We believe that safe and fair working conditions should be the norm for all apparel workers, not just the ones that work in our suppliers' factories. That’s why we are using our influence to build capacity across our supply chain, striving to normalise good practices and create convergence with other brands and multi stakeholder initiatives. We were one of the first apparel companies to institute a Supplier Code of Conduct in 1995, and have forged long-term relationships with many of our suppliers to build trust.
C&A follows the UN Guiding Principles on Business and Human Rights. We are fully aware of the roles and responsibilities we have as a company. We have embedded the OECD Due Diligence Guidance for Responsible Supply Chains in the garment and footwear sector to properly identify, prioritise, and manage risk throughout our supply chain. This ongoing exercise aligns with C&A’s work with the German Partnership for Sustainable Textiles, the Dutch Covenant for Sustainable Apparel and Textile, and the industry-wide Action, Collaboration, Transformation (ACT) initiative.
We have defined the top four challenges faced by our suppliers and created long-term engagement strategies for each challenge. We are committed to seeking out solutions to eradicate practices such as excessive overtime and wages, undisclosed subcontracting, fire and building safety, restrictions to freedom of association and labour rights in our key sourcing countries. We will continue to work in partnership with other leading organisations and civil society to drive change across the industry.
Over the past several years we have identified four priority challenges that significantly affect the working conditions in our supply chain. These issues are complex and usually interconnected in the unique contexts of the various countries that we source our products from. Because of this, it takes time, collective action, influence, and partnerships to deliver sustainable change.
Over the past year, we’ve focused on building capacity, tackling those issues where our business decisions have the greatest impact, and identifying areas of convergence with other industry partners. In addition, we thoroughly analysed our purchasing practices and identified the areas where we can perform better towards our suppliers. The key challenges below are not in any specific order of importance.
Challenge 1 – Compensation and working hours
Challenge 2 - Building and fire safety
Challenge 3 - Freedom of association
Challenge 4 - Undisclosed production
Working to live
For garment workers in markets such as Bangladesh, a long working week can be normal. We acknowledge the various factors that can cause this to happen and are working to change practices to ensure that workers are compensated fairly and no worker works more than a maximum of 48 hours per week, plus 12 hours maximum of overtime. In fact, our Supplier Code of Conduct stipulates that working hours may not exceed a 48-hour week plus a maximum of 12 hours overtime, or 60 total hours in any seven-day period, except in truly exceptional and unforeseeable circumstances. In addition, workers need to be fairly compensated for their hard work.
Through supplier training and regular auditing, our supplier partners are aware of the requirement to comply with national laws, the ILO Core Conventions, collective bargaining agreements, and the aspects of the ETI Base Code dealing with maximum working hours, overtime pay, and rest days. They are also aware of the need to compensate workers for overtime in a timely manner. To maintain a safe and comfortable workplace, workers must also be allowed to take breaks, have at least one day off in every seven-day period, and be eligible for statutory holidays. To detect and address potential non-conformances with these requirements, our audit teams and Development Officers regularly assess, monitor and help to mitigate unintended consequences.
Through our experiences, we recognise that our buying and sourcing practices may affect how our suppliers plan for production and can have significant impacts on wages and working hours. Last-minute changes in design, production, or delivery timings may inadvertently exacerbate this issue. Aside from this, we have also experienced that suppliers may not adequately plan for production, leading, among other things, to challenges in staffing levels to deliver the orders on time. Other factors like workers needing to attain additional compensation to support their families, and situations where factory management may intentionally misrepresent actual working hours to avoid business impacts, make this particular issue very challenging to address. Lastly, there is a general lack of wage law enforcement by local governments, requiring the brands to do most of the checking.
For many years, we have required our suppliers and their factories to compensate workers by paying wages that meet or exceed legal minimum and/or industry benchmark standards, whichever is higher. Even so, it’s still common to find instances of unpaid overtime premium. In some cases, workers are being compensated by productivity (the number of pieces made) instead of hourly at a premium rate.
How we’re responding
Many workers want or need to maximise their pay, so reductions in work hours can only benefit them if wages increase. Therefore, we have embarked on a journey to identify and overcome the barriers to these tensions through a multi-stakeholder approach with other brands, the Action, Collaboration, Transformation (ACT) initiative, C&A Foundation, and our own pilot projects.
