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Highlights from the first-ever EcoVadis global csr risk and performance index 2017

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Highlights from the first-ever EcoVadis global csr risk and performance index 2017

  1. 1. Document Classification: EcoVadis Public Highlights from the EcoVadis Global CSR Risk & Performance Index Michael Smith, Senior CSR Analyst, EcoVadis Rosey Hurst, Founder, Impactt
  2. 2. Document Classification: EcoVadis Public Webinar Details OBJECTIVES: 1. To benchmark CSR performance of companies from US, Europe and China 2. To highlight key CSR issues that warrant increased attention from US companies INTENDED AUDIENCE: 1. Procurement officers 2. CSR/Sustainability professionals 3. Compliance professionals 2
  3. 3. Document Classification: EcoVadis Public 1. Highlights EcoVadis Global CSR Index 2017 2. Reasons for Regional Performance Variations 3. Impacts for US Companies 4. CSR Spotlight Issue-Labor Practices & Human Rights 5. Q&A Session Webinar Agenda
  4. 4. An Overview of the First EcoVadis Global CSR Risk & Performance Index Michael Smith Senior CSR Analyst, EcoVadis
  5. 5. Document Classification: EcoVadis Public The Data: 2015-2016 799,250 evaluation data points used 640,770 documentsevaluated byEcoVadis 24,984 evaluations 194 EcoVadis ISIC categories 21,927 unique companies 144 countries 28 portfoliosindustry divisions 2 size groups 3 1 10 world regions
  6. 6. Document Classification: EcoVadis Public (9 criteria) (7 criteria) (3 criteria) (2 criteria) Policies Endorsements Reporting Measures Certifications Coverage 4 CSR Themes – 21 Criteria – 7 Management Indicators The EcoVadis CSR Rating Reference Model
  7. 7. Document Classification: EcoVadis Public Results Overview 0 0,5% 0,4% 00-14 15-24 25-34 35-44 45-54 55-64 65-74 75-84 85-100 5% 10% 15% 20% 25% 30% 6% 4% 24% 21% 25% 25% 28% 30% 13% 16% 3% 4% 0,28% 0,41% 0 % 0 % Year2015 Year2016 Score range percentages by year Size breakdown by % across calendar years Outer ring: 2016; Inner ring: 2015 27% 24% 21% 20% 56% 53% 0 10 20 30 40 50 42,4 44,0 43,2 43,8 45,4 44,6 44,0 45,3 44,7 39,3 41,5 40,5 36,9 38,6 37,8 Year 2015 Year 2016 Theme Performance 2 Years
  8. 8. Document Classification: EcoVadis Public US-EU-China: Aggregate Performance Results? Europe outperforms the US and China across 2015 and 2016
  9. 9. Document Classification: EcoVadis Public USA-EU-China: Size Matters
  10. 10. Document Classification: EcoVadis Public US-EU-China: CSR Theme Breakdown?
  11. 11. Document Classification: EcoVadis Public Sector Category Scores Most portfolios edging closer to being considered low CSR risk. Yet, certain portfolios continue to hold medium to high CSR risks X axis - number of companies in portfolio Y axis - % change in average overall CSR score from 2015 to 2016
  12. 12. Document Classification: EcoVadis Public What is Driving Responsible Sourcing Efforts? A convergence between the US and Europe on the same top three drivers and priorities for SP programs: Brand Reputation, Risk Mitigation, and Compliance.
  13. 13. Document Classification: EcoVadis Public What is Driving Responsible Sourcing Efforts? Cont. Source: Global Reporting Initiative Carrots & Sticks 2016
  14. 14. Document Classification: EcoVadis Public Impacts on US Companies US Suppliers-Potential loss of business because they lack innovative practices compared to EU and Chinese companies, and lack price leverage that Asian companies maintain US Buyers-Weak US supplier performance potentially undermines buyer efforts to manage operational CSR impacts-including supply chains-responsibly
  15. 15. Document Classification: EcoVadis Public Poll Question How do you engage your suppliers to drive improvements on sustainability issues (multiple choice)?  "Doing business with us" page on your company website  Formal supplier code of conduct  Sustainability/CSR clauses in contracts  Sustainability assessments and/or on-site audits  Set performance targets with recognition and/or incentives  Collaborate on improvement plans and/or education on CSR
  16. 16. Taking a Human Rights perspective The challenges and opportunities in Global Supply Chains Rosey Hurst, Founder and Director, Impactt Limited
  17. 17. • Which statement is closest to your experience? (one choice) - We have no human rights issues in our supply chain - We work with our suppliers to close audit non- compliances - We analyse suppliers’ management systems to map risk - We collaborate with stakeholders to remediate problems Poll question
  18. 18. What workers say It was a dream to work in the gulf countries as no opportunities back at home. Now I am here and do not want my relatives to be here, and work as an ox in the field. I want to go to home but do not have my passport in my hand, so I have to work till the contract finishes with my employer. I swear, I will not come back to construction work in the gulf. Nepali worker, Qatar
  19. 19. What workers say I am not happy with the life, after doing so much hard work and not being able to fulfil my dreams. Worker, India
  20. 20. What workers say Supervisors show little respect to workers: shouting, telling us to work faster, not allowing us to go to the toilet… Worker, UK
  21. 21. In the news
  22. 22. 2010 2011 2012 2013 2014 2015 2016 2017 UNGPs US Business Supply Chain Transparency Act introduced UK Bribery Act Focus on Supply Chains E.O. 13627: Strengthening Protection Against Trafficking in Persons in Federal Contracts UK Modern Slavery Act California Transparency in Supply Chains Act Australian Slavery, Slavery-Like Conditions and People Trafficking Act EU Directive on Preventing and Combatting Trafficking in Human Beings EU Directive on ESG Disclosure US Business and Supply Chain Transparency on Trafficking and Slavery Act 2015 introduced Key legislation Dutch Child Labour Due Diligence Law Swiss responsible business initiative launched French ‘Duty of Care’ Law
