An Overview of Social Compliance&

Introduction to WRAP

Worldwide Responsible

Accredited Production

(WRAP)September 2015

Tanzania

Agenda

• Overview of Social Compliance– Origins and Evolution– What is Sustainability?– Why do Compliance & Sustainability Matter and Have Become so Important?– The Business Case for Compliance

• An Introduction to WRAP – History / Overview– WRAP Principles– Certification Process– Monitoring Partners Selection & Controls– WRAP Training Offerings

• Benefits of WRAP Certification• Conclusion / Q&A

Origins & Evolution of Social Compliance

• In the mid-to-late 1990s, US / EU brands and retailers were embarrassed by reports of worker abuse in factories making their products in Central America and Asia.

• Based on those reports, many brands and retailers wrote corporate Codes of Conduct and began auditing factories, attempting to ensure legal, ethical and humane working conditions.

• Evolving from comply-or-die models to conversations about sustainability.

What is Sustainability?

• Many Definitions– Most of them context driven

• Need to Look at the Big Picture

• Our definition of choice:

Sustainability is being able to do whatever it is we are doing now, without endangering the ability of future generations to do the same.

Why do Social Compliance & Sustainability Matter?

• Doing the Right Thing

• If that’s not enough - it comes down to protecting your company

– Social Compliance = Risk Management

– Sustainability = Business Continuity

Why Has Social Compliance Become So Important?

• With the advent of modern technology, we now have global, instant communication.o Internet / Social Media / Smartphones

• What happens in China, Bangladesh or Vietnam now appears on CNN or BBC within minutes.

• Reputation/supply chain management are global issues, with very high stakes.o Risk Management in a Transparent World

• Greater awareness of need for sustainable manufacturing and sourcing practices.o Business Continuity in Uncertain Times

Ali Enterprises-September 11, 2012

Anger and Grief Across Karachi After Fire-The New York Times

Deadly Karachi blaze was “waiting to happen”-BBC

Karachi factory fire highlights risks for workers

-Dawn.com

Tazreen Fashions-November 24, 2012

Fatal Fire in Bangladesh Highlights the Dangers Facing Garment Workers

-The New York Times

Paying with Their Lives: The High Cost of Cheap Clothing

-Solidarity Center

Retailers and suppliershit by fallout from deadly Bangladesh factory fire

-CNN

Rana Plaza-April 24, 2013

Building Collapse in Bangladesh Leaves Scores Dead

-The New York Times

Big Brands Face Scrutiny Over FactorySafety After Bangladesh Collapse

-Associated Press

Factory collapse A ‘wake-up call’for fashion industry

-ABC Australia

Business Case for Compliance

• Protecting your organization

• Return on investment:

– Systemic approach to management

–Direct business benefits

• More efficient production– Savings include raw materials and energy costs

• Lower worker turnover

– Satisfying client requirements

An Introduction to WRAP

Mission:WRAP is an independent, objective, non-profit team of global social compliance experts dedicated to promoting safe, lawful, humane and ethical manufacturing around the world through certification and education.

• Task force established by AAMA in 1996 to study the issue of “sweatshops” in offshore manufacturing and recommend an industry-wide response

• Committee sought input from brands, suppliers, NGOs, academics and governments

• Reviewed corporate, industry, multi-lateral organization codes & national laws

• WRAP incorporated in 2000 with 12-point code• Based on universally recognized min. standards

- Core ILO Conventions • Compliance to national laws, respect for local culture

History

Organizational Overview• Non-profit organization (not a charity)• NOT a membership club• By charter, Board is majority non-industry• HQ in Arlington, VA, USA• 2 Regional offices– Hong Kong, SAR, and Dhaka, Bangladesh– Representatives in India, Thailand & Vietnam and representation in

Latin America

• 23 full-time staff – 11 experienced auditors / 7 accredited trainers

• Audits conducted by 3rd-party firms, as well as WRAP staff (latter mainly for quality control)

Leading Independent Certification Program

• In 2014, received over 2400 applications

• As of early 2015, over 2000 facilities employing more than 1.8 million workers in over 40 countries have been certified

Communication Leadership

• 7,000+ subscribers to weekly newsletter

• Website receives over 5,000 unique visitors each month, and is available in 4 languages

• Full-time local staff in 7 countries; 15 languages covered

WRAP PRINCIPLES

Principle 1

Compliance with Laws and Regulations – Facilities will comply with laws, codes, rules and regulations in all locations where they conduct business.

Principle 2

Prohibition of Forced Labor – Facilities will not use involuntary, forced or trafficked labor.

Principle 3

Prohibition of Child Labor – Facilities will not hire any employee under the age of 14, or under the age interfering with compulsory schooling, or under the minimum age established by law, whichever is greater.

Principle 4

Discipline, Harassment or Abuse – Facilities will provide a work environment free of supervisory or co-worker harassment or abuse, and free of corporal punishment in any form.

Principle 5

Compensation and Benefits – Facilities must pay at least the minimum wage required by law for all hours worked, including all mandated wages, overtime, allowances and benefits.

