Björn Borg has been a member of the Business Social Compliance Initiative (BSCI) since 2008 and applies the BSCI Code of Conduct. All our suppliers must sign, and commit to comply with, the Code of Conduct, and compliance is verified through recurring audits. Our licensees for bags and footwear are also active participants in BSCI, working with their factories within the BSCI framework.
Our target is that suppliers of at least 90% of total purchase volume will i) be enrolled in the BSCI monitoring programme or meet equivalent standards or certification, such as SA8000, and ii) measurably improve over time towards meeting the long term targets set with each supplier. Where possