Interview: Ray Baker on responsible supply chains
Ray Baker is the Director of Social Responsibility for Kingfisher plc where he is accountable for developing the group’s international environmental and social policies and programmes. Ray is a member of the Institute of Personnel and Development, the Cambridge University BEP Climate Change group and the Business in the Community Market Place practitioner’s taskforce. He is also Chair to both the EuroCommerce and British Retail Consortium policy advisory groups on Corporate Responsibility and was a member of the European Multi Stakeholder Forum on CSR.
Kingfisher is Europe's leading home improvement retail group and the third largest in the world, with markets in the UK, Southern Ireland, France, Poland, Italy, China Taiwan, Russia, Spain, Turkey and Korea. Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix Direct. B & Q in the UK were pioneers in the 1990’s, being amongst the first retailers to require their suppliers to purchase timber products from independently certified well managed forests and preferencially timber products which carried the Forest Stewardship Council FSC logo.
There was a factory in China that I visited which had particularly poor standards. If they hadn’t improved we would have terminated their contract but we worked with them to improve. Termination is a last resort.
BITC: What does responsible supply chain management mean for Kingfisher?
Ray Baker: The first priority for Kingfisher is knowing where we are buying goods from and how they are being made. We need to try and attain full transparency at all of our factories and across the full spectrum of our supply chain. Trust, understanding and commitment are also very important internally, as well as across our supply base. While we buy thousands of products from factories all around the world, we do not actually own these factories so the job of transparency becomes even more difficult.
BITC: What is your role and how do you interact with and influence the buying teams?
Ray Baker: Kingfisher is a vast operation with buyers based in offices around the world. Being at the Corporate Centre, our role is to help to provide solutions, communicate good practice, and report the outcomes of our international indicators. The operating companies are responsible for delivering against the Kingfisher Code of Conduct for Factory Working Conditions. We are just facilitators for change.
It is also important, in that regard, to remember that our overseas sourcing offices are also part of our supply chain and here we are making excellent progress in the development and promotion of good factory standards and conditions. However, a lot of our products are sourced through 3rd party agents and suppliers. I cannot possibly attend every factory audit and when I do visit a factory it is not normally for a strict social audit, I just need an overview of what is being done. We have our own specialised auditors within our sourcing offices. We also use local third party organisations like SGS. We also ask factories to provide us with information about other audits and self assessment audits.
BITC: How do you deal with difficult issues like child labour, where the solutions are not always that simple?
Ray Baker: We are not experts on child labour. We need to work in partnership with organisations who understand the issues better. We work with local NGO’s like Save the Children and consult with them to deal with certain problem situations.
In our Code of Conduct for Factory Working Conditions we stipulate that we do not want children to work in our factories. For new factories we will not take on a contract if children are found to be working in the factories However, in existing contracts things aren’t always that straightforward. For example, there is a difference between forced and bonded child labour and family labour. In India (where amongst other things, we have our brass door handles made), we find that they are often manufactured in a family environment, in family homes. In our experience, children help their family before or after school.
In this situation we do not automatically discontinue a contract, because if we did, the children and family may end up in a worst situation. Instead, we try to make sure that the conditions are safe and that the children have access to education. To do this, we work with local NGOs to help to improve the situation. We would also put a formal improvement plan in place. We would set targets and measure against these targets for visible improvements. In these situations it is very difficult to police everything. Because it is so hot in India, many of these workers work at 2 o’clock in the morning - it is more difficult to audit their homes at that time of night.
Why do we do all of this? The main reason is that we believe children, wherever they come from, should just be able to be children; with the opportunity of a good education and able to live in a safe and healthy environment. However it is also important from a reputation perspective as we wouldn’t want to be associated with child labour issues. Customers don’t tend to ask us about things such as child labour but there is a huge trust in our brand and it would really damage our reputation if they found we were knowingly allowing children to make the products they buy from us.
BITC: Do you think companies should go beyond local standards?
Ray Baker: This is a difficult one. For example in China the people that work in the factories also live in the factories for a big part of the year; so the factories are also their home. When you check the dormitories where all the workers sleep you find that they are in some cases over-crowded, a bit smelly, with not much privacy. These are standards that, in the West, would be largely unacceptable. When we take factory owners up on this, they point out that the conditions are actually far better than the home living conditions of many of the workers. In this situation you need to form a judgment.
Having said this, we believe that the people making our products should work in universally acceptable standards. With the help of reference points such as our own code of conduct and the ILO (International Labour Organisation) guidelines we decide where this line is and where we believe the conditions are below the line we insist on improvements being made.
