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The Aftermath of Bangladesh: Best Practices in Foreign Markets

BY CSA STAFF

By Colleen A. Conry, Jane D. Goldstein, Natalie Logan and Alicia Suarez

On April 24, 2013, 1,127 people were killed when Rana Plaza, a garment manufacturing complex in Savar, Bangladesh, collapsed. This tragedy highlights the working conditions that may exist in Bangladesh and other countries. It also draws attention to the challenges faced by U.S. companies that want to conduct their business in an ethical and socially responsible way, particularly when operating through third-party suppliers in foreign countries.

Through the acts of suppliers and other third-party agents, U.S. companies may inadvertently participate in abusive labor practices. While U.S. companies grapple with the decision of how, if at all, to move forward in Bangladesh, this article proposes best practices that companies can utilize both internally and with regard to their dealings with third parties.

Best practices for preventing abusive labor practices
While corporate social responsibility (CSR) programs should address many issues and risks, this article focuses on health and safety, including human and labor rights. The following best practices are a starting point and not an exhaustive list. Companies should consult their advisors in order to tailor policies appropriately to meet their objectives.

Risk Assessments and Benchmarking:
At the outset of constructing a CSR program, companies should understand the landscape in which they operate. This may include the following:

  • Conducting risk-assessments to determine which geographies and stages of production present the highest risk;
  • Gaining an understanding of stakeholder and consumer demands; and
  • Assessing the adequacy of existing policies and procedures by benchmarking each against publicly available industry standards and guidelines, as well as peer policies and procedures.

Tone at the Top
CSR programs should be initiated and supported from the top with input from all departments and ranks. This requires active support, both written and verbal, from the company’s executives and board of directors.

Policies and Procedures
A company should document both its internal CSR policies and procedures and its CSR policies and procedures as they apply to suppliers and other third parties. A company may choose to establish its internal CSR policy within its existing Code of Conduct or through an independent CSR policy.

Companies can also choose to forego internal policymaking and join organizations that set out specific standards by which members must abide, such as the Fair Labor Association. Companies should also establish a policy that specifically applies to its third-party agents, such as an independent Supplier Code of Conduct.

A comprehensive CSR policy requires, among other things, attention to human and labor rights and anti-corruption practices.

Human and Labor Rights: A CSR policy should cover, at a minimum:

  1. Prohibition of child and forced labor;
  2. Compensation;
  3. Working hours and conditions;
  4. Health and safety;
  5. Freedom of association and the right to collective bargaining (or the establishment of parallel means of association and bargaining where laws prohibit association and collective bargaining, as in China); and
  6. Non-discrimination.

Anti-Corruption: A company’s anti-corruption policy should prohibit the offering, promising, or giving of bribes or anything of value, directly or through third parties, to foreign government officials in order to improperly obtain or retain a business advantage. The policy should also address risk areas, including: gifts, meals, entertainment and travel, internships and employment, political and charitable contributions, interactions with third parties, training, accuracy of books and records, and reporting of misconduct.

Suppliers:
Foreign suppliers and their respective agents can present a particularly high risk to U.S. companies. Accordingly, companies should take steps to mitigate those risks, such as:

  • Due diligence: Companies should establish risk-based due diligence procedures to assist in the review of potential suppliers and other third-party agents. Companies should require third parties to complete the questionnaires and other steps required by the due diligence procedures before engaging or paying the third parties.
  • Supplier codes of conduct: As noted above, companies should establish independent Supplier Codes of Conduct and provide these policies to all suppliers before engaging them. Further, companies should require suppliers to certify initially and annually that they understand and will abide by the policy. Companies should explicitly state the consequences for failing to adhere to the policy.
  • Addressing sub-suppliers: Companies should look beyond their direct suppliers to their suppliers’ underlying agents. An example of a sub-supplier would be the party that manufactures and supplies materials, such as fabric or buttons, to the ultimate clothing manufacturer engaged by a U.S. company. Companies may choose to encourage their suppliers to implement their own CSR programs that sub-suppliers must abide by, or require their suppliers to notify them of any sub-suppliers that will be engaged to participate in the production of their end-products. In addition, U.S. companies may choose to work together to seek legal or regulatory redress of sustainability issues in countries in which they operate.

Audits and Monitoring
Policies and procedures must be appropriate, effective and enforced. Companies should periodically audit and monitor their employees’ and suppliers’ compliance with these policies and procedures. Supplier audits should include interviews of management and workers, review of the supplier’s records, and facility tours. Many companies engage third-party auditors to assist with these efforts to maintain the integrity of the process. In furtherance of these efforts, companies should also work to establish open lines of communication with suppliers and encourage and reward supplier transparency in order to encourage compliance.

In the wake of the Rana Plaza tragedy, U.S. companies will be expected to focus on accountability in their sourcing operations. Implementing robust policies and procedures and ensuring internal compliance, as well as compliance by suppliers and other third-party agents, with ethical and socially responsible standards, particularly with regard to health and safety, are key to this effort.

Colleen A. Conry and Jane D. Goldstein are partners, and Natalie Logan and Alicia Suarez are associates, at Ropes & Gray LLP. Conry and Suarez practice in the firm’s Washington, D.C., office, while Goldstein and Logan practice in its Boston office.


