CSR has al­most be­come a cliché and firms are adopt­ing a more fo­cused pol­icy of re­spon­si­ble busi­ness con­duct.

For busi­nesses with sup­ply chains in South­east Asia, in­spec­tions have been re­garded as a ne­ces­sity.

Norway-Asia Business Review - - Contents - CHEYENNE HOL­LIS

How­ever, with more firms adopt­ing a pol­icy of re­spon­si­ble busi­ness con­duct (RBC), the role in­spec­tions is com­ing un­der greater scru­tiny. Nordic busi­nesses with sup­pli­ers in Asia are fa­mil­iar with the need to reg­u­larly in­spect fac­to­ries or op­er­a­tions to en­sure they meet all re­quired com­pli­ance guide­lines, both those set forth by the com­pany and lo­cal gov­ern­ments. And while the find­ings of these in­spec­tions are widely ac­cepted, this doesn’t mean they are an ef­fec­tive prac­tice.

“There is no such thing as free com­pli­ance. There is al­ways some­one who pays. The ones pay­ing for non-com­pli­ance to­day are the work­ers, the lo­cal com­mu­nity and the en­vi­ron­ment,” Ms Gunelie Winum, se­nior ad­vi­sor at Re­spon­si­ble Busi­ness Ad­vi­sors, states. “In­spec­tions are not ef­fec­tive. Ev­ery­one fo­cuses on in­spec­tions, but these don’t find the root cause of the is­sue. They only serve as a gap anal­y­sis,” Ms Winum notes.

She ex­plains that ul­ti­mately this process does a dis­ser­vice to both buy­ers and sup­pli­ers, es­pe­cially in South­east Asia where prob­lems keep aris­ing from a de­sire to keep prices low. In some in­dus­tries, such as ap­parel or man­u­fac­tur­ing, buy­ers place pres­sure on sup­pli­ers, which forces them to cut cor­ners or ig­nore labour and hu­man rights guide­lines. Even if the is­sue turns up in an in­spec­tion, it can be dif­fi­cult to es­tab­lish why it oc­curred or how the prob­lem can be rec­ti­fied.

“There are cases where an in­spec­tion finds em­ploy­ees work­ing ex­ces­sive hours, but doesn’t find out why. In the con­sumer in­dus­try, buy­ers can be the cause of this be­cause they re­quire rushed or­ders which squeeze the lead time,” Ms Winum points out. “They may also put pres­sure on their sup­pli­ers by de­mand­ing lower prices. The sup­pli­ers must find ways to meet these re­quests and of­ten the so­lu­tions in­fringe on labour rights un­less there are sys­tems in place to pre­vent it from hap­pen­ing.”

The so­cial in­spec­tion in­dus­try is es­ti­mated to be worth USD 15 bil­lion glob­ally, but Ms Winum stresses its size shouldn’t be equated to its ef­fec­tive­ness. In fact, she be­lieves that as the in­dus­try as grown, the more con­vo­luted it has be­come.

One of the largest prob­lems for sup­pli­ers is that pre­par­ing for in­spec­tions can be dif­fi­cult if they work with mul­ti­ple buy­ers. Each buyer tends to look for the same

things dur­ing an in­spec­tion, but there will be small dif­fer­ences in guide­lines and pro­to­col. Sup­pli­ers need to fo­cus on what it takes to pass these in­spec­tions, ne­glect­ing other is­sues such as im­ple­ment­ing safer labour con­di­tions.

“For ex­am­ple, we found a fac­tory in China had un­der­gone 183 in­spec­tions in one year. Each in­spec­tion takes oneto-three days. This means they are ba­si­cally be­ing in­spected all year round leav­ing lit­tle to no time to work on im­prove­ments,” Ms Winum de­tails. Mov­ing to RBC

There are a num­ber of sup­ply chain is­sues fac­ing firms who have op­er­a­tions in South­east Asia de­spite guide­lines be­ing set up by both com­pa­nies and gov­ern­ments to elim­i­nate these. Cur­rent prob­lems in­clude labour stan­dards, non-reg­u­lar em­ploy­ment and forced labour. The trou­bles vary de­pend­ing on the in­dus­try. For in­stance, the fish­ing in­dus­try strug­gles with forced labour among mi­grant work­ers while the man­u­fac­tur­ing in­dus­try has trou­ble main­tain­ing stan­dard labour con­di­tions.

