Independent Monitoring: A New Approach Gathers Momentum(Archive)

In May, Nike CEO Phil Knight announced a new initiative to improve the working conditions of the workers who make Nike’s shoes. The initiative included a tougher policy against hiring children, a program to improve factory air quality, and a commitment to independent monitoring of the factories that make Nike products.
It remains to be seen how Nike will implement its promises. Nevertheless, the fact that Nike felt the need to address its critics shows that the grassroots campaign to hold Nike accountable has had some success. After exposes of conditions in Nike factories in China, Indonesia and Vietnam, Nike had become a national symbol of the problem of child labor. Nike had been the target of several biting Doonesbury cartoon strips and campus protests around the country.
Nike’s stated commitment to independent monitoring not only represents a new departure for the company. It is further proof that it is not sufficient for corporations simply to set a code of conduct for their contractors’ factories. It is not even sufficient for companies to monitor their contractors for compliance on their own. Corporations need independent auditors to verify compliance with their codes. Without independent monitoring, consumers do not find corporate codes of conduct credible.
However, debate has raged over the definition of independent monitoring, and how to set up an effective system. Companies have traditionally viewed auditing firms as the best independent monitors. However, according to Charles Kernaghan of the National Labor Committee, true independent monitoring can only be performed by non-governmental organizations (NGO’s) with knowledge of the communities where the factories are located. Trade union leaders, on the other hand, emphasize the role of local unions.
In 1997, the Council on Economic Priorities (CEP) set up a new initiative to provide a workable framework for independent monitoring. Using the same approach that companies have used to ensure worldwide manufacturing quality standards such as ISO9000, CEP has created a workers rights standard: Social Accountability 8000, or SA8000.
What distinguishes SA8000 is that the standard is strict but has been designed to be monitored by traditional auditing firms. And already, several firms have pledged to require their contractors to implement it.
What is the CEPAA?Also in 1997, CEP set up the Council on Economic Priorities Accreditation Agency (CEPAA) with the mission of developing and verifying the implementation of voluntary corporate social responsibility standards.
CEPAA aims to fulfill its mission in three ways:
by convening key stakeholders to develop consensus-based voluntary standards,by accrediting qualified organizations to verify compliance with these standards, andby promoting understanding and encouraging implementation of these standards worldwide.In March 1997, CEPAA convened the first meeting of its Advisory Board. From the outset, the CEPAA Advisory Board has represented a diverse cross-section of stakeholders, drawn from trade unions, academia, corporations, auditing firms, non-governmental organizations (NGO’s), and social investment firms. Over the course of the last two years, the Advisory Board has achieved a remarkable consensus as it has developed SA8000.
Advisory Board members include the International Textile, Garment & Leather Workers Federation, the National Child Labor Committee, Columbia University, SGS-International Certification Services, and Franklin Research & Development, the investment advisor affiliated with Insight.
What is SA 8000?For many years, companies have policed the manufacturing quality of their contractors worldwide by requiring them to meet certain quality standards. The International Organization for Standardization (ISO) has been responsible for two notable standards of this kind: ISO9000 (a quality standard) and ISO14000 (an environmental management standard). Many corporations require their contractors to seek certification by an auditing firm that they meet these standards.
CEPAA has built on this existing framework of ISO standards and monitoring by developing a workplace standard, SA8000, against which factories can be audited.
SA8000 sets a strict standard modeled on the UN Convention on Rights of the Child, the Universal Declaration of Human Rights and widely adopted conventions of the International Labor Organization. The provisions of SA8000 include:
a ban on the employment of children under 15 years of age,a ban on the use of forced or bonded labor,a ban on the use of corporal punishment, mental or physical coercion and verbal abuse of workers,the recognition of the right of workers to form and join trade unions,no discrimination on the basis of race, caste, national origin, religion, disability, gender, sexual orientation, union membership, or political affiliation,wages that meet all minimum legal standards and provide sufficient income for basic needs, including some discretionary income,a maximum 48-hour work week, with a minimum one day off per week, and a cap of 12 hours overtime per week paid a premium rate,certain basic standards for a safe and healthy workplace, anddefined management procedures for the implementation of SA8000, including the keeping of relevant records and taking appropriate corrective actions.In addition to setting a specific standard against which auditors can measure factories, SA8000 requires auditors to consult with workers, unions and NGO’s in the course of their audits. CEPAA has even set up a complaints and appeals process by which individual workers, NGO’s and other interested parties can bring forward issues of noncompliance at facilities certified under SA8000.
How Does SA8000 Work?Aside from developing SA8000, CEPAA is also charged with the responsibility to accredit firms as the third-party or external auditors for SA8000. Once accredited, these quality certification or auditing firms will be able to certify whether manufacturing facilities conform to SA8000. The accreditation is valid for three years. Accreditation is not limited to traditional auditing firms. CEPAA hopes that NGO’s will also apply for accreditation.
The accreditation process entails a thorough initial audit and biannual surveillance audits of the certification firm. CEPAA has also developed auditor training courses and a guidance document that details the methods by which auditors can verify a factory’s compliance with SA8000.
CEPAA’s system of auditor certification is designed to allow corporations to reliably out-source the monitoring of their contractors. Companies that seek to avoid using sweatshops can now require that the factories that they use submit to certification under SA8000. Companies can either pay to have their suppliers certified or simply require that their suppliers obtain SA8000 certification of their factories as a condition of doing business.
Already, the system is starting to work. CEPAA has accredited both DNV Certification and SGS-International Certification Services. Four companies – Avon, Eileen Fisher, Otto-Versand and Toys R Us – have publicly announced their adoption of SA8000. These companies alone use thousands of primary suppliers.
Moving ForwardIn just two years, CEPAA has made considerable progress. While the White House Apparel Industry Partnership has remained deadlocked in its efforts to draw up a code of conduct, CEPAA has succeeded in developing and implementing a code that addresses the concerns of companies, unions and NGOs.
Moreover, SA8000 addresses tough issues such as wages. Under SA8000, certified factories have to pay a “living wage” that covers basic needs as well as providing some discretionary income. By contrast, virtually all corporate-sponsored codes of conduct require only that factories pay the particular country’s minimum wage, which is often too low to provide for a worker’s basic needs.
SA8000 reliance on auditing firms to perform the independent monitoring of the standard has come under criticism. NGOs such as the National Labor Committee and Sweatshop Watch argue that only local human rights and religious organizations can win the trust of workers and find out their perspective of their factory. Sweatshop Watch, in particular, does not consider auditing firms paid by companies to be truly independent monitors.
CEPAA President Alice Tepper Marlin, however, recognizes the value and need in using auditing firms to certify factories. “The work and time of whoever conducts audits has value and needs to be recompensed. CEPAA’s role is to ensure high standards of independent and impartial auditing. That way consumers can make purchasing decisions on the basis of certification of good practice.”
The main strength of CEPAA and SA8000 lies in its recognition that many companies now understand that it is their interests to avoid buying goods made in sweatshops. By providing those companies with meaningful standards and a method by which to audit against those standards, CEPAA has taken an important step forward in protecting workers rights worldwide.
Simon Billenness serves as a member of the Advisory Board of Social Accountability International (formerly CEPAA)