Stakeholder engagement

Target 1

To build strategic partnerships with international agencies, governments and civil society, with the objective of improving social and environmental conditions in the garment industry in China, El Salvador, Honduras, India, Mexico and Vietnam.

Why was this target chosen?

It has been a long-term goal of the SEA programme to promote supplier self-governance and to build monitoring and enforcement capacity at a community level. Both objectives can be achieved by partnering with organisations that have the requisite skills, capability and experience to improve workplace conditions, are able to provide training and advice to workers and factory managers alike, and are viewed as credible by the stakeholder community. We decided to focus our efforts on selected countries - those where the nature of the issues demanded broad outreach or a multi-stakeholder approach.

What was the approach taken?


ASIA

China - We have continued to build on long-standing relationships with local NGOs. Our national Workers Hotline which was originally manned by SEA was transferred in 2008 to the China Labor Support Network (CLSN), a Southern China based NGO. With the China Working Committee and CSR Asia, a social enterprise based in Hong Kong, we have also continued to explore the use of worker hotlines as a mechanism to underpin NGO capacity building.

India - In 2008 there were several high profile child labour cases linked to US and UK retailers manufacturing garments in India. Mindful of the risk of child labour in a developing country, SEA reached out to the International Labour Organization's (ILO's) New Delhi office, to the FLA representative in India and to the US government for their recommendations on credible NGO partners capable of monitoring for - and remediating - child labour.

Vietnam - During 2008 rampant inflation triggered nationwide strikes that impacted foreign-invested enterprises, including footwear and apparel manufacturing plants. Working with other brands and the Vietnamese Chamber of Commerce and Industry, we reached out to the Ministry of Manpower and to the ILO's Chief Technical Advisor for Industrial Relations for guidance and support. Our four-year partnership with Marie Stopes International, an NGO and reproductive health specialist, continued, as did our engagement on HIV/AIDS training for workers in our supply chain.

AMERICAS

El Salvador - Consistent engagement with a local jurist, senior officials at the Ministries of Labour and Economy, leaders in the National Assembly, and US Embassy staff to resolve workers' rights issues from the 2005 Hermosa factory closure.

Honduras - Preliminary meetings started with local trade associations and mid-level officials at the Ministry of Labour and the US Embassy.

Mexico - There was active participation in the MFA (Multi-Fibre Arrangement) Forum's Working Group which engages with representatives from the Ministries of Labour and Economy for increased regulatory oversight of workplace conditions. For information on the MFA Forum and its working groups see: http://en.maquilasolidarity.org.

Score

50 percent

Notes

  • China - good progress (50%)
  • India - partly complete (25%)
  • Vietnam - overall: good progress (50%)
  • El Salvador - substantially complete (75%)
  • Honduras - partly complete (25%)
  • Mexico - partly complete (25%)

Barriers encountered along the way


ASIA

China - As with all communications and relationship processes, sustaining the effort over the long-term, creating scalable solutions and defining measurable outcomes have been the main hurdles to overcome. For example, for training initiatives or the promotion of a hotline service to be effective it has to be regularly updated and reintroduced.

India - There are many potential NGO partners in India but finding organisations that are credible and reliable is difficult. Also, child labour NGOs tend to be locally based. Our action however was a broad contingency measure, and not specific to a factory or locality.

Vietnam - Limited available internal resources and the inability to address the national and international economic fundamentals and inflationary conditions were the primary drivers behind the issue.

AMERICAS

El Salvador - None.

Honduras - Slower than anticipated execution of an engagement timeline.

Mexico - While the participation by government regulatory representatives was good, senior and executive levels were not often engaged.

Conclusion


ASIA

China - We have critically reviewed workers' awareness of the hotline services, having found that only a relatively small number of workers in a few factories are using the services. We have also sought to integrate government implementation guidance on the Contract Law into regular best practice training for suppliers.

India - Engagement has proven useful and allowed us to draw on existing knowledge and expertise, thereby shortening the learning curve.

Vietnam - Recurrent strikes have forged closer communication between government, buyers and manufacturers and also generated greater recognition of the importance of good labour relations and the need for genuine worker representation and an improvement in how wages and benefits are negotiated.

AMERICAS

Many of the stakeholder relationships are now being realised at regional levels and with new stakeholder participants.

El Salvador - There was positive progress with two new legislative acts implemented, and a third act drafted by year-end.

Honduras - The dialogue has matured with key local stakeholders. The approach has become more consultative with empowered local stakeholders.

Mexico - There has been slow progress and therefore little change.

Lessons learnt in 2008

The target is broad-based, with many different forms of engagement taking place within different timeframes and with very different stakeholder groups and local conditions in each of the countries targeted.

