Sustainability audit per EICC Supplier Code of Conduct

[somashekar]

I would like to ask people here about experience and learnings from a Sustainability audit based on the lines of EICC - Supplier code of conduct. We are up to taking one in the near future.

 

[harry]

About EICC (Electronic Industry Citizenship Coalition):

EICC promotes an industry code of conduct for global electronics supply chains to improve working and environmental conditions.

 

[Ajit Basrur]

I would like to ask people here about experience and learnings from a Sustainability audit based on the lines of EICC - Supplier code of conduct. We are up to taking one in the near future.

Hi somashekhar,

Coincidently, I am also studying the EICC topics

EICC have their own code of conduct spread across five areas of social responsibility viz. Labour, Health and Safety, Environmental Management System and Ethics. Refer HERE

Refer this site also which has lot of related information.

I would definitely say that these audits are different than our qms audits and wish you the very best


Ethics

 

[Dr. L. Ramakrishnan]

Hi Somashekar,

I have conducted many EICC Assessments throughout the Asia Pacific Region, including China and India from 2006. Even the factories belonging to my company (i.e. before my retirement) had to undergo EICC assessments. Now the assessment is carried out by a third party throughout the company (that includes suppliers too) and the results are published in the Annual Sustainability Report of the company.

My suggestion is that "Non-negotiables" have to be clearly understood and supported by the top management. Suppliers not meeting the requirements need to be removed from the supplier list, after giving them sufficient time for action. This is one area where a committed top management is needed. If this is not done and if the Supply Chain Management can influence the decision, your EICC assessment will be a farce.

As for the assessment itself, it is better to develop a company/country specific questionnaire so that important points are not missed. Reports based on this questionnaire may be used for monitoring progress in various areas.

I would be happy to help you with the EICC assessment if you have any specific questions.

I am attaching a presentation made by me at the CII Green Summit 2008; this may be of interest to you.

With kind regards,

Ramakrishnan

 

[somashekar]

Hi Somashekar,

I have conducted many EICC Assessments throughout the Asia Pacific Region, including China and India from 2006. Even the factories belonging to my company (i.e. before my retirement) had to undergo EICC assessments. Now the assessment is carried out by a third party throughout the company (that includes suppliers too) and the results are published in the Annual Sustainability Report of the company.

My suggestion is that "Non-negotiables" have to be clearly understood and supported by the top management. Suppliers not meeting the requirements need to be removed from the supplier list, after giving them sufficient time for action. This is one area where a committed top management is needed. If this is not done and if the Supply Chain Management can influence the decision, your EICC assessment will be a farce.

As for the assessment itself, it is better to develop a company/country specific questionnaire so that important points are not missed. Reports based on this questionnaire may be used for monitoring progress in various areas.

I would be happy to help you with the EICC assessment if you have any specific questions.

I am attaching a presentation made by me at the CII Green Summit 2008; this may be of interest to you.

With kind regards,

Ramakrishnan

Thanks very much for the headsup Dr.
Can I know typically what are the "Non-negotiables"
An other aspect which concerns me is the style of the third party assessment. How much of this is done at the operator interview or security guard interview level ?
I feel there is a lot of gap in this area in my case, if the audit style is across various random interviews of people in lower levels in the organization.
Another area is about the evidences on the ethics aspect. I have no any procedures or even a system on things like ombudsmen etc. Just a plain mention about these in the company HR manual. Things out of the EHS aspect seems like my weak area and I seek guidance on these.

 

[samsung]

Thanks very much for the headsup Dr.
Can I know typically what are the "Non-negotiables"
An other aspect which concerns me is the style of the third party assessment. How much of this is done at the operator interview or security guard interview level ?
I feel there is a lot of gap in this area in my case, if the audit style is across various random interviews of people in lower levels in the organization.
Another area is about the evidences on the ethics aspect. I have no any procedures or even a system on things like ombudsmen etc. Just a plain mention about these in the company HR manual. Things out of the EHS aspect seems like my weak area and I seek guidance on these.