Principle 6

Hours of Work – Hours worked each day, and days worked each week, shall not exceed the legal limitations of the countries in which facility is located. Facilities will provide at least one day off in every seven-day period, except as required to meet urgent business needs.

Discrimination – Workers must be employed based on their abilities and paid, promoted and terminated based on their ability to do the job rather than on the basis of personal characteristics or beliefs.

Principle 7

Principle 8

Health and Safety – Facilities will provide a safe and healthy work environment. Where residential housing is provided, facilities will provide safe and healthy housing.

Principle 9

Freedom of Association and Collective Bargaining – Facilities will recognize and respect the right of employees to exercise their lawful rights of free association and collective bargaining.

Principle 10

Environment – Facilities will comply with environmental rules, regulations and standards applicable to their operations, and will observe environmentally conscious practices in all locations where they operate.

Principle 11

Customs Compliance – Facilities will comply with applicable customs laws, and in particular, will establish and maintain programs to comply with customs laws regarding illegal transshipment.

Principle 12

Security – Facilities will maintain facility security procedures to guard against the introduction of non-manifested cargo into outbound shipments (i.e., drugs, explosives biohazards and /or other contraband).

WRAP CERTIFICATION PROCESS

• Must have management systems approach• Commitment from Top Management, with specific

individual(s) assigned compliance responsibility• Adoption, Deployment & Monitoring• Maintain supporting documentation or other relevant

evidence• Continuous education of all employees

Implementation Requirements

• Application• Registration• Self Assessment• Evaluation Audit (Unannounced visit)

• Self assessment• Facility tour• Employee interviews• Management interviews• Document review

• Review of report by WRAP• Certification• Unannounced Follow-up Visits

Certification Process

Application Process

• Go to www.wrapcompliance.org– Click on “Login” and enter information– Verify all information is correct– Select monitoring firm– Pay registration fee– Contact monitoring firm

Certification Fees

• WRAP registration fee: US$1195 – Sets a 6-month clock ticking– WRAP typically generous in granting extensions to

facilities that have made a true effort to achieve compliance

• Additional costs: audit fees– Depends on the size of the factory (no. of

employees)

WRAP Monitoring Partner Selection & Control

• Monitoring Partners accredited at organizational level

• All auditors must be individually accredited and directly trained by WRAP– Refresher training required once every 2 years

• Ongoing review:– Office visits, shadow audits & audit file reviews– WRAP staff conducting unannounced visits

at certified facilities• Big part of function of staff in regional offices

(approx. 20% of facilities in general, but 100% re-visited in Bangladesh)

Social Compliance Best Practices

• Even the most progressive of approaches to auditing will not suffice if auditing is all you do– Social compliance is a two-way street

• Engagement necessary at all levels– Understanding the practical challenges faced– Being consistent with message• No “disconnect” between sourcing and compliance

– Building partnerships• Continuous improvement

– Ongoing training and education

WRAP Practices

• Management systems approach to social compliance and sustainability– Engaging with facilities to build relationships

• Education is essential –WRAP Training offerings

WRAP Training Offerings

• General awareness training

• Five-day lead auditor

• Two-day internal auditor

• Modular training courses

– Fire safety training

– C-TPAT training

• Designed for third-party and company auditors

• Interactive training with hands-on exercises, case studies, role plays, virtual factory tours, final exam

• Widely recognized as “best in class” auditor training

• IRCA accredited

Five-day Lead Auditor Course

Two-day Internal Auditor Course

• Designed for brand compliance managers or facility managers who are charged with compliance with customer codes of conduct and WRAP requirements

• Participatory course which includes hands-on exercises, role plays, virtual facility tour and mock audit

• IRCA accredited

WRAP Fire Safety Training

• Started in Bangladesh, September 2011– Launched in Pakistan in 2012, China and India in

2013, and in Vietnam and Indonesia in 2014– Local language– Over 3000 people trained (in local language)

• Aimed not just at evacuation, but also prevention– Risk Assessment– Practical Demonstrations

Benefits of WRAP Certification• WRAP’s Credibility and Dependability– Clear requirements; systemic approach– Cost effective expertise– Availability of expert resources (training)

• Safer Working Conditions• Improved Worker Morale and Communications• Avoiding Audit Fatigue• Remember the Business Case for Compliance– Protecting your organization– Return on Investment

• Higher Productivity• Lower Worker Turnover

– Satisfying Client Requirements

Summary

• Sustainability and social compliance certification are becoming increasingly important aspects of supply chain management in today’s global value chain.

• A properly implemented, and credibly certified (WRAP!) social compliance system serves the dual purpose of meeting buyer requirements as well as increasing worker efficiency and morale, and, thereby, productivity & profitability.

Conclusion

WRAP is:• The “standard most often cited” for social

compliance certification in the textile sector. – “Making Private Standards Work For You”

2010 UNIDO Study • A respected leader in the training arena.• A highly recognized, responsive and

effective partner for supply chain social compliance management.

Clay E. HicksonSr. Dir. of Strategy & Bus. Dev.

chickson@wrapcompliance.org

Worldwide Responsible Accredited ProductionArlington, VA, USA

www.wrapcompliance.org+1-880-2883-6356+1-703-243-0970

Thank you!