resulted in, for example, grave injury or death at a factory. Country laws can be complex so you also need an expert that knows how to interpret the language to both effectively and legally implement the correction.
Mosaic offers remediation guidance, laws and law interpretation services on one convenient knowledge platform. Prior to Mosaic, this information was very difficult (if not impossible) to find in the CSR space. The need for a tool like this is very obvious to me and why I’ve become an advisor to the Mosaic team.
- Root Cause Analysis: “Sustainable” remediation can only be achieved if a non-compliance is looked at from a systems perspective and “root cause” analysis is conducted that identifies the underlying causes of the noncompliance issue. Correcting the root causes of an issue, especially for complex, systemic and egregious non-compliances, is extremely important. Otherwise, you run the risk of a short-term “band-aid” approach and the issue comes up again in the next audit. If you aren’t requiring your suppliers (or third-party firms) to conduct and disclose the results of their root cause analysis and how those issues were addressed, then your remediation program will struggle. Very few people or service providers are skilled at this process.
- Sourcing and Product Team Support: When the CSR team and the sourcing team are aligned in a united front to work with factory management to correct issues (especially the difficult ones), your chances of getting to full compliance go up greatly. The sourcing team holds the purse strings with the factories and is also often the key decision maker and interface with a factory. If your sourcing manager and director are on board with the CSR team’s plan and are present at the supplier meetings, then it’s more likely the factory will cooperate and correct the issue.
- Responsible Purchasing Practices: I strongly suspect that brands that have responsible purchasing practices programs (RPP) have the highest rate of compliant factories. An RPP program is one that ensures that brand business decisions do not put the factory at risk of being out of compliance with their Code of Conduct and local laws. For example, a last-minute change to a design can directly cause excessive work hours and mandatory overtime (a form of forced labor) for workers to ensure the order gets done on time. Without a solid RPP program, important “root causes” at the brand level can be missed leaving you and the supplier frustrated with the same issue coming up over and over again. There is so much more to say on the connection between RPP and remediation, but we’ll save that topic for another post.
- Strong and sincere supplier relationships: If a factory is treated poorly by their brand customer (i.e, lacking respect and equanimity), that factory is more likely to hide labor and environmental issues from them. When a brand treats factory management poorly this sends a signal that they are not open to discussing a factory’s challenges with them (much less helping to address them). Resultantly, the factory might create double payroll books showing that full wages are paid, or mask health and safety issues during a walk through. The single most important ingredient for a successful CSR program, especially in supporting the remediation process, is to be fair and respectful towards your suppliers. Listening and being an equal partner in solving problems helps ensure the factory has the space and support to improve in a sustainable manner. I’ve found that if the sourcing, product and CSR teams act with empathy and show support, factories will feel comfortable showing you their real challenges (and real books!) thus accelerating improvements and meeting remediation goals.
Even with all of these key elements active in your program, sometimes suppliers are not interested in cooperating on corrective actions. Long-term supplier relationships are best practice, but on rare occasions, leaving a factory for CSR reasons is part of a normal program. I’ve found that when a CSR program includes the elements listed above, exiting is the exception rather than the rule.
- Civil Society Organization (CSO) Support: CSO’s, like a local labor organization, human rights advocacy group or a government agency, can be extremely helpful in sorting through the non-compliance issue you as a brand are trying to solve. Most audit findings don’t warrant this type of collaboration, but when you do have a situation where you need local help I highly recommend exploring CSO partnerships. Local organizations often know the ins and outs of the political landscape, the cultural mores, and understand the local labor or environmental issues much deeper than a brand or supplier will ever know. Governments often have programs that can help train factory management or lend financial support or expertise to a challenge. You can also find strong, long-term allies, advisors and advocates in CSO’s as supply chain work never stops. I also recommend looking into US, European or International CSO’s that can lend expertise and credibility to your program and remediation efforts. They often have experts that can see the international and local picture of your challenge and can help you improve your CSR program overall. Many brands shy away from working with CSO’s because they don’t know what to expect and because sometimes it takes more effort and time to collaborate. However, I’ve found that more often than not they are worth the extra effort and have been invaluable in finding sustainable solutions to the problem.
- Brand Collaborations: Brand remediation collaborations can accelerate a factory’s improvement efforts. While brand collaborations can be time consuming, their success rate is high. Brand collaborations are especially helpful if you are a small to medium sized company that makes up a small amount of production in a factory, or you are a one person CSR team that needs support and critical mass from other brands with larger orders (and thus more influence on the factory) to remediate a systemic issue. A brand collaboration can also help reduce audit fatigue and set the factory up for success. We can’t do this work alone and brand collaborations are an important way to tackle some big and complex challenges.
- IT Support: If you have a medium to large supply chain, you will need a software platform to help organize your data, run reports and simplify your system. I’ll be honest; I have never found a system that is the “silver bullet.” All the products I’ve seen have pros and cons. However, digitizing the massive amounts of CSR work that requires tracing, tracking and reporting on progress is a big step towards streamlining and creating efficiencies in your program.
We’re all in this business to do some good out there and affect positive change in workers lives and the natural environment. It’s evident that the more we put sustainable remediation at the heart of our programs (including time and funding), the faster we will get to this hopeful goal.
Cara Chacon, Principal at Intentum Consulting
Cara has worked in the corporate responsibility industry as an executive, consultant, trainer and auditor for the past 24 years. She launched her own consultancy firm in November 2021 called Intentum Corporate Responsibility Consulting. Prior to that, Cara had an 11-year run as Patagonia’s VP of Social and Environmental Responsibility where she led a global team of professionals that set strategy and implemented the company’s human rights and environmental sustainability initiatives. Cara led many of Patagonia’s pioneering sustainability programs including their regenerative organic cotton program, the largest apparel Fair Trade certification program, their first climate and living wages strategies, B-Corp certification and all their robust animal welfare and materials traceability programs and certifications. Cara was also the founder and co-chair of Patagonia’s C-suite sustainability decision making body called the “Footprint Council.” She also served on the Board of Directors of Textile Exchange (2017-21), Organic Cotton Accelerator (2020-21), Fair Labor Association (elected by industry peers 2012-16) and various Advisory Boards. In her past role at STR Responsible Sourcing, she led a global team dedicated to the development and execution of CSR/sustainability trainings and capacity building engagements for brands, suppliers and auditors. In her career, Cara has conducted over 1,000 supplier social and environmental compliance assessments and capacity building engagements in over 35 countries across 25 different industries. She has a Master’s degree in International Affairs and a Bachelor’s degree in Government from California State University, Sacramento.