Accurate tracking and adequate remuneration
Transparency on working practices is of utmost importance in allowing us to monitor performance across our supply chain. Over the past four years, we have emphasised the need for transparency with our suppliers and their production units. For instance, suppliers must use reliable time recording systems, where all regular hours, overtime hours, and breaks are accurately tracked. Our Sustainable Supply Chain (SSC) Development Officers help factory management understand these requirements and work with them to ensure the accuracy of their records.
Ensuring appropriate payment and training
C&A’s Code of Conduct specifies that ‘wages and compensation (for standard working hours, i.e., without overtime) must be paid regularly and on time, and be sufficient to meet basic needs and provide some discretionary income for workers and their families’. This definition is aligned with the one used by the Clean Clothes Campaign and others. In addition, C&A is a founding member of the industry-wide initiative ACT. C&A has highlighted its commitment to work towards living wages in our supply chain in the Memorandum of Understanding signed in 2015 with IndustriALL. Among other commitments, as part of ACT we committed to help establish industry-wide, national collective bargaining agreements in those production countries that do not yet have them. This will allow worker representatives to bargain with the local manufacturers’ associations to secure the wages they need.
Whenever a piece-rate wage is used, suppliers must demonstrate that payments are at least equivalent to the minimum wage or that collective bargaining is in place. This is supported by a written wage and compensation policy that is communicated to workers through employee handbooks, notice boards, letters, regular meetings or other means. Factories must also provide training to all workers and subcontractors. These measures increase transparency and empower workers, while helping us identify the issues more easily. In 2018, 98% of our production units were in compliance with national wage legislation. All suppliers to our Brazil and China regions were found to be in compliance with respect to wages. Non-compliances were discovered among a small percentage of suppliers to our Europe and Mexico regions.
Supportive purchasing practices
Our aspiration is to drive an efficient and ethical buying process, taking into consideration the challenging environment in which our suppliers operate. We have undertaken a thorough internal assessment of the way we buy, using the ACT self-assessment tool. C&A actively participated in the creation of this tool and analysed all steps of its buying process thoroughly: from forecasting and product development to production and delivery. We identified eight core areas for improvement within our purchasing practices. These improvement areas have been agreed collectively in the form of ACT purchasing practices commitments by which we abide. In addition, C&A is in the process of implementing the ACT Costing Principles for isolating labour costs in price negotiations with suppliers among other purchasing practices interventions.
Together with our senior sourcing and buying management, C&A is working on implementing a holistic internal action plan focused on improving our communication with suppliers to create additional trust and training our own employees on responsible buying practices, among many other areas of work. In addition, we are committed to developing a monitoring process, together with other ACT brands, suppliers, and trade unions that will make it possible to measure improvements in our purchasing practices and report on progress.
Improving purchasing practices is not a project with a start and end date. We believe it is a continuous journey — one we have just started. If we want to have a long-lasting impact on suppliers and workers, engaging the whole industry on this journey is crucial. That is why we are proactively sharing our knowledge and experience buying responsibly with industry peers and initiatives such as the Dutch Covenant and German Partnership for Sustainable Textiles.
Collective bargaining at the industry level means that workers within a country can negotiate their wages under the same conditions, regardless of the factory where they work in, or the retailers and brands for which they produce. The ACT approach links collective bargaining with brands’ purchasing practices as the mechanism that provides the economic leeway for national bargaining partners to agree on continuous, substantial improvements in working conditions and wages. Therefore, C&A actively promotes the fundamental labour right of workers to bargain and negotiate collectively through their democratically elected labour unions.
We believe collective bargaining is the only viable approach to achieve living wages in the apparel industry in a sustainable manner. Collective agreements at the national level provide a level playing field for all employers and workers to agree on higher wages and better working conditions, instead of competing on those issues.
We are aware that brands’ purchasing practices and capacity planning are key for suppliers to plan their production cycles, avoid excessive working hours, and ensure on-time and accurate payment to workers. As the countries in Asia do not have a long history or experience with collective bargaining, we acknowledge that for a certain period of time, moving towards a living wage agreed through collective bargaining may carry the risk of an international competitive disadvantage. To address this challenge, the approach will be pursued in key sourcing countries simultaneously. Meanwhile, special supportive country commitments by C&A and other ACT brands for the first countries signing a collective bargaining agreement at industry level will mean that higher wages will not lead to international competitive disadvantages. We have a global supply chain and we believe it needs a global approach to transform the industry together with other peers.
