As You Sow's leadership has helped to transform the quality of corporate reporting on vendor standards as reflected in the ground-breaking public reports on vendor standards compliance issued industry leaders such as Gap Inc. We have helped strengthen similar public reporting on supply chain standards by engaging with Dell and Hewlett Packard.

Verifiable enforcement of corporate codes of conduct on labor practices can play a key role in mitigating some of the human cost of globalization by improving working conditions in supplier factories around the world. It can also serve to strengthen civil society in developing countries as properly implemented compliance programs help enforce basic standards despite weak laws or enforcement. In 2010, As You Sow released a scorecard and report evaluating supply chain compliance and held a webinar with representatives from Gap Inc., Levi Strauss & Co., and the Fair Labor Association.

Some companies have significantly increased their auditing of supply chain facilities using outside auditors from large commercial firms to perform labor and human rights to monitor for vendor code compliance., As You Sow partnered with McDonald's and Walt Disney Co. in launching a multi-year pilot project at 10 supplier factories in China to see if developing in-house capacity for suppliers to self-monitor would improve compliance.The result was the Project Kaleidoscope report, released in 2008. The project helped build stronger working knowledge about how to improve compliance. A major result was significant declines in findings of under compensation, insufficient rest days and excessive working hours.

Background on Vendor Codes of Conduct

Sweatshop conditions at contractors of major U.S. apparel and footwear makers became a national controversy in the mid-1990s. Major publicity about two disturbing situations fueled this attention: slave-like conditions at a garment factory in El Monte, California and the revelation that entertainer Kathie Lee Gifford's line of apparel at Walmart was sewn by child laborers at a Maquiladora factory in Honduras.

These conditions were a consequence of globalization policies that led retailers to outsource production as a means of reducing labor costs. Additional pressure has been created due to country-hopping by international corporations in search of ever-lower wages. Companies often use aggressive tactics to negotiate the lowest possible price with suppliers. Suppliers may be forced to cut corners and employ abusive practices in order to deliver the desired product. While retailers maintain that they don't own or control suppliers, they share significant responsibility for subsequent abusive practices especially if they insist on unrealistically low production costs.

A shift in corporate consciousness resulted in many companies drafting Codes of Vendor Conduct for their domestic and overseas contract suppliers. The codes seek to assure fair labor practices in the workplace. These codes sound good on paper but are not adequately monitored or enforced by retailers. Companies that do monitor their supply chain are generally not willing to share the results of their compliance efforts with stakeholders.

The best codes are based on the core conventions of the International Labor Organization, a UN agency promoting social justice and internationally recognized human and labor rights. Eight ILO conventions have been identified as fundamental to the rights of workers. They relate to freedom of association and the right to organize through collective bargaining; equal pay for men and women for work of equal value; and barring forced labor, child labor and discrimination in hiring.

Despite some encouraging progress over the past decade, it is still unusual for most companies to monitor their supply chain in the absence of major public controversies. A study released by the non-partisan Investor Responsibility Research Center in 2004 concluded only 12% of S&P 500 companies had codes of conduct requiring suppliers to address supply chain issues. A more recent 2009 assessment by the Labor and Work Life program at Harvard Law School of more than 2,000 large companies worldwide found that only 15% have issued a labor and human rights code of conduct for suppliers. Only 6% say they monitor suppliers for policy or code compliance.