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nGage Labs prepares for next level with expanded exec team

BY CSA STAFF

SCOTTSDALE, Ariz. — nGage Labs, Inc., a leading provider of in-store shopper engagement solutions for retailers, has appointed Peter Charness as president; Nancy Terzolani as SVP of client experience and Larry Negrich as VP of marketing.

They will be charged with leading the company in its next phase of growth.

"nGage Labs has emerged as one of the leading thinkers in developing new capabilities to enable the personalized shopping experience. We’re perpetually seeking to attract talented and gifted individuals to lead our business as our innovations continue to gain momentum in the market," said Rod Ford, CEO, nGage Labs. "We have a strong focus on new science and innovation around our platform, enhancing the customer engagement experience, and leveraging marketing and public relationships to share our thought leadership with the market. I am pleased to welcome these proven performers to the nGage Labs team to lead our growing company forward."

As president, Charness will guide product development direction to fully leverage technologies and accelerate delivery of shopper engagement solutions. He will also oversee customer implementations and guide operations at nGage Labs. He has more than 30 years of experience in both retail and technology companies. Prior to nGage Labs he was at Manthan Systems and SilkOakSolutions.

Charness also served as SVP of global marketing and chief product officer for JDA Software where he led the functional direction and strategic advancement of JDA Portfolio. This comprehensive collection of more than 45 best-in-class products help retailers and their suppliers maximize their inventory investment while improving revenues, efficiency and customer focus.

As a former VP of logistics and technology for a major Canadian specialty chain, Charness oversaw the implementation of supply chain programs. He has also had executive responsibility for store operations, merchandise planning and control, replenishment, POS, warehouses and distribution centers for various retail organizations.

"Peter Charness’ executive experience at leading teams to develop breakthrough products at industry-leading companies, such as JDA Software and Manthan Systems is an invaluable asset to nGage Labs," said Ford. "He has an impressive history of bringing new ideas to market. We value his experience and leadership to guide our growth in the fast-growing shopper engagement solutions market."

"The retail industry has struggled to leverage the full potential of mobile to achieve measurable business goals," said Charness. "NGage Labs is leading in shopper engagement solutions featuring new mobile technologies for retailers by leveraging the strengths of mobile. We will be able to help retailers blunt the ‘Amazon Effect’ and to leverage the advantages a retail chain with physical store offers."

As a key member of the nGage Labs executive team, Terzolani will be responsible for growing nGage Labs professional services team and will oversee all services-related strategy and initiatives. As SVP of client experience, she will be responsible for overseeing the client facing teams, supporting growth and development within new and existing business, and ultimately ensuring overall satisfaction with nGage Labs. Nancy has more than 20 years of CRM, data management, analytics, and business development experience. Prior to nGage Labs, she held client leadership responsibilities within the retail vertical at both Merkle and Experian as well as held marketing management positions at JC Whitney, Spiegel, Crate & Barrel and Barrie Pace.

"It’s rare to find an executive with the depth and breadth of retail client experience that Nancy brings to nGage Labs," said Ford. "She has worked on both the client marketing side as well as the service provider side of the industry, working with some of the largest retail brands in North America. Her unique combination of experience along with intimate knowledge of retail operations will serve her well as she builds out our client engagement experience."

As VP of Marketing at nGage Labs, Negrich will be responsible for overseeing and driving nGage Labs marketing organization and initiatives. Larry has more than 20 years of enterprise software, marketing, and business development experience. Prior to nGage Labs, Larry had marketing leadership responsibilities at leading enterprise software companies including Microsoft, JDA Software and Avnet Technology Solutions.

"Larry brings to nGage Labs a unique blend of retail solutions subject matter expertise and a track record of successfully building brands and marketing organizations that deliver results," said Ford. "As we look to significantly increase our brand awareness in the market, Larry brings the marketing executive characteristics we need to support our goal of being the thought leader in the shopper engagement solutions market."

The in-store shopper engagement solutions that nGage Labs, Inc. offers to retailers enables them to recognize, personalize and engage shoppers directly via the customer’s mobile device and interactive smart displays.

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Pricier protein, increased volume a tasty combination for Tyson

BY CSA STAFF

Strong sales of chicken and beef pushed Tyson Food’s sales to record levels during the third quarter ended June 29.

The world’s largest protein producer attributed the growth to a combination of volume and price increases. Total sales increased 5.7% to $8.7 billion while profits from continuing operations grew to $249 million, or 69 cents a share, from $76 million, or 22 cents a share.

"As expected, we are delivering robust results in the second half of our fiscal year." said Donnie Smith, Tyson’s president and CEO. "We produced strong earnings of 69 cents per share while investing in our people, processes and new businesses and continuing to buy back stock. Our chicken segment achieved record operating income, and our beef segment rebounded to generate solid returns. We see a tremendous amount of opportunity in our business. I am very proud of the team because I’m seeing good long-term decision making to sustain us in the future, and that gives me confidence."

Fueling the growth was strength in the chicken business where sales increased 10.6% to nearly $3.2 billion, driven by a combination of 4.4% volume growth and a 6% increase in prices.

It was a similar story for the beef business where a 3.8% increase in volume and a 2.9% increase in prices caused beef sales to increase 6.8%.
Pork sales were essentially flat at $1.3 billion as lower volumes were offset by higher prices.

Going forward, Tyson is optimistic about recent favorable weather conditions and the impact on planting and growing conditions for grains which comprise a major input cost for protein production. Full year sales are expected to total $34.5 billion with 2014 sales forecast to reach $36 billion.

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