C&A is working in Cambodia, Myanmar, Turkey, and Bangladesh alongside other ACT brands. These initial countries have been selected due to their sizable garment production, the considerable presence of ACT member brands, and the potential for trade unions to engage in collective bargaining at the industry level. Together, these countries make up 51% of our sourcing volume. Successfully working in these countries—along with the others where collective bargaining is already in place—will result in the vast majority of our supply base being covered by collective agreements.
Our progress in 2017 was crucial for the ground work initiated in three of the pilot countries for establishing an industry-wide collective bargaining mechanism. In 2018, we were key participants in the three ACT country missions in Cambodia and Turkey, where we joined other brands and IndustriALL to meet key local stakeholders (local unions, factory owners, and Cambodian ministries) and drive positive change in the development of a long-lasting collective bargaining process in the country.
In March 2018, C&A hosted the ACT country consultation in our Yangon, Myanmar offices. Our initial meetings and the proposed ACT approach on wage setting mechanism were well received by ministries, unions and suppliers. We did not want to lose momentum, so we returned to Myanmar later in 2018 to continue our engagement and work towards living wages for the textile industry. During the year, we met with unions, suppliers, and the government in Myanmar to address work conditions and wages. Together with other ACT brands, we also met with the tripartite delegation of Myanmar (Ministry of Labour, Unions, and the supplier association) during the International Labour Conference in Geneva to discuss labour and human rights, wages, and the continued development of the country.
A lot remains to be done in this field. We are committed to engaging with all relevant stakeholders as well as working towards increasing the necessary buying leverage by inviting non-ACT brands to join our collective efforts to achieve our ultimate goal of living wages for workers in the apparel industry.
Building capacity on fire, building, and electrical safety
It is a fundamental right of all workers to have a safe and healthy work environment. However, a lack of fire safety precautions in apparel production units has claimed the lives of thousands of people in Bangladesh.
Our Supplier Code of Conduct includes robust requirements for building construction, fire protection, and emergency preparedness. We have learned a lot from our work with the Bangladesh Accord on Fire and Building Safety, and have maintained leading brand status in remediation of fire and building safety issues in Bangladesh. We have rigorous requirements of all our factories and in all sourcing countries globally, and when appropriate, provide additional resources and training to improve safety. In Brazil during 2018, we trained 27 suppliers in the state of Santa Catarina about requirements and best practices in health and safety, fire safety, compensation, governance, and other topics.
Significant gaps in education and expertise
Fire and building safety are complex topics, with engineering and technical aspects that are often beyond the internal knowledge of an apparel factory. To assess these issues at the factory level, advanced vocational training and/or engineering degrees are required. In many of the sourcing countries, there is a lack of a competent talent pool to support the identification and remediation plan development, requiring costly consultant support.
In addition, fire and building safety requires robust processes from the local government that ensures adherence to the national building, fire and electrical legislations. Bringing many of our suppliers up to standard has required partnership, leading to significant actions at the factory level such as educating and upskilling the workforce and refitting locations with fire-resistant features. Often, these upgrades are costly or require significant time and resources to achieve.
How we’re responding
Supporting our suppliers
Normalising a high standard of fire safety requires significant effort from us and our suppliers. We work closely with them to understand the implications of new requirements and support them as they implement improvements. With our input, factories can access the necessary skills and tools to implement fire, building and electrical safety programmes and management systems. We also assess their capability to implement the changes from a capital or resource standpoint.
Our Supplier Code of Conduct was updated in 2015 to include additional extensive requirements for fire and building safety throughout our supply chain. During 2017 and early 2018, we worked with a consultancy to review our fire and building safety requirements again, ensuring compliance with local legislation and industry standards. We inspect all of our factories and require them to have legal documentation in place for each of their buildings, including dormitories, canteens and warehouses. Legal documentation is checked, and buildings undergo regular safety inspections to ensure improvements are implemented according to local legislation. Since this is an ongoing task, we will continue to adjust processes and requirements to ensure all production units are operating as safe working places.
C&A suppliers are required to maintain adequate insurance that covers workers for any injuries, accidents, or death. This applies to all work done on site and should also, when stipulated by law, include contractors and temporary and part-time workers.
