Wednesday, May 29, 2013

G4: The Voice of Dissent

Who speaks for the workers? At the GRI Conference in Amsterdam 22-24 May 2013, there was one voice which was loud and clear. It was that of the ITUC - The International Trade Union Confederation - representing 175 million workers in 156 countries and territories through 315 national affiliates - in the form of Sharan Burrow, the ITUC General Secretary, and colleague also speaking at the conference, Dwight Justice.
Of course, the timing couldn't have been more fortuitous. The Rana Plaza death toll of over 1,100 in Bangladesh, not the first but certainly the most publicized safety tragedy in outsourced garment factories in Asia in recent years, was the burning platform, both literally and figuratively, that added an almost haunting ring of truth to Sharan Burrow's plea for integration of labor rights and social standards into the norms of business behavior.
Sharan Burrow, ITUC, demands worker rights at  the GRI Conference
Here's a taste of Sharan's speech to the conference:

"Notwithstanding the legitimacy of the GRI and the improvements made in the new “G4” to deliver more strategic sustainability reports that are focused on those impacts that matter most to people and the planet, the reality is that the short-term quest to maximise profit pits corporations against rights and sustainability. Despite the risk of climate catastrophe, the corporate opposition to a price on carbon or industry policy-based subsidies for start-ups in new energy – let alone the major fossil fuel giants fight against a comprehensive climate agreement – is without moral or sustainability virtue.

Yet many of the same major companies file their sustainability reports without conscience. And their approach to the workers whose labour fuels their profits is criminal. Ask any CEO if they would like their sons or daughters to work in the textile factories in Pakistan, the mines in the Congo, manufacturing plants in Central America, or as beer women in Cambodia, and they shudder. But at the same time they allow the willful perpetuation of these horrors in the supply chains of their corporations.

The model is neither humane nor sustainable. Yet many corporations promote their practice as responsible. Just check the sustainability reports of the retailers that sourced from Rana Plaza in Bangladesh. There can be no more excuses, no more deaths from fire, occupational injuries or disease, no more work-related poverty and no more denial of human and labour rights. It is time to move beyond volunteerism to compliance. If corporations don't integrate labour rights and environmental standards into their core business model, then the rule of law must be effective enough to ensure compliance.

Globalisation in the manufacturing and service industries began to accelerate sharply in the 1980s as advances in communications and transport technology enabled companies to begin exploiting the vast global workforce on a scale which was previously impossible. Firms adopted business models based on locating production in countries where labour laws are weak, virtually non-existent or poorly enforced, and thus workers are effectively blocked from organising unions and engaging in collective bargaining with employers.

The global supply chain has become the means by which international brands maximise their revenues by continuously seeking an edge on their competitors by driving production costs ever lower. While the globalised business model continues to provide vast profits for companies, it comes at a tremendous cost to working people and to the economies of many of the poorest nations. The backwash of low-wage competitiveness can now be seen in the attacks on rights and collective bargaining in Europe, and along with the anti-union orthodoxy in the US, is not just morally wrong but counterproductive to sustainability."
Many of Sharan's remarks, and her subsequent contribution in the panel discussion, were met with nods of acquiescence, and occasional applause, from the very large crowd in the audience. We all agree that corporations should be more accountable for their impacts in the supply chain, which are where the most significant human rights abuses take place. The real question is whether G4 will go further in driving that accountability, moreso than its predecessor, G3.
Of course, we cannot expect a single, voluntary reporting framework to change the world and be solely responsible for the enlightened transformation of business accountability. Sustainability is a movement which requires all stakeholders, including governments, to play a role. Nonetheless, reporting is a catalyst for performance improvement, and G4 does take reporting to a new level. With a focus on the impacts that matter, in the places they matter, G4 aims to make reporting more relevant, more process-oriented, less tick-boxy and more accessible to our global community of businesses of all sizes in all sectors.
G4 has strengthened the coverage of reporting in the area of labor, human rights and supply chain management with new performance indicators.
New G4-12 General Standard Disclosure, required at both Core and Comprehensive reporting levels (see previous post for the difference between Core and Comprehensive), asks companies to describe their supply chains, indicating the number and location of suppliers active in supporting the delivery of an organization's products. Outsourced factories in Bangladesh, and elsewhere, should be disclosed as part of the supply chain.
Former performance indicators LA1 and LA4, now G4-10 and G4-11, covering details about the total workforce, including employees, supervised workers and percentage of employees covered by collective agreements, are now mandatory in the G4 guidelines, as General Standard Disclosures for all companies, rather than optional performance indicators as in G3/G3.1.
New Specific Standard Disclosures in the area of labor include G4-LA14, G4-LA15 and G4-LA16, relating to the percentage of suppliers screened using labor practices criteria, significant actual and potential impacts for labor practices in the supply chain and actions taken, and disclosure about grievances filed against the company.
New Specific Standard Disclosures in the area of human rights G4 HR-10, G4-HR11 and G4-HR12, include the same set of performance indicators that refer specifically to human rights, separately from labor practices.
However, Specific Standard Disclosures are relevant in a G4 report only if they have been identified as material. Companies which have not prioritized material issues which relate to labor practices have no formal G4 requirement to disclose such practices in their supply chains. This creates a potential risk that companies will be rather selective about the issues they identify as material and the extent to which they will be transparent about the detail of their supply chains. The big change in G4 is the need for a structured, inclusive, documented and transparent process for identifying material issues. It's inconceivable that a company whose product lines depend on thousands of outsourced factories throughout Asia and elsewhere will not declare labor and human rights as material issues after due process. G4 requires a leap of faith that companies will apply this new reporting framework responsibly and ensure content is developed in a considered and balanced way, reflecting significant social and environmental impacts both internal to and external to the organization. 
G4 comes, then, with a greater emphasis on the responsibility of stakeholders to be alert to the ways in which companies use the G4 guidelines, what they prioritize and how they report. G4 is the era of, not only greater responsibility to report (companies), but greater responsibility to respond (stakeholders).  I would like to hear more from the voice of dissent, the ITUC, and from others, responding to corporate disclosure, as it happens, and not just with bold statements at GRI conference time. As G4 takes root, it is critical that we all step up our vigilance and active involvement in the reporting process. We are all stakeholders. We are all accountable. We are all the voice of dissent.
In the meantime, 1,600 people, nodding, in the RAI Conference Center in Amsterdam on a rainy morning in May, is a good start.

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via   or via my business website   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

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