“Com­pa­nies need to set clear guide­lines on what is ac­cept­able from their sup­pli­ers and fol­low up en­sur­ing the guide­lines are un­der­stood and fol­lowed. The un­der­stood part is what many busi­nesses miss,” Ms Winum says. “Leg­is­la­tion and reg­u­la­tions are in place in most coun­tries, but aren’t al­ways fol­lowed by sup­pli­ers who may not un­der­stand these. It’s up to buy­ers to ex­plain the guide­lines to sup­pli­ers through train­ing, di­a­logue and ca­pac­ity build­ing. In­spec­tions alone can­not do this.” im­por­tant with cases now be­ing pur­sued by the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment (OCED). Na­tional con­tact points in OCED mem­ber coun­tries have been set up for re­port­ing vi­o­la­tions of hu­man or labour rights.

Ms Winum ex­plains a Nordic com­pany with sup­pli­ers in South­east Asia must be com­pli­ant with all guide­lines and reg­u­la­tions. If they are not, they can be re­ported via OCED con­tact points in their home coun­try who will in­ves­ti­gate these claims. The process is far from per­fect, but she stresses it is a step in the right di­rec­tion.

“Reper­cus­sions are slowly start­ing to hap­pen and we will see more and more of this. If you have sys­tems in place to pre­vent rights vi­o­la­tions, you aren’t likely to be pun­ished. But if you don’t have any sys­tems to check, then you will likely face con­se­quences,” Ms Winum states. The ben­e­fits of RBC

Re­spon­si­ble Busi­ness Ad­vi­sors has helped firms from a wide-range of in­dus­tries make the tran­si­tion from be­ing in­spec­tion and CSR based to RBC fo­cused. The shift from in­spec­tions to stake­holder en­gage­ment, ca­pac­ity build­ing and a fo­cus on good prac­tices will re­quire all par­ties to look at the busi­ness ben­e­fits.

“Sup­pli­ers can save hun­dreds of thou­sands of dol­lars by adopt­ing de­cent work prac­tices through the help of RBC,” Ms Winum says. “Buy­ers can ben­e­fit be­cause their sup­pli­ers will have bet­ter re­port­ing data. They will also save re­sources by elim­i­nat­ing in­spec­tions and be­ing more en­gaged with their sup­pli­ers through open di­a­logue.”

With a ded­i­cated team based in the 100 coun­tries they op­er­ate, Re­spon­si­ble Busi­ness Ad­vi­sors is able to work with sup­pli­ers con­tin­u­ously and bridge the gap be­tween fac­to­ries or op­er­a­tion hubs and buy­ers. Whether it be through on­line so­lu­tions that help im­prove fac­tory man­age­ment, worker en­gage­ment and re­port­ing, or as­sist­ing with on-site ca­pac­ity build­ing, the firm is ded­i­cated to work­ing with all stake­hold­ers.

“It re­ally comes down to trust. Buy­ers and sup­pli­ers must trust each other and build a long-term re­la­tion­ship. Pro­duc­tion man­age­ment must trust in that en­gag­ing work­ers will ben­e­fit their busi­ness,” Ms Winum states. “RBC sees all par­ties in­volved and en­gaged in find­ing a pos­i­tive so­lu­tion since each one is in­vested in the process. This al­lows is­sues to be eas­ily re­solved and elim­i­nated.”

She con­tin­ues, “If you look at the big pic­ture, adopt­ing RBC is the only way to iden­tify and elim­i­nate hu­man rights vi­o­la­tions, labour is­sues or other prob­lem that can oc­cur along in own op­er­a­tions or in the sup­ply chain. It is also the best way to cre­ate mean­ing­ful stake­holder en­gage­ment which leads to the tan­gi­ble im­prove­ments all par­ties want.”

One should, how­ever, not un­der­es­ti­mate the com­plex­ity of hu­man rights vi­o­la­tions, en­vi­ron­men­tal dam­ages and other RBC is­sues. Cur­rent in­ter­na­tional guide­lines strongly rec­om­mend the use of ex­ter­nal ex­per­tise. Re­spon­si­ble Busi­ness Ad­vi­sors is able to help com­pa­nies im­ple­ment RBC prac­tices which en­sure op­er­a­tions are kept in line with in­ter­na­tional norms and stan­dards.

Draw­ing on broad ex­pe­ri­ence in re­search and eval­u­a­tions from the de­vel­op­ment field, Re­spon­si­ble Busi­ness Ad­vi­sors also has the abil­ity to find key per­for­mance in­di­ca­tors, mon­i­tor per­for­mance and im­pact, com­plete as­sess­ments and carry out other vi­tal tasks that are in line with RBC.