ASIA

China - Our outreach has reinforced the need for greater capacity building within the NGO sector to support worker interests and education. Too few capable NGO partners exist and these are overstretched and under-resourced. Collaborative partnerships, for example across the garment industry, continue to make sense, but the timeframes required to launch such collaborations are much longer than single brand-managed initiatives.

India - Initiating a general dialogue is useful, but it is hard to build traction if the issue lacks specificity and there are multiple potential organisations to partner with.

Vietnam - A clear gap exists between industry level dialogue with government and the specific day-to-day management of industrial relations at the factory level. Inevitably factory issues, such as strikes, require immediate resolution but the underlying issues are tied to government minimum wage setting, or economic management, and these are operating under much longer timeframes and with only incremental change.

AMERICAS

El Salvador - This is a three-year engagement. Along the way many lessons have been learnt and barriers overcome and, as a result, the stakeholder relationships and understanding have matured. 2008 saw the need for less frequent meetings, which validated the approaches being used.

Honduras - Not yet any unforeseen consequences and it is too early in the dialogue to report on lessons learnt.

Mexico - The timelines for this target need to be in a five-year plan to better inform the annual goals.

New target for 2009

The 2008 engagement in each of the six countries will continue in 2009, with a specific focus on the impact of the global economic crisis. An additional country, Indonesia, will be added to the Asia Region, with a specific commitment to supporting a dialogue with the Play Fair Alliance in a country-based workshop.

Target 2

To enter into a dialogue with Hong Kong's labour and human rights community and obtain NGO views on issues surrounding the Beijing 2008 Olympic Games.

Why was this target chosen?

We recognised that, having been chosen as an official sponsor for the Beijing 2008 Olympic Games, there would be both heightened expectations and campaign activities directed at the adidas Group. We therefore chose to be open and pro-active in our engagement at an international and national level. For a description of our engagement with international NGOs related to the Beijing 2008 Olympic Games see the 2008 issues section.

What was the approach taken?

We believed that the NGO community in Hong Kong would likely be the main conduit through which issues over working conditions in adidas suppliers making Olympic production would be raised. With respect to broader human rights topics, we also expected that Hong Kong based NGOs would take an active role and seek to enter into a dialogue with Olympic sponsors.

Score

25 percent

Barriers encountered along the way

Using our extensive networks within Hong Kong civil society we conducted an informal outreach to gauge interest in a more formal dialogue about human rights and the Beijing 2008 Olympic Games. Surprisingly the general response was muted. Those in the NGO community most actively engaged in issues related to China indicated that they were not themselves planning to specifically target sponsors, or the Chinese government, as this would further reduce the limited operating space available to them in China. They were however supporting other international NGOs with relevant information to help with their advocacy work.

Conclusion

Given the expressed limited interest in entering into a more formal dialogue, we did not pursue engagement further. During the lead up to the Beijing 2008 Olympic Games, we were not contacted by any Hong Kong based NGO to discuss the Olympics. However, we did field enquiries and requests related to working conditions in factories in China from international NGOs and trade unions who themselves are widely networked with Hong Kong labour rights groups.

Lessons learnt in 2008

Under the circumstances, the informal approach that was adopted was appropriate and timely. It was made possible by the well-developed relations between the adidas Group SEA department and individuals within the Hong Kong NGO human rights and labour rights community.

New target for 2009

As this was event specific, there is no related target for 2009.

Target 3

To expand the outreach with North American universities and collegiate NGOs.

Why was this target chosen?

This target was identified to continue a mature dialogue with critical licenser stakeholders and to ensure that expectations for transparency, reporting and the integrity of licensing contract obligations were achieved or surpassed. The adidas Group's university licenser community is more than 300 strong.

What was the approach taken?

The approach for 2008 focused on exposing these stakeholders to actual field conditions as well as collaborative activities aimed at the clarification of specific code of conduct elements such as wages, working hours and freedom of association. This was a fresh approach but one that enhanced previous activities of verified reporting. The study and consideration of chronic compliance issues by US academics is part of an ongoing approach.

In June 2008, the SEA team hosted a visit by US collegiate licensing executives from a major US university and senior executives from a leading collegiate bookstore operator to adidas footwear, apparel and accessory factories in China and Vietnam.

On another occasion, an SEA representative participated in an FLA code review working group with university and NGO caucuses' representatives. The working group is helping FLA staff identify the most critical enhancements to the FLA Code.

In an effort to promote academic consideration of unforeseen consequences that result from factory compliance practices, SEA has facilitated a trip to El Salvador for law school representatives from a West Coast US university to evaluate and report on the impact of maquila jobs in rural subsistence farming areas of the country.

Transparency remained an important activity and was focused on the regular reporting of SEA work to resolve the El Salvadoran Hermosa factory case to important licenser universities. For more see the 2008 issues section.

