Social Accountability

More than just a new buzz-word, social accountability is a vital consideration for the management of multinationals throughout Indonesia. Ensuring that your corporate reputation is maintained and that your company's business functions in a lawful, humane, safe and ethical environment with respect to local and international laws and conventions are sound business investments.

Social accountability can now be measured and assessed through a social accountability audit utilizing the SA 8000 standards.

SA 8000 Background

SA8000 is a consensus standard that encourages companies and other organisations to develop, maintain and apply social, ethical and acceptable workplace practices within their sphere of influence. SA8000 is an initiative of the Council on Economic Priorities Accreditation Agency (CEPPA), an affiliate of the Council on Economic Priorities. In short, the SA8000 standard seeks to ensure certain benchmarks are applied to workplace practices through accredited and independent third party auditing. The overall mission of SA8000 is to improve working conditions globally. For a detailed breakdown of the areas covered, see below.

Detailed Information on SA8000

With ever increasing frequency, companies are coming under scrutiny from governments, shareholders, customers, trade unions, human-rights groups, and others to prove that their activities are conducted in a way which is socially acceptable to those who may be touched by it.

The notion of 'social accountability' is not a new one. International organisations, trade unions, human-rights lobbyists and regulators have long strove to eliminate the inequities of the workplace. Child labour and prison/forced labour continue to be pivotal issues in many areas of the world. Most of us will buy goods manufactured under conditions that we would never admit. Illegal labour and discriminatory practices are still usual, even in the 'developed world'.

Several initiatives have been developed to tackle the issue of ethical business behaviour, among the most relevant are:

OECD Guidelines for Multinational Enterprises
The Caux Principles
Principles for Corporate Global Responsibility (UK, Canada and US)
Ethical Trade Initiative (UK)
The International Code of Ethics for Canadian Business
Corporate Code of Responsibility for Transnational Companies (New Zealand)

However, these are not standards against which companies can be gauged. Filling this gap SA8000, or Social Accountability 8000, was published in October 1997. As a complement a guidance document meant to aid in the interpretation and implementation of SA8000 has also be drafted.

Similarly to ISO9000 and ISO14000 (the international quality and environmental management systems series of standards, respectively) SA8000 is formulated to allow audit and certification by a third-party certification body. However, and unlike the ISO9000 and ISO 14000 series, this new standard embraces not only system requirements but also tangible performance requirements.

A scheme for SA8000 accreditation and certification has been set up, to provide a corporate focused solution and, by making use of independent auditors, try to achieve the credibility absent from some other initiatives in this field. The SA8000 principles intend to have a supply chain effect, being applied internally within a company but also used as a tool to manage suppliers.

In an age dominated by the media, public image has become a pivotal concern. In such a context for many companies just behaving ethically is no longer enough. SA8000 certification aims at providing external evidence that a company is “doing the right things right”.

Where Does SA8000 Originate?

SA8000 results from a four-year work launched by the Council on Economic Priorities Accreditation Agency (CEPPA), an agency of the Council on Economic Priorities (CEP). The CEP is a non-governmental organisation in the field of corporate social responsibility, it was established in 1969 and is based in New York.

The advisory board of the CEPPA has representatives from a broad spectrum of organisations, including manufacturing and service companies, financial institutions, management services companies, customer and supplier corporations, other non-governmental organisations, trade unions and academia. Among those contributing to the development of the standard were representatives from Toys R Us, Avon Products, OTTO-Versand, KPMG, Body Shop, Amnesty International, National Child Labour Committee, Sainsbury's, University of Texas, Belgian Workers Federation, Abrinq, International Textile Garment and Leather Workers Federation, Eileen Fisher, Grupo M.S.A., Amalgamated Bank, Reebok and SGS-ICS.

The development of SA8000 was not a governmental or sectorial scheme, and allegedly efforts were made for it not to be dominated by any individual interest group, however it is evident that the advisory board is largely dominated by representatives from the business and financial milieu.

The goal of the CEPPA was to publish an auditable international standard for socially responsible business. The standard reflects the conventions of the International Labour Organisation (notably the seven core conventions), the Universal Declaration of Human Rights and the UN Convention on the Rights of the Child. The standard also demands compliance with national and other applicable laws, regulations and other requirements to which the company subscribes.

This standard is meant to be applied across the north-south world divide, irrespective of the organisations size, ownership (public, private, etc.) or whether it is profit or not-for-profit.

SA8000 aims at encouraging companies and other organisations to implement, maintain and improve socially correct workplace practices in all the domains they can control or affect. A significant number of organisations have introduced 'rules of conduct', but in most cases they are rather subjective and difficult to audit. SA8000 is inspired on a ISO9001 management system and therefore is designed for auditability.

What's Covered in SA8000?

