July 22, 2009 - The Global Social Compliance Programme (GSCP) is a powerful mediator in the global supply-chain, intent on elevating suppliers' standards of employee treatment to a common, respectable ethic across the world. Key to GSCP's motivations is injecting an effective method of mediation into existing institutions rather than creating a new system altogether.

CSRwire has spoken with GSCP co-founder Rajan Kamalanathan. In addition to being an Executive Board Member of the Global Social Compliance Programme, Mr. Kamalanathan is Vice President of Ethical Standards, Wal-Mart Stores, Inc. In 2008 Mr. Kamalanathan and the Wal-Mart Sustainability Team were honored with the Sam Walton Entrepreneur of the Year Award.

About the aims of GSCP, Mr. Kamalanathan explains:
"The idea was to get with other retailers and brand manufacturers to give suppliers a single message, to create a platform consensus on best practice in the supply-chain." The goal was to "accept existing institutions" on the grounds that "we don't need to create another one". Since its start in 2007, 26 companies from all over the world have elected to participate in GSCP. Included among the participants are Hasbro, Ikea and Wal-Mart.

Participation, which is instigated at the CEO level, is contingent on signing a public statement of support. This document details the key objectives of the program, and the company's signature indicates a devotion to the improvement of working conditions across the globe. GSCP works with participants to develop best practices for how suppliers and factories operate. Acknowledgement of these methods, and a commitment to work towards them, becomes part of the purchase agreement.

When asked why Wal-Mart is involved as a company, Mr. Kamalanathan says: "We've had a lot of impact as an individual company, but it hasn't been substantive enough to change the industry". Partnership with an industry giant such as Wal-Mart may very well expedite the process of facilitating convergence with GSCP Reference Code in the global supply-chain. To use GSCP's own definition: "Its core aim is that harmonization delivers a shared, consistent and global approach. It also offers a forum where the participating companies can openly discuss issues and challenges". To be sure, GSCP is founded on a vision of the fusion of commerce with universal human rights. Mr. Kamalanathan considers GSCP to be "a medium by which we could progress that vision".

The founders of GSCP stand by their conviction that the most efficient solution to the ethical pitfalls plaguing the global supply chain is to be found in working with current institutions, not in replacing them with new ones. Furthermore, they are all too aware that "one company can’t solve the problems we face in the supply chain".

Auditing duplication is one of the foremost challenges the supply chain faces. GSCP attributes the problem to the lack of a consistent, objective dialogue about what is acceptable in the workplace. In the absence of a set of consistent standards and aims, and an objective method of ensuring they are met, companies can unknowingly work with sub-standard factories. In addition, factories can distrust audits, and public authorities cannot always agree on who is watching out for human rights abuse.

"Duplication is an outcome of divergence," GSCP states. "To correct it, the existing monitoring systems need to work together towards convergence."

That said, perfecting an auditing program would not eradicate root problems. "The auditing alone doesn't solve challenges workers are facing," says Mr. Kamalanathan. Even with phenomena such as "audit fatigue" out of the picture, more fundamental problems will continue to hinder progress. In turn, GSCP is keeping its thinking broad in order to treat problems in their entirety, rather than just treat symptoms. Looking ahead, GSCP is focused on questions such as: How do we use data intelligently? What are the key issues, not just in the factory, but also in the region, and in the country at large? Do employees have HR departments? These are the types of questions that will continue to carry GSCP toward its goals.

Mr. Kamalanathan's key concern, looking ahead, is discovering new methods of simplifying the process all retailers and brand manufacturers are using, to make sure that people don't create complexity. Naturally, it is GSCP's hope that businesses will continue to step forward and offer leadership in "driving change that is necessary".

One reason consistency and objective methods of mediation succeed is that they create transparency. Transparency has become a crucial objective for GSCP on every level. Mr. Kamalanathan believes that insufficient transparency created one of the most significant obstacles for GSCP in its early days.

"We spent a lot of time doing things privately to make sure our plans were clear. It caused misconceptions. Now, everyone knows exactly what is going on," Mr. Kamalanathan states.

Looking into the future from an auditing perspective, GSCP would like to see retailers and brands coming together to accept the GSCP Reference Code. Mr. Kamalanathan calls the problem of auditing duplication "crazy", and he believes that the way to get beyond it is through credible reference standards. Eliminating the need to unnecessarily conduct audits is a top priority for GSCP. In addition to creating "audit fatigue" and widespread confusion, excessive audits add cost.

Mr. Kamalanathan is very optimistic. "It's great to see a momentum being built to work collaboratively," he says. His vision for the future is that companies will take a leap of faith and engage with each other. It is his hope that companies will be persuaded by the ideals of GSCP, and the reasoned, effective strategies that GSCP has implemented in order to abolish worker maltreatment.

But what about the business side of things? In what way does the GSCP Reference Code offer participants a business advantage? In the words of Terry Babbs, GSCP Chairman and Director of Ethical Standards at Tesco:

"Participating companies will get a number of benefits. Their brand promise is likely to seek a fair deal for those who make, sell and buy their products. Their ability to deliver that promise will be improved. In addition, they will participate in a forum where they can openly discuss issues and challenges."

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