Marcus Haggard, associate in the law firm of Perkins Coie, offers advice to companies on how to ensure compliance by their suppliers with ethical labor standards.
Manufacturers and importers are being held accountable for ethical behavior more than ever before, says Haggard. But achieving that goal can be difficult, given the multi-tier nature of most supply chains. Companies must work with their first-tier suppliers in order to achieve visibility into the practices of sub-suppliers, all the way back to the production of raw materials.
When signing up a new supplier, businesses need to draw on a whole suite of tools to comply with the ever-growing list of regulations governing the fair treatment of workers. They include prior agreements, internal policies, contract clauses and questionnaires that must be completed by prospective suppliers, stating their commitment to ethical labor practices. In addition, the supplier in question will often be required to pledge compliance with the companies’ own business-conduct policies.
It’s increasingly important to employ the services of a third party that can verify the supplier’s behavior. These independent entities can conduct public record searches and interview the supplier directly. They are also vital in the performance of onsite audits of the supplier’s production facility. “Having a good relationship with a third party is necessary,” Haggard says.
The COVID-19 pandemic has made it difficult, if not impossible, to carry out in-person audits at overseas factories over the last 18 months. Haggard says companies must do the best they can under the circumstances, including relying on technology such as video meetings to participate in “face-to-face” meetings with suppliers. The same platforms can be used to interview factory workers, although it can be a challenge to speak with those individuals outside the presence of their employers.
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