The Bangladesh Accord has now been in place for nearly six years. C&A has been recognised as one of the brands that has made a dedicated effort to making this initiative successful, having been part of its steering committee since inception. In 2017, we were one of six organisations selected to help define how the agreement should be extended past its five-year anniversary.
Together, we agreed that the Accord has made great progress in raising awareness on important safety measures, empowering and involving workers, and driving real change in fire and building safety in the Bangladesh garment industry. After fruitful negotiations among the brands’ representatives, IndustriALL Global Union, and local stakeholders, it was decided that the Accord would be extended until May 2021, with some important additions:
The renewed Accord was signed at the OECD Global Forum on Responsible Business in June 2017 with C&A representing the brand community. The new Accord is important for us because it extends independent, expert building safety inspections for three more years, ensuring that safety improvements achieved under the first Accord will be maintained and that any new findings in any factory will be addressed.
Despite the encouraging progress of 2017, we are concerned about the uncertainty of the Accord going forward. During the last months of 2018 and beginning of 2019, the capacity of the Accord to perform has been limited due to a number of court decisions in Bangladesh that remain open. We are deeply committed to the good work of the Accord. As founding members and as a company dedicated to building safety, we believe the Accord is the best way to address the Bangladesh apparel industry’s fire safety challenges. Should the Bangladeshi courts decide the Accord will no longer be permitted to do this work, C&A will still focus on ensuring safe working conditions in Bangladesh.
Additional support to victims of the Tazreen fire
We remain deeply saddened by the loss of life and injuries caused by the tragic fire in November 2012 at Tazreen Fashion in Bangladesh, a factory that supplied C&A Brazil. In the aftermath, C&A Foundation provided immediate financial support to the families of all 112 people killed and established a fund to provide ongoing support to 49 adult dependents.
Working with Caritas Bangladesh, C&A Foundation also created a rehabilitation programme to help survivors find a new path for themselves. C&A Foundation continues to contribute to the Trust for Injured workers’ Medical Care (TIWMC), which supported 172 workers injured in the Tazreen fire and also ran two medical camps in 2017. These 172 workers will receive medical treatment and psychosocial support for the next 14 years through a grant from C&A Foundation.
C&A Foundation also supported the Tazreen Claims Administration Trust (TCA) alongside the Clean Clothes Campaign and IndustriALL Global Union in 2015, to help survivors and the families of victims gain access to adequate compensation. The TCA finalised its work in 2016, completing the compensation payments to the victims of the fire. In total, approximately US$2.17 million was paid out to all the impacted families and the workers injured in the fire.
Enabling worker organisation and collective bargaining
Freedom of association and collective bargaining is fundamental to improving labour conditions across the apparel supply chain and in our sourcing countries. Freedom of association remains an important focus of our strategy to amplify workers’ voices, encourage a dialogue with management, and advance the overall performance of our suppliers' factories.
Overcoming legal restrictions
Some countries restrict collective bargaining by law. In these cases, we expect our suppliers to help workers establish alternative forms of worker representation and negotiation. We also expect our suppliers to establish, implement and communicate a grievance mechanism that is accessible, predictable, equitable, transparent, rights-compatible, confidential and based on engagement and dialogue to resolve internal disputes and employee complaints. Freedom of association is tested as part of our auditing process and violations are considered a severe non-compliance with our Supplier Code of Conduct. It is also a key aspect of our Fairness Channel and WeChat (in China only) compliance hotlines, implemented with the support of Ethicspoint incident management software.
In 2018, we detected eight cases where freedom of association was not respected in our supply chain. Of these, four were found in Turkey, two in India, and one each in Myanmar and Cambodia. To remediate these incidents, our local Sourcing and Sustainable Supply Chain (SSC) teams, with support from the Global Sustainability team and the Sourcing teams, have worked closely with our suppliers, the workers’ representatives, and international trade unions to address each issue individually. As of early 2019, four cases are still open and we are working to successfully close them in the coming weeks.
How we’re responding
When freedom of association issues are discovered through auditing, union allegations, strikes or via our Fairness Channel compliance hotlines, we take decisive action to work together with the proper groups to resolve the issue, ensure the fair treatment of workers and implement the necessary safeguards to avoid being repeated in the future. Where necessary, we will support the reinstatement of workers dismissed unfairly and ask for compensation or support.
