Verité Working with Asian Suppliers: The CSR Challenges for Norwegian Firms Heather White Founder and President, Verité

Verité Challenges in Overseas Contracting Relationships Arms length oversight Little bargaining power 3rd party ownership poses potential reputational threat

Verité Role of Host Government - Uncertain Lack of government enforcement Presence may be antagonistic to workers' rights/protections May resent interference posed by outsiders’ codes

Verité Social Consequences of Global Outsourcing Persistent discussion of ‘living wage’ Increase in prominence for ‘fair trade’ goods Companies argue the social benefit of job creation and economic activities Companies pondering MFA-end impacts Possibility of downward pressure on working conditions due to economic disruption

Verité Social Consequences of Global Outsourcing Companies at the forefront of CSR are engaging discussion of the social benefits of their production Responses to ‘anti- globalization’ forces require broad conceptualization of business’ role ‘Outsourcing’ debate has political importance

Verité Globalization and CSR The literature shows systematic evidence of multinational companies exposed by so-called anti-sweatshop campaigns being subsequently punished by the market through sharp decreases in share prices. Responsibility Breeds Success, Development Outreach, Nigel Twose and Ziba Cranmer, World Bank

Verité On Wall Street, a Rise in Dismissals Over Ethics New York Times Published: March 29, 2005 By LANDON THOMAS Jr. “With regulatory scrutiny heightened, there has been a wave of firings as corporations move to stop perceived breaches of ethics.”

Verité Groups Influencing Social Compliance  Consumers  Media  NGOs  Labor Unions  Students  Business partners  Investors (owners)  International Organizations  Church/religious groups

Verité Globalization and CSR

Verité Standardization Social Benefit Accountability Collaboration Worker Empowerment Trends in Social Compliance: the Verité view Transparency

Verité The Case for Worker Empowerment Stakeholders’ push for SC  better informed workers Greater awareness  sustained SC (or push from below) Use of area-based NGOs for sustainability

Verité The Case for Worker Empowerment Workers are sharing responsibility for social compliance (even pushing it and enabling it) Empowered workforce sustains the workplace  develops community Healthy community averts economic displacements

Verité Movement Toward Standardization Factories with multiple buyers Licensees or agents serving multiple brands with same info Shared auditing Cost reduction Minimize audit ‘fatigue’

Verité Standardization of Expectations and Accountability Foundation of CoC is universal –Respect for human rights –Int’l labor standards –Coming together of governments - - Nafta, Asean, APEC, US- Jordan trade Cooperation bet. brands Better info management Access to information

Verité More Collaborative Initiatives Among Brands Standardization –Codes, tools, approaches –Industry wide initiatives Common production facilities  common target audience Cost reduction Minimize audit ‘fatigue’ Minimize learning ‘fatigue’ Better protection for the brands

Verité Role of Transparency in Reporting Vendor performance assessed on facts, not only relationships Not just the product, but “HOW is it made?” Demand to know common violations; industry specific… Answers not only WHO (factory) but WHAT (standards, industry, etc.) and WHERE (geographic location) More segmented reporting - - includes country/regional performance Legal changes requiring social reporting

Verité Role of Transparency in Reporting CalPERS Users have ability to validate and disseminate reports Growing number of ‘learned’ workers Growing number of civil society organizations everywhere Governance concerns

Verité ‘If we hadn’t included stakeholders in reviewing and commenting on the report prior to its release, we would have had a very different response.’ Dan Henkle, VP, Gap Inc.

Verité Standardization Greater influence in business & broader role in societal development. Social Benefit Accountability Collaboration Worker Empowerment Global Social Compliance in 2010 Transparency

Verité Fast Forward …  Changing landscape of liability  moving from legal to moral dimension  Liabilities are not only current  timeline goes into the future and into the past  In 10 years, CSR will play broader role in how companies are doing business  And, CSR will need to be seen as contributing to social development, not simply insulating a brand

Verité Thank you!