Intersection of Local Law & Brand Code of Conducts


Panel: Tara Rangarajan (Head of Communications and Brand Engagement for ILO’s Betterwork Program), Jane Hwang (CEO, Social Accountability International), and Desta Raines (Director of Sustainability for Sephora/LVMH)

Moderator: Darryl Knudsen (Advisor to Mosaic Responsible Supplier Resource, former Director of Business and Human Rights, Gap Inc. and former member of National Advisory Committee for Labor Provisions of Free Trade Agreements)

Post Webinar Reflection by our Moderator

When James asked me to moderate a panel on “The intersection of local law and brand codes of conduct” the topic felt a bit like deja vu to me. I was even a bit leery because twenty years ago the topic was rather controversial. An excessively technical focus on national laws (at the expense of international law and international norms) was often used by employers and their associations as a fig leaf for inaction on supply chain labor rights. But the rich discussion we had last week, led by three accomplished experts, who have focused their careers on bringing about lasting improvements for workers in global supply chains, reminded me of Terry Pratchett’s quote: “Coming back to where you started is not the same as never leaving.”

The problem

Currently, brands with Codes of Conduct (CoC) and commercial factory monitoring programs often operate in isolation and struggle to support the in-country government institutions and labor laws needed to ensure long-term compliance improvement within the disparate countries of their supply chain. Furthermore, despite every CoC requiring that suppliers know the law, there is often a lack of knowledge and understanding of these expectations. As a result, many brands are unfamiliar with what it is they are asking their suppliers to meet. This gap in knowledge permeates how brands interact with their suppliers and can undermine program efficacy as well as newly legislated ‘due diligence’ requirements.

How did we get here?

When offshoring was picking up in the 90s, there was a concomitant backlash among those concerned that production in countries with poor labor governance would result in a “race to the bottom” on conditions for factory workers. Some argued that the status quo was adequate, but others argued that it was important for brands to hold their suppliers to standards, which were higher than prevailing conditions in the countries of production. This line of reasoning relied on three main arguments: 1) Producing countries either could not or would not enforce their labor laws because multinational companies would relocate elsewhere, where prevailing conditions were lower, 2) Producing countries lacked the technical and financial capacity to ensure good working conditions and needed outside support and assistance, and 3) national laws were sometimes inferior to or in contradiction with internationally recognized human and labor rights. Over time, these private regulatory schemes have become the norm. Nearly all multinational companies have them, and many of them run on autopilot, having forgotten their original purpose. They have become divorced and delaminated from the national institutions they were originally seeking to bolster.

Thirty years on, should national institutions enforcing their own laws be the goal?

Panelists spoke to this provocative postulation. They agreed that this should be the goal, but there were some caveats. Here are some of the ideas that emerged:

Tara pointed out that at the ILO/ IFC Better Work Program, they often discuss national institutions (government, worker associations and employer associations) as being the walls of the house of healthy industrial relations. However, participation of the ILO and multinational brands help provide “supports” for some of these walls, where they may be weak. The ultimate goal should be their eventual removal.

Jane concurred. She said that national institutions should increasingly take on enforcement. Brands can and must play other roles. Examples include aligning their lobbying activities and sourcing practices to be in support of the better working conditions their current audits are seeking to achieve.

Desta also agreed that national institutions enforcing their own laws should be the Polaris that guides our actions. She pointed out that the current regime is based on a lack of trust in national institutions that existed 30 years ago and still exists today. But she was confident that there could be a gradual transition toward less checking and greater trust.

Important Q&A Response Summary (Paraphrased)

We had 95 registrants from multinational companies, multi stakeholder organizations, audit firms, and more, and they themselves asked a few great questions. Here is a summary of two.

Q: Will EU and other Due Diligence laws help push companies to have more of an impact?
A: Legislators and regulators aren’t sufficiently impressed with what companies have done on a voluntary basis. So, hopefully these laws will push brands to do more and think more outside the status quo “box” towards a sustainable vision that helps support in-country institutional capacity. However, if the laws result in just more of the same audit-centric approach, it will not help.
Q: What role will social auditing firms have in the future?
A: All stakeholders have a role to play including social auditing firms. Hoover, that role should be to support sustainable improvement and long term accountability.

You can hear the panelists’ answers to these questions on the full webinar recording.

Practical Advice from the Panel:

Finally, panelists had some practical advice for policy-makers and practitioners alike. They acknowledged that companies will likely always have an interest in and a role to play in respecting internationally recognized labor and human rights, not to mention national laws. They were adamant that the ultimate goal of supporting national institutions should not be used as an excuse for inaction by individual companies. Instead, companies and other supply chain actors should ask themselves whether their programs and actions will help or hurt the long-term goal of strengthening national institutions’ abilities to respect and protect internationally recognized human and labor rights.

A final word:

Mosaic believes that a critical step toward this change is helping practitioners become more aware of and connected to the national laws of the countries in which they operate. We are building tools and know-how to make this happen – to localize brand programs for impact. Only then, can companies answer the question about whether they are helping or hurting from an informed place.