There was a continued engagement with licenser universities and their licensing committees to discuss the execution of licensing compliance with working conditions in the factories making university branded products.

Score

100 percent

Barriers encountered along the way

None.

Conclusion

The factory visits by university and academic representatives were successful in bringing a stronger consideration of actual field conditions to the ongoing philosophical and methodological discussions on several campuses. Additionally, the visits and other collaborations with these groups acted as verification of the adidas Group's reporting data for specific factory cases in Asia-Pacific and Central America.

New target for 2009

This target will be continued in 2009, especially the facilitation of factory site visits by the university licenser community. Negotiations with the Collegiate Licensing Company (CLC), CLC licenser universities and an adidas Group business unit are well underway for an April 2009 trip to Vietnamese factories.

Target 4

To steer and support the Better Cotton Initiative (BCI) to influence environmental change in the international cotton industry.

Why was this target chosen?

While the negative impacts of mainstream cotton cultivation continue, the challenges in regard of certified organic cotton remain. At the adidas Group, we are keen to find sources of sustainable cotton, and we see involvement in the work of the BCI as the best way to achieve this.

The Better Cotton Initiative (BCI) began as a multi-stakeholder project in early 2004, and became an organisation in mid 2005. It aims to enhance the collaboration between brands, NGOs and environmental organisations to improve the environmental conditions in the mainstream cotton industry. The primary focus is on reducing water consumption and pesticide use in cotton farming. The BCI aims to meet its goals by providing training and capacity building to cotton farmers in efficient farming techniques that do not add costs to the cotton growing process.

What was the approach taken?

Along with other brands, the adidas Group provided both funding and technical support to help develop tools and instruments to further the BCI's aims. For example, following intensive internal and external consultation in 2008, the BCI Steering Committee, of which the adidas Group is a member, finalised the global 'Principles, Criteria and Enabling Mechanism', the core part of the future BCI structure.

The BCI supply chain task force developed a first version of the proposed marking, tracking and purchasing approach for better cotton. We were able to facilitate that this mechanism was being reviewed by the adidas Group sourcing liaison office in India.

Score

75 percent

Barriers encountered along the way

Addressing environmental challenges in the very complex global cotton industry requires the involvement of a wide group of stakeholders, to take into account their diverse views and interests. While this makes decision-making processes more challenging, it helps design an approach that finds overall consensus among these groups, which in turn will reinforce effective execution.

While we are committed to the BCI process, the amount of people's time and expertise that we can contribute is limited.

Besides our continued financial and in-kind support to the development of the BCI strategy and tools, the adidas Group will review the inclusion of better cotton in its materials sourcing strategy.

New target for 2009

Kick-off of four major pilot projects scheduled for 2009, field-testing of the BCI criteria and preparatory actions for integration into the adidas Group supply chain structure. See internal engagement target for 2009.

Target 5

To expand the participation in FLA 3.0 and include El Salvador, Honduras and Turkey.

Why was this target chosen?

FLA 3.0 is a proactive, preventive system to achieve sustainable compliance through capacity building in the supply chain. It is the most recent generation of FLA audit methodologies and preceded by basic compliance auditing (FLA 1.0), and strategic auditing of the compliance systems and the root causes of non-compliance (FLA 2.0). The evolution of FLA auditing gives accredited company programmes increasing space to be creative. FLA 3.0, launched in China and Thailand in 2006, showed promising results and led to the decision to expand the programme in Central America and Turkey.

What was the approach taken?

To date a total of 24 factories in two countries (China and Thailand) are enrolled in the programme. Four adidas suppliers are participating in the FLA 3.0 pilot, the Soccer Project. Of the 24 factories, 19 have completed management self-assessments and 18 have had a representative sample of workers interviewed. In May 2008, FLA 3.0 foundation training was launched to 35 supplier participants in Central America.

The four adidas suppliers in the Soccer Project in China and Thailand have completed the Hours of Work training sessions and those suppliers have submitted capacity building plans. FLA Independent External Assessments (IEAs) will be conducted to assess improvements over the implementation period.

Score

25 percent

Barriers encountered along the way

The roll-out of FLA 3.0 continues, but at a slower rate than planned. There were a number of factors identified as contributing to the slow uptake, including the lack of trust between buyers and suppliers, the capacity of supplier management to absorb training, the need to retrain compliance staff and retool programmes, and implementation cost.

The FLA Board decided to discontinue the 3.0 roll-out in Turkey for a variety of reasons, including:

  • Only a small number of factories from Turkey were originally included
  • Declining production in the country
  • Supplier participation in a previous project.