“We en­cour­age all com­pa­nies to adopt RBC prac­tices. This al­lows them to op­er­ate in ways that are good for busi­ness, the sup­ply chain stake­hold­ers as well as lo­cal peo­ple and the en­vi­ron­ment,” Ms Winum con­cludes.

Even with more women want­ing to take on man­age­ment roles and a na­tional will­ing­ness to em­brace in­clu­sive­ness, so­ci­etal and fam­ily chal­lenges must be ad­dressed be­fore it can hap­pen.

Ms Torunn Aass Tar­al­rud, who is Di­rec­tor of In­no­va­tion Nor­way Sin­ga­pore and Com­mer­cial Coun­sel­lor at the Royal Nor­we­gian Em­bassy in Sin­ga­pore, has wit­nessed the sit­u­a­tion in Sin­ga­pore first hand. Be­fore em­bark­ing on a ca­reer in Asia, Ms. Tar­al­rud served as In­no­va­tion Nor­way’s Re­gional Di­rec­tor for South and South­east Asia. She has many years of ex­pe­ri­ence with man­age­ment from her fam­ily busi­ness, as it grew from be­ing a small lo­cal busi­ness to a medium-sized in­ter­na­tional busi­ness. She has served as board rep­re­sen­ta­tive in both pub­lic and pri­vate com­pa­nies, and men­tored young lead­ers, es­pe­cially young women with man­age­rial as­pi­ra­tions.

There is a high ra­tio of fe­male busi­ness lead­ers in many Asian coun­tries. In your ex­pe­ri­ence, is this also the re­al­ity in Sin­ga­pore?

I have no of­fi­cial re­port that I can re­fer to, how­ever, there is no doubt that there is a po­lit­i­cal and na­tional will to fa­cil­i­tate for a more di­ver­si­fied labour mar­ket and in­crease the pro­por­tion of fe­male ex­ec­u­tives and di­rec­tors. To­day, only 7 % of rep­re­sen­ta­tives in boards are women. How­ever, the pro­por­tion of fe­male ex­ec­u­tives is in­creas­ing, even in big com­pa­nies. We find that the largest rep­re­sen­ta­tion of women is in the bank­ing- and pub­lic sec­tors. This is not so dif­fer­ent from the gen­eral de­vel­op­ment we see in other coun­tries.

If so, why is there rel­a­tively few fe­male lead­ers in for­eign/Nor­we­gian com­pa­nies in Asia? fe­male busi­ness lead­ers in Asia?

There is a will to in­crease the pro­por­tion of fe­male lead­ers. My im­pres­sion is that there is an in­creas­ing num­ber of women who have an am­bi­tion of be­com­ing a leader and want a ca­reer in lead­er­ship. It is in gen­eral per­ceived as pos­i­tive, though the tra­di­tional gen­der roles are still very much present in the per­cep­tion of women as lead­ers. At the same time, the Asian cul­ture is also char­ac­ter­ized by an age hi­er­ar­chy. It is prob­a­bly more dif­fi­cult for older work­ers to have younger lead­ers, re­gard­less of whether they are women or men.

Are there any good rea­sons for women not to lead busi­ness op­er­a­tions in Asia?

Nor­way has one of the best wel­fare sys­tems in the world. It al­lows both par­ents to have a ca­reer. The sys­tem se­cures the fam­ily econ­omy and takes care of the prac­ti­cal is­sues such as child­care. In Sin­ga­pore, the child’s mother is en­ti­tled to 12-16 weeks of ma­ter­nity leave. There is no sys­tem that se­cures the right to proper child­care, so this must be or­ga­nized within the home. In ad­di­tion, many peo­ple also have old par­ents / in-laws, and it is ex­pected that the fam­ily will take care them. This means that women to a large ex­tent have to care for both their chil­dren and the el­derly, with the re­sult that their pro­fes­sional ca­reer is de­layed. This is the main rea­son why women have fewer op­por­tu­ni­ties for a man­age­rial ca­reer in larger com­pa­nies. How­ever, many women in Sin­ga­pore choose to start their own busi­ness within sec­tors where you can have an of­fice at home and with flex­i­ble work­ing hours. This may be the rea­son why there is a rel­a­tively higher pro­por­tion of fe­male man­agers in small busi­nesses.


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