Perspectives in Responsible Sourcing

Wired Reputations: the US DOL’s New Form of Pressure on Brands

Thus far, the DOL has funded 19 free-of-charge smart phone applications that are currently available for download. This technological commitment, dubbed the “Open Government Initiative,” has been the response of Labor Secretary, Hilda Solis, to President Obama’s commitment to increase the transparency, accountability, and responsiveness of government agencies. Secretary Solis mentions on the DOL’s blog, “Work in Progress,” that this is “just the beginning for the Labor Department.” Companies with social compliance programs should ensure that their US based suppliers are in compliance with the law due to the rising risk of media exposure.

The first smart phone application released by the DOL in May 2011 allows workers to – independently from their employers – track their working hours and wages earned. With the ability to email time and wage records as attachments, employees may aid the DOL’s Wage and Hour division in the case of a workplace investigation. Employers should keep in mind that the onus is on them to prove that they have not violated wage and hour law. With digital employee records and none of their own, employers may be forced to dole out significant back pay.

Now, application development has been pushed out to the public. In July 2011, the DOL launched its first contest for the development of smart phone applications that make use of department data and awarded $68,000 in prizes to the winners. One of the winners created a mechanism that allows consumers the means to compare businesses by reputation by combining consumer rating services like “Yelp!” with compliance data from the DOL and OSHA. Entitled, “Eat, Shop, Sleep,” the innovative application searches restaurants, shops, and hotels nearby and includes a filter to narrow results by health and labor violations. A video that shows the application in use may be viewed here.

In the US and Europe, technology is constantly increasing its importance in the realm of corporate social responsibility. Already, fast access to information is critical to the successful preservation of brand image. Consumers currently have smart phone applications allowing them to scan product bar codes on smart phones in order to compare item prices. With the advent of applications geared to human rights, such as the one that tracks the “slavery footprint” of individuals, perhaps one day consumers will be able to tie together price and human rights when making purchases. Brands may need to tweak their social compliance programs in order to ensure consumers are satisfied in a world where products are bought based on their country of origin, the amount of energy spent in the production process, and the average salaries of the manufacturing workers involved.

European Commission Revamps its CSR Strategy

The European Commission just published its new EU Strategy 2011-14 for CSR.
Besides proclaiming that corporate social responsibility is the future for European businesses the paper contains some interesting thoughts. Here are the highlights:

The EC has redrafted its previous definition of CSR to the short and catchy “the responsibility of enterprises for their impacts in society” which it perceives to be more modern and in-step with the current understanding of what CSR is.

Companies acting in a socially responsible manner are considered the key to reaching the EU’s stated goals of achieving 75% employment, sustainable growth and responsible business behaviour. The Commission also clearly articulates that it wants to see businesses as the drivers of CSR development. Nevertheless a clear prerequisite for any responsible action will be compliance with laws and collective agreements – recognition that both States and civil society have their roles to play in shaping the debate on corporate responsibility.

Instead of offering a prescriptive approach there is an acknowledgement that many areas of CSR may be intuitive – particularly for smaller companies – and that there is no single way to achieve responsibility. Instead, enterprises are encouraged to engage with international standards and principles if they feel the need for more formalised guidance.

At the same time the Commission has set an ambitious agenda for action to facilitate movements in the area, which includes:

• Enhanced visibility of CSR and dissemination of good practices;
• Improved tracking levels of trust in business – e.g. through attacking green-washing;
• Improved self- and company-regulating processes;
• Enhanced market rewards for CSR;
• Improved company disclosure of social and environmental information;
• Continued integration of CSR into education, training and research;
• Renewed emphasis on importance of national and sub-national CSR policies; and
• Increased alignment between European and global approaches to CSR.

Reports indicate that the EC is putting its money where its mouth is suggesting the inception of a 90 million Euro fund to support enterprises excelling in their social and environmental impact.

Businesses with strong corporate responsibility agendas should see this re-affirmation of the central importance of CSR in EU policy as encouragement to continue their efforts. Those who are still in the process of getting on the wagon will find many incentives to up the ante.