BITC: How do factory owners react to the enforcement of international standards?
Ray Baker: They don’t always understand why we are asking for these things. We need to make sure that the commercial balances with the ethical. To improve dormitories, water supplies, or working conditions might cost quite a lot of money, an expense which is often incurred by the supplier. In return the expectation from the supplier is that the commercial team will give them continuity of supply, so we need to work closely with our buying teams to keep them informed and updated.
That is why it is so important that when you visit the factories people understand why we are doing this. What are the benefits? We try to give factory managers really good reasons for making improvements. We do this by running workshops for factory managers where we take them away for a day and give them some practical tips and ideas on how they can improve the standards within their own units. If you just ‘tell’ people to do something but they don’t understand 'why'; it is not as effective. For example if a factory reduced accidents, it can reduce absence, which means less need for repeated training, more productivity, and goods of a higher quality.
There was a factory where we asked them to record accidents in the accident book. When we went back there were lots of accidents in the book. We questioned their follow up and the response was – 'well you asked us to record the accidents so we did.' There was a lack of understanding that the reason for recording them was to take action to try to reduce the accidents not record them for the sake of it.
In Africa, in some factories, apart from the human tragedy of HIV and Aids, 15% can being added to their wage bill because of absence and extra skills training – clearly in this case our overall impact can only be small. However by working with the factories concerned and the local government, we have sponsored a mobile clinic which visits the factories on a regular basis. We monitor the progress and find that where the workers are making use of the clinic that absence and sickness has reduced. We need to make the business case to factory managers.
There are examples where we have helped the factory owners understand the reasons for making improvements, which has led to a significant improvement in working conditions. The responsibility for the workers rests squarely with the factory owners but this must be in line with our Code of Conduct for Factory Working Conditions. However, in some situations especially in home working units – they may find it difficult to immediately fund these improvements. In that case we may help to pay for the alterations. In return we would expect that they maintain these conditions.
Some years ago in the Phillipines, where we were buying coloured lamp shades we found that the working and living conditions were appalling. They were all made in home working units. We invested money to provide solid floors and lighting in these units. We went away, having made the improvements, and when we returned some months later, the workers had moved their families into the refurbished home working unit and started working in the older more run down units where they used to live. So these things are not always as simple as we may like them to be. You cannot just impose your standards.
In Kingfisher’s Code of Conduct for Factory Working Conditions there are critical failure points – things like basic human rights, protection of life and limb, no slave labour, serious breaches of health and safety etc. While we care about and respect local culture, none of these things can be excused by culture. These are fundamental rights and principles. You have to draw the line. There is a difference between children being locked in a room and forced to work and people working with their family to earn some extra money for food. There are norms which should be abided by wherever you are in the world.
BITC: Have you found particular challenges with your operations in China?
Ray Baker: China is a big place with a population of around 1.2 billion people. A very small percentage of this 1.2 billion currently live in the city. Conditions vary. In factories in major towns some are more high tech than some of the factories in Europe. In rural areas conditions are maybe not so good. Kingfisher expects that, where trade unions are legally recognised, workers should have the right to join or not to join them. Where trade unions are not recognised we would expect that people have the opportunity to have a good dialogue with management and that they have an opportunity to voice their views and opinions.Have you ever terminated a supplier contract due to bad labour practices? Do you think buyers even take notice of all this when they are issuing contracts? We have terminated suppliers failing to meet our requirements but I must say this is rare as we would not initially take on suppliers who fail to meet criteria.
There was a factory in China that I visited which had particularly poor standards. If they hadn’t improved we would have terminated their contract but we worked with them to improve. Termination is a last resort. Where factories are not complying, they are probably not good factories, and the quality of goods is probably very poor. You normally don’t have one without the other.
BITC: What do you see as the emerging issues in this field over the next 10 years, as countries like India and China emerge into even more powerful economies?
Ray Baker: As requirements in Europe continue to rise, so too will issues such as: labour rights; waste recycling; chemicals in products; CO2 emissions and climate change. Factories outside of Europe will need to be even more aware that they will be scrutinised on these issues. Many companies only do social auditing of factories – Kingfisher also does environmental auditing of suppliers as well as looking at the whole lifecycle analysis of the products we sell. Climate change is a huge world issue that will affect us all. If India and China don’t do anything about climate change we are in real trouble but it is important for countries like the UK to set an example and for organisations such as Kingfisher to take the lead.