  23. 23. UNGP – The 3 pillars PROTECT RESPECT REMEDY
  24. 24. SDGs Directly work towards SDG 8 Targets: • Eradicate forced labour and modern slavery • End child labour in all its forms • Protect labour rights for migrants and those in precarious employment • Promote safe and secure working environments Contribute towardsWork towards Forced Labour Discrim - ination FoA Living Wages Child Labour Secure work Working Hours H&S Respect
  25. 25. Worker pie – the trade off Respect Better future for family Income security • Having a voice • Confidence you will be listened to • Status at home and in the factory • Personal development opportunities • Promotion opportunities • A fair wage in a normal working week • Paid in full on time • Job security
  26. 26. Identify Mapping the process Understanding the risks Understanding any breaches Remediate Addressing identified risks Righting any wrongs Eliminate Looking ahead and proactively ensuring risks are eliminated Putting in place systems that close off risks one by one Re-thinking the business to further reduce risks moving forward In practice
  27. 27. Where are the risks? Who works in your operations and supply chain? Levels of oversight Directly employed Indirectly employed Auxiliary Locals National Migrants International Migrants
  28. 28. Wage gaps Average monthly take home wage (USD)* Living Wage Estimate (Monthly / USD)** Monthly wage Gap (USD) Monthly wage gap % shortfall Bangladesh 97 452 355 79% Cambodia 226 472 246 52% India 168 364 196 54% Vietnam 258 280*** 22 8% UK 2098 2239**** 141 6% China 532 692 160 23% • Impactt database • **Asia Floor Wage 2017 • ***Global Living Wage Coalition Figures, focusing on Garment sector workers 2016. No updated Asia Floor Wage available for Vietnam) • ****UK Living Wage Foundation, based on Living Wage Outside of London (£8.25/hour)
  29. 29. Prevalence in China from 2007 to Q3 2017 CHINA PREVALENCE INDEX* Forced labour Hours over 60/week Non-payment of minimum wages Child labour No robust age verification system No union or ineffective union 2007 77% 79% 82% 28% 77% 100% 2008 89% 95% 73% 36% 89% 87% 2009 73% 86% 38% 8% 66% 71% 2010 80% 93% 65% 22% 71% 74% 2011 71% 91% 47% 24% 70% 53% 2012 56% 88% 27% 36% 62% 89% 2013 45% 93% 23% 16% 53% 81% 2014 21% 98% 27% 13% 48% 64% 2015 10% 100% 17% 26% 50% 33% 2016 19% 98% 45% 2% 35% 79% 2017 6% 100% 50% 10% 48% 88% Source : Impactt data * Years 2007-2015 are from August to July, e.g. 2014 is August 2013 to July 2014 2016 is from August 2015 to December 2016 2017 aligns with the calendar year – ask Impactt for further details
  30. 30. Services in UAE - 2017 Source : Impactt data 64% 56% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hours over 60/week No union or ineffective worker representation
  31. 31. In the food sector too - 2017 Impactt have visited 121 food processing sites since 2012, including: • Nut harvesting areas of the Amazon • Tea plantations in Kenya • Chicken and Turkey killing sites in the UK and Ireland • Turkish apricot orchards • Berry-growing areas of Morocco Source : Impactt data 9% 32% 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Forced Labour Hours over 60/week
  32. 32. Finally, the UK UK PREVALENCE INDEX Discriminatio n Abuse 2012 10% 32% 2013 39% 39% 2014 31% 19% 2015 20% 22% 2016 26% 25% 2017 11% 20% Source : Impactt data
  33. 33. Identify In practice
  34. 34. REMEMBER FINDING A PROBLEM IS A GOOD THING! Human Rights issues are everywhere… If you not finding them, you are not looking hard enough!
  35. 35. Identification – Some best practice tips • Review what you already do to understand what is missing to identify issues/risks • What more/different is needed? • How to leverage current processes and what new is needed? • Supply chain mapping • Beginning at the first tier, eventually moving to second and third tiers. • Risk assessment (including mapping risk by country, and worker type risk mapping) • Audits can support in this process • Due diligence beyond audit once risk is identified, for example understanding more about your suppliers’ and your operation labour forces, etc. • Talking with suppliers to understand more about their business, their challenges, their labour supply chains and ways of recruiting. • Talking with workers. • Ensuring your commercial teams are aware of key issues to spot • Using publicly available resources to determine risk spots, such as NGO reports or media stories
  36. 36. Key elements Remediation
  37. 37. Remediation - Don’t Panic There are practical ways to remediate instances almost all types of exploitation SLAVERY HARSH TREATMENT EXCESSIVE HOURS
  38. 38. Eliminate In practice
  39. 39. Elimination Elimination Good regulation Business caseRe-humanisation
  40. 40. What does good reporting look like? Dos • Be honest, simple and transparent • Focus on the greatest (salient) risks to people • Show how it connects to the business overall • Get specific – share examples • Set clear and realistic commitment • Show your understand your supply chain • Demonstrate impact • Be open about challenges • Explain gaps • Look forward Don’ts • Leave gaps to the imagination • Be too top-level without giving details • Only share success • Share bits and pieces without showing how they connect • Make it hard to find connected information
  41. 41. For more information on Impactt contact: rosey@impacttlimited.com / luke@impacttlimited.com 020 72426777 For more information on EcoVadis contact: Marketing@ecovadis.com / sales@ecovadis.com 917-398-3340 Q&A session

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