Yes, the third party sustainability assessment generally involves interviewing the people at the grass root levels (non seasoned) such as

Security Guards - to assess how vigilant they are to safeguard the organizational assets,
workers - to assess the organizations commitment of compliance with various labour laws, ILO conventions, Universal declaration on Human Rights and general policy commitments
Ladies - Working hours, Discrimination, REDACTED harassment etc.
Employees particularly engaged in hazardous operations - to know if they are provided with adequate training w.r.t. the hazards & risk control measures associated therewith, their routine medical examination, job rotation to reduce exposure etc. etc.
Trainees, freshers etc. - to know the processes implemented by the organization for their career development, welfare and in general ensuring their retention

The feedback received from this vulnerable group is also used by the assessors to evaluate the organization's preparedness to deal with various social risks that may weaken its sustainability initiatives. Hence, this part must be carefully looked into and the existing gaps must be strongly addressed.

EHS is one of the pillars of organizational sustainability and hence is pivotal during the assessment.

OHS - Important aspects that may be touched upon are:
1. Processes adopted for OHS risk assessment & management same as prescribed in OHSAS but may require you to go beyond the minimum level of compliance.

2. Effectiveness of operational controls should be visible and are endorsed by the workers

3. Trends of OHS performance that can include reduction in injury rate, severity rate, workdays lost, fatality rates over the years. Important is to know what you did to achieve this level of performance and what lessons were learned. How top management ensures involvement of employees & other stakeholders (internal & external) during planning, implementation and review phase. (OHSAS 18001/ 18002 can be referred)

4. Impacts of initiatives implemented on the H&S of employees (may ask for health records approved by a certified surgeon)

5. Organization's health & Safety Policy (not necessarily the one that's required by the OHSAS)

Environment -

1. 100% compliance with all applicable national, international, local or other laws. Also the processes to identify the changes in legislation and how these changes can effect the organizations sustainability initiatives. e.g. cost of combating the effects of climate change may put the organization's economy in perils.

2. Proactive initiatives to deal with Environmental risk management such as a CDM initiative, use of non renewable energy sources, use of energy efficient technologies & practices etc. etc.

3. Involvement/ role of internal & external stakeholders in improving your environmental performance. (External stakeholders like community people, neighbours, media persons, regulators, suppliers, customers etc. may also be contacted for verification)

4. Use of innovative environmental tools. e.g. reduction of pollution/ pollutants at the source, reduction in the consumption of substances hazardous to environment/ employees health, reduction in hazardous/ toxic waste generation etc.

5. Continuous reduction in the use of natural resources and how it was made possible, it's replicable potential and the likes.

6. Organization's initiatives towards Greening of supply chain.

7. Awareness on International Environmental Agreements, their alignment with the business and organization's preparedness to meet the requirements should they become applicable or are ratified by the national government in near future.

8. Practices and processes for Stakeholder identification, prioritization and engagement on environmental concerns.

9. Proactive disclosure of environmental performance. e.g. subscribing to GRI, publishing sustainability report in annual reports or company website etc.

There can be many more points worth consideration and also what I mentioned above may not be in line with the EICC code, yet these are few of the common aspects which I suppose, are focused by the assessors during the typical sustainability assessment which, in general, is based on the Malcolm Baldrige model of Quality Excellence.

Hope this helps.

 

[Dr. L. Ramakrishnan]

Dear Somashekar,

1. "Non-negotiables" are the absolute "NO" to your company. These may be Child Labour, REDACTED harassment, Corruption and bribery, Compliance with legislation and regulation, Working hours, Substances (banned or to be phased out), Wages etc.

2. Third party assessment is likely to provide an "un-biased" view to the top management; before going for a third party assessment I would suggest that the organization carries out training programmes, audits, reviews, corrective actions etc., and convinces itself that it has addressed most of the issues satisfactorily.

3. As an organization you will have a "moral" authority over your suppliers if you yourself go through an EICC Assessment and comply with its requirements. Like any other audit, you need to have follow-up and surveillance audits at pre-determined intervals.