The adidas Group chose not to participate in the 2008 FLA 3.0 roll-out in Central America but will reconsider it in 2009. SEA team members previously planned for deployment to 3.0 were instead reallocated to support the Sustainable Compliance Leadership (SLC) working group. This group's project to develop standardised audit tools is supported by FLA staff and FLA 3.0 monitoring practices so there remains a strong connection to FLA 3.0.

Conclusion

The most important conclusions were that factories that worked shorter hours had better worker retention, quality output and on-time delivery performance.

Lessons learnt in 2008

The FLA staff analysed factory self-assessment documents and more than 2,000 worker interviews in China and Vietnam. Several findings about excessive working hours were surprising and pose new challenges for sustainable compliance approaches. The FLA 3.0 process steps for the factory self-assessment proved to be at least as penetrating as traditional audits and perhaps even more so in that it removes much of the adversarial character of the audit and encourages frankness rather than falsehood.

Hours of work

48% of workers and 47% of managers said their factory worked over 60 hours per week. The rate of non-compliance with the Hours of Work code element detected by independent external monitors has been running at 8-9% since 2003 but stands at almost 50% in the combined management and worker survey results and at 100% of the factories according to the worker interview results. Only three of fifteen factory management teams saw a greater risk of accidents or minor incidents associated with longer hours while 70% of the workers did, expressing a view more consistent with the professional occupational health perspective. Factories cited other contributory risks related to the sourcing process, including changes in the style after the placement of the order, sudden increases in quantity and late delivery of materials by designated suppliers. While not surprising, this finding will inform the discussions with business units and sourcing departments on responsible buying practices.

Nonetheless, managers and workers tend not to see excessive working hours as a problem. While these results confirm what many people already know, namely that factories work long hours and workers are often willing to do so, it is interesting to note that the percentage of non-compliance reported by managers and workers is higher than in the FLA's conventional independent audit results.

Finally, the most important conclusions from the evaluation of the data were that factories that worked shorter hours had better worker retention, quality and on-time delivery. Preventive strategies such as better training and improved quality standards can therefore go a long way to reducing code violations.

New target for 2009

The lessons learnt from the continued roll-out of FLA 3.0 will feed into the Sustainable Compliance Leadership (SCL) initiative that is to be launched in 2009.

Target 6

To complete a feedback report, providing the adidas Group's response to the views and suggestions given in the 2007 suppliers stakeholder dialogue held in Hong Kong.

Why was this target chosen?

In each of our global multi-stakeholder dialogues we have followed a standard approach: direct engagement resulting in a formal stakeholder report (summarising stakeholder views) followed by a feedback mechanism, i.e. reporting back on how the issues raised were tackled by the adidas Group. Typically this feedback has been reported in the annual social and environmental report. For this stakeholder dialogue, however, we wanted to respond to the specific suggestions and views expressed by our suppliers and show how these had been accepted, or rejected, and how they had shaped the programme over the course of the year. Hence the idea of a feedback report.

What was the approach taken?

Initially, it was envisaged that a full report would be prepared covering the three thematic areas introduced by CSR Asia during the facilitation of the stakeholder dialogue - namely community investment, environmental sustainability within the supply chain and the implementation of the new Chinese Contract Labour Law. Subsequently however the target was redefined to focus on environmental sustainability issues only and to link this directly with a second round of engagement, with the same targeted stakeholders, at the end of 2008.

Score

10 percent

Barriers encountered along the way

The follow-up stakeholder meeting, originally scheduled for November 2008, has been deferred to March 2009. The focused feedback report has therefore also been deferred and will not be issued until April 2009.

Conclusion

Having reviewed the views expressed in the stakeholder report of the dialogue against the planned scope of the feedback report, it was clear that the community investment topic introduced by CSR Asia was of only general interest to the suppliers. Their principal focus and concern was on the immediate impacts on their business operations from the new China Contract Labour Law and the possible implications of the adidas Group expanding and strengthening its environmental performance requirements for suppliers.

Lessons learnt in 2008

A review of the scope of the feedback report was helpful in that it became more focused and forward-looking rather than simply reporting back on actions already implemented. Also, in some respects, events overtook the reporting process. For example, the uncertainty over the application of the China Contract Labour Law so strongly expressed by the suppliers in 2007 was in part clarified by the government issuing implementing guidelines and by the expert training provided by SEA to suppliers over the course of 2008.

New target for 2009

Complete a focused feedback report, providing adidas Group's response to the views and suggestions on environmental sustainability given in the 2007 suppliers stakeholder dialogue and link this to a dialogue with the same targeted suppliers in April 2009.

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Within this report
Outside this report
KEY
  • 0%: no progress
  • 10%: initiated
  • 25%: partly complete
  • 50%: good progress
  • 75%: substantially complete
  • 100%: fully complete