SA8000 has nominally been developed to advance the cause of socially responsible business. It is a four part document. The first three parts deal with scope, interpretation and definitions. The fourth part enumerates minimum requirements concerning child labour, forced labour, health and safety, freedom of association and collective bargaining, discrimination, disciplinary practices, working hours and compensation, as well as the management systems to achieve these requirements. These requirements are summarised below.

Nevertheless, the standard's requirements say nothing about the quality of the product or service; that is clearly outside their scope. The product or service may be mediocre, but if it was produced in an SA8000-certified site, basic rules of working conditions have been honoured.

Child Labour

Child labour is banned, allowing only for the exceptions included in ILO convention 138 and recommendation 146. Requirements are established for minimum age (15), work hours, young workers (those under 18), school attendance, workplace conditions and remediation of children.

Forced Labour

The use or support of involuntary, or under menace of penalty labour, is not allowed - as established in ILO conventions 29 and 105. The frequent practice of controlling workers by sequestering their documents (e.g., passports, work permits) is also forbidden.

Occupational Health & Safety

The standard imposes the appointment of a senior management representative for the H&S of all personnel. This representative shall be accountable for the implementation of the H&S clauses of the standard.

SA8000 has requirements regarding healthy and safe working environment; risk detection and prevention of accidents and injury; regular H&S training; clean, safe and sanitary support facilities as well as access to potable water.

Freedom of Association and Right to Collective Bargaining

The right of the personnel to create and become members of trade unions of their choice must be respected by the employer, according to ILO convention 87. The company must also allow for collective bargaining.

In those countries where local laws affect these rights, the company should attempt to find 'parallel means' to enforce them.

Following ILO convention 135 the standard protects the personnel representatives, by allowing them access to fellow workers and preventing their discrimination.

Discrimination

Following ILO conventions 100 and 111, no discrimination in hiring, compensation, access to training, promotion, termination, retirement, is permitted on the basis of: Race, Caste, National origin, Religion, Disability, Gender, Sexual orientation, Union membership, or Political affiliation.

The employer cannot interfere in the exercise of the rights of personnel to observe tenets or practices, or to meet needs relating to any of the previously listed categories.

The occurrence of behaviour, which is deemed sexually coercive, threatening, abusive or exploitative, shall not be allowed by the company.

Disciplinary Practices

Companies abiding to SA8000 must not use or support the use of corporal punishment, mental or physical coercion as well as verbal abuse.

Working Hours

Compliance with applicable laws and industry standards is demanded. Working time must not be more than 48 hours per week (on a regular basis) and never in excess of 60 hours per week.

Overtime shall occur only on an exceptional and voluntary basis and be remunerated at a premium rate. Workers shall have at least one day of rest in every seven.

Compensation

The workers' payment shall not only meet legal and industry minima, but also meet basic needs plus some discretionary income. No disciplinary deductions are allowed. Regular and detailed information on wages and benefits must be supplied to the workers.

No false apprenticeship schemes or other attempts to by-pass labour laws, social security legislation and regulations are permitted.

Management Systems

Assuming a posture similar to ISO9001, based on corporate responsibility, control, and continuous improvement, SA8000 requires top management to act in the following areas:

Policy for social accountability, Management review, Company representatives, Planning and implementation, Control of suppliers, Concerns and corrective actions, Outside communication, Access for verification, Records.

The Arguments for SA8000 Certification

Both organisations and the public are confronted with a challenge when wanting to procure from socially responsible suppliers. Before SA8000 there was no global norm against which companies could be assessed.

SA8000 certification theoretically provides assurance that the goods or services have been produced and delivered in accordance with a commonly accepted and socially acceptable set of values.

Naturally, for the socially responsible organisations, SA8000 will allow them to create a demarcation from their peers, who do not meet the standards. It is expected that entrenched practices such as using sweatshop and child labour should be reduced following of SA8000 implementation.

SA8000 is an instrument for closing the gap between business and the evolving values of society. Through the auditing of human matters, instead of financial or quality issues, SA8000 certification strives to materialise the concept of social accountability.

Today companies are under ever increasing coercion from their stakeholders to pledge their efforts to socially correct and legal workplace and acquisition practices. The velocity of media impact means that businesses need to be more flexible and transparent, as problems in one site or with one supplier may derive severe consequences for the whole company.

SA8000, and the third-party certification scheme associated to the standard, intend to relieve customer organisations from having to design individual supplier requirements or regularly audit their suppliers in the area of social accountability. Those behind the SA8000 certification scheme expect that these benefits represent significant cost savings, outweighing the cost associated with certification.

Our thanks to Bill Glenwright of Hill and Associates for contributing the information on SA 8000 for this article.

For further reading material, see Risk Management for Businesses in Indonesia.