4. As for the interview with Labour, security guards, canteen employees, drivers etc., the subjects normally discussed are: Wages (minimum wages, overtime wages, wages for working on holidays etc., salary tab), working hours (normally maximum of 60 hrs including overtime with one day off for every six days of work), safety precautions, hygiene, medical examination (especially for canteen employees and drivers), age proof (including those from contractors). My experience in India is that Security Guards and Drivers work for more than 60 hrs a week, they work for seven days continuously without a break and they are not paid overtime salary or higher salary for working on holidays and national holidays. Medical examination of canteen staff (especially for lungs and skin related - finger tips - issues, contagious diseases), security personnel (audiometry, physical fitness and vision) and drivers (audiometry, vision, especially colour blindness) is seldom carried out. In many instances there is no wage tab that is given to the worker.

5. As for the ethical aspects, you may like to follow some of the Code of Conducts adopted by large corporations. In India Tata's have a code of conduct (http :// www. tata.com/aboutus/articles/inside.aspx?artid=NyGNnLHkaAc= - OBSOLETE BROKEN 404 LINK(s) UNLINKED - PLEASE HELP - REPORT POSTS WITH BROKEN LINKS). I would also like to refer you to the following link which will show you how this subject is handled in Philips: Business principles - Investor relations | Philips. If your organization is not large you do not need to have such an elaborate code of conduct; but it is essential that the essence of these codes are captured as a Way of Working for the organization. In big organizations one has a "Compliance Officer" who is responsible for ensuring compliance with the code throughout the organization.

6. As for EHS, if your organization (or your suppliers' organization) is ISO-14001, OHSAS 18001 and SA 8000 certified, most of the issues would have been covered. A major issue I see in India is about "guarding the moving parts of machines" (required by the Factories Act); many times it is frustrating to explain to the "experienced" engineer and operator that the machine they operate does not meet a simple safety requirement. Another area of concern in India is the handling of Chemicals; operators handle chemicals without realizing their effects on them, very often without any PPE, with bare hands and standing on spilled chemicals etc. There is a need for fundamental changes in the way of working. I am not sure if any of your suppliers will be carrying out air-borne chemical substances concentration (e.g. to check if the concentration is below the TLV (TWA, C) of ACGIH); even though this is required as per the Factories act, I have seen that none of the SSI suppliers had carried out this measurement. Another issue is the factory layout. You will find many safety issues compromised while the layout has been made....the list is long. But these are opportunities for improvement !!!

My suggestion is that you try to implement the EICC code in your organization first and learn the difficulties and the solutions. It will then be easy for you to inform your suppliers the requirements, train them and help them to comply with the EICC requirements.

In case you need any help please do not hesitate to ask;I will be happy to be of help to you.

With kind regards,

Ramakrishnan

 

[Ajit Basrur]

Ramakrishnan,

Thanks for the valuable information - truly your experience speaks

 

[klraghu]

Dr. Ramakrishnan can you share about your auditing expereice with Philips General Purchasing (PGP) division audits i.e., audit process for LABOR AGENCY involved in Philips on-site

 

[Dr. L. Ramakrishnan]

Hi

I assume that you are interested in knowing as to how the audit will take place NOW. My experience is from the PAST. If my assumption is wrong please correct me.

I have retired from Philips two years ago and I do not know if there is any change in the way EICC assessments are carried out. But knowing the organization which is very serious on this assessment, I would expect the audit to focus on all the elements of EICC pertaining to Labour, health and safety, environment, management systems and ethics; if you are going to be audited by a third party - prepare for issues related to minimum wage, salary slip, working hours (especially for drivers and security staff), Overtime work, weekly offs, age, discrimination in wages, training in safety, health check up (especially for drivers, canteen employees, security staff), PF deposits, ESI, training in emergency (in the work place), provision and use of PPE, exposure to management systems (& depending on your company's size your own management system), licences, code of conduct etc. The list is not exhaustive...but indicative.

I would be glad to answer if you have any specific question.

With kind regards,

Ramakrishnan