Championing worker representation
Our Supplier Code of Conduct requires our suppliers to adopt an open and collaborative attitude towards worker representation, allow workers to form or join trade unions of their own choosing, and to bargain collectively.
In addition, we are participating in the ACT Initiative, which plays a key role in assuring living wages in the supplier countries through the creation of national industry-wide collective bargaining processes with freedom of association as a main cornerstone.
When workers and management communicate well, they are more likely to collectively support a healthy work environment. Workers need to know their rights and responsibilities and have channels through which they can raise concerns. C&A is committed to helping our suppliers provide workers with safe and effective ways to raise concerns and grievances. During the last decade, our compliance hotlines have helped us identify issues that arise in our offices, stores, or supply chain. We aim to support fairness and transparency in how we work with our employees, suppliers and their workers.
Read more about how we empower workers
Learn more about our values
Supporting freedom of association
Recent years have seen unrest in the Cambodian garment industry. Protesters have taken to the streets, clashing with security forces and union leaders have been dismissed as they planned to organise strikes. Unions have repeatedly described repression of workers’ rights by company management and anti-union crackdowns. Engaging with suppliers on freedom of association and collective bargaining is a high priority for us.
Through the Ethical Trade Initiative (ETI), we have engaged with other brands to voice our concerns directly to the Government. Together, we were clear that stability, predictability, and the rule of law are needed for further growth of the garment sector in the region. In particular, we want to see Cambodian laws respecting the ILO) Core Conventions.
In 2018, C&A also continued its active engagement with the Government of Cambodia, suppliers, and key stakeholders to raise our concerns about labour and human rights. To date, we have participated in three consultations with unions, suppliers, and the government in Cambodia. In 2018, C&A convened two roundtable meetings with suppliers in Cambodia to discuss freedom of association, collective bargaining and wages. Together with our previous round tables, we have now held eight round table discussions on the issue of freedom of association, focusing on building healthy labour/management relations with senior management representatives all of our Cambodian suppliers.
During the round tables, we emphasised that C&A aims to work only with production units that fully comply with our Supplier Code of Conduct. We encourage suppliers to enable open communication to solve disputes amicably and are willing to support them with technical knowledge if they have difficulties resolving a dispute.
Due to the rigour of these round table discussions, we have already seen changes start to happen in the region, including the following outcomes:
Preventing undisclosed production
Undisclosed production is when a production unit that has not been previously approved for production is discovered. Although it is not often detected, it constitutes a serious violation because we cannot verify that the factory is in alignment with our Supplier Code of Conduct and our environmental and social requirements. We require that each new production unit is audited and meets the requirements of our Supplier Code of Conduct before orders are placed.
The detection of undisclosed production requires ongoing vigilance due to the complexity of the global supply chain. It’s one of the reasons that we disclose a list of our tier-1 and tier-2 suppliers’ factories every year. By being transparent on where our products are produced, we can create accountability for ourselves and our suppliers when undisclosed production is used.
In 2018, we detected 26 incidents of undisclosed production in our supply chain, of which one case involved undisclosed home working. We consider these violations to be serious, and six of those cases led to the suspension of C&A’s business relationship with the supplier. In all cases, a thorough investigation was conducted, and corrective action plans put in place with the supplier and our internal teams.
How we’re responding
Clear expectations and serious consequences
If undisclosed production is identified, the Sustainable Supply Chain (SSC) and Sourcing and Quality teams assess the situation and the production unit. Because the circumstances behind the cases are sometimes complex, the teams thoroughly investigate the situation and intentions, and utilise a systematic process to determine the consequences.
In 2016, we rolled out a three-strike policy to mitigate the risk of undisclosed production units such as home working. Additionally, if a zero-tolerance item is found on inspection, a supplier can be suspended for 12 months or terminated, depending on the results of the investigation. If undisclosed production is detected and the factory meets the other requirements of our Supplier Code of Conduct and quality standards, the supplier will receive a warning on the first instance, leading to suspension for 12 months or termination after the third instance. In all cases, if a zero-tolerance finding is detected at the undisclosed production unit, the supplier will be suspended for 12 months.
To foster accountability and understanding of our requirements around undisclosed subcontracting, we informed our entire supply base and have regular interactions on the subject during our audit process.