In the wake of recent allegations about sourcing practices at three fashion retailers, Jozef De Coster looks at a pan-European organisation - the Business Social Compliance Initiative - which believes retailers should be supporting their suppliers, not just policing them.
Child labour at Primark sub-contractors in India, poor working conditions at a unit owned by a supplier to Spanish retail group Inditex, and allegations that Tesco exploits the workers who make its clothes all hit the headlines last month.

But the unfortunate reality is that the accusations levelled at these three companies could just as easily have been targeted at most other fashion retailers or brand manufacturers.

Even those firms who work the hardest at improving the working conditions in their suppliers' factories can't be certain they will never be confronted with some unexpected reputation-damaging allegation - be it child labour, underpayment or illegal overtime - detected by the media or NGOs in one of the plants making their clothes.

Scared by a series of scandals implicating leading brands in the nineties, many companies eagerly embraced the tenets of CSR (Corporate Social Responsibility).

They launched codes of conduct, set up auditing systems and detailed in their annual reports their efforts to be fair, green and transparent.

However, they rapidly found that very few of their suppliers in emerging countries were able to produce ever more cheaply and more quickly while treating their workers according to Western codes of conduct - and at the same time make a profit.

'Comply or die' methodology
So, in order to minimise the risk of a scandal, many apparel buyers imposed their codes of conduct on their suppliers applying the so-called 'comply or die' method.

Factories that didn't pass a social audit were given only a limited time and little support to correct their mistakes. If they failed to do so, customers shifted orders to competing suppliers.  

This is not the approach of BSCI (Business Social Compliance Initiative), an organisation that was set up in March 2003 by the Brussels-based FTA (Foreign Trade Association).

It wanted to establish a European platform in the field of ethical sourcing, and to improve the social compliance of clothing suppliers in particular.

During the nineties, FTA had observed that a number of companies, such as Gap, Levi Strauss, Nike, Adidas, Otto, C&A, and Hennes & Mauritz - some of which had been confronted with NGO allegations - had developed their own social monitoring systems.

However, an unwanted consequence was that some clothing suppliers were subjected to a high number and costly succession of overlapping social audits. 

Joint European initiative
In view of the growing variety of company codes and monitoring activities, FTA decided to launch a joint European initiative, looking for better effectiveness and lower costs through the use of synergies.

BSCI was created as a common monitoring system, to simplify and standardise the requirements and individual monitoring procedures.

The system is based on the labour standards of the International Labour Organisation (ILO) and other important international as well as national regulations.

BSCI is growing fast. After five years in existence, it has 160 members reaching more than 1.85m workers in supply chains worldwide.

Most members are from the European continent (Björn Borg, Calida, Celio, Charles Vögele, El Corte Ingles, Esprit, Falke, Hunkemöller, KappAhl, Metro and Otto), but there are also four members from Hong Kong (AS Watson,  Novi Footwear, Seidensticker and Wonderful Earth).

No boycott but capacity building
The growth of its membership shows BSCI is a system that fits the needs of fashion brands and other companies. Most had been unhappy with the traditional 'comply or die' auditing model.

Ferry den Hoed (Euretco), president of BSCI explains: "We don't believe that the most efficient way to make a sustainable improvement in labour practices is to require immediate perfection.

"Better is our combination of monitoring and capacity building."

In 2007, even after a re-audit, 47.3% of the suppliers working for BSCI members were found to be non-compliant with the organisation's code of conduct.

What happens to them? Lorenz Berzau, BSCI managing director, says: "The purpose of audits is not to boycott the suppliers. Negative audit results indicate that something has to be done, that there's a need for improvement." 

That's why BSCI is organising regular workshops and training to raise awareness.

In May 2008, for example, more than 1,200 participants joined its workshops for suppliers in Shanghai, Shenzhen and Being.

The approach of BSCI may be potentially riskier from a public relations standpoint than the 'comply or die' model, but the organisation's staff are sure they are following the right strategy.

Last week, a group of business leaders headed by the Belgian ex-EU Commissioner Viscount Davignon and BSCI's president Ferry den Hoed, met with European Employment Commissioner Vladimir Spidla to discuss how the competitiveness of European companies and of the EU as a whole could be enhanced by sustainable supply chain management.

Ferry den Hoed explained: "The conclusion of our meeting with Commissioner Spidla was there has been enough talk, it's now time to act."

With the support of the European Commission, European businesses from all sectors are now planning to organise a conference in China next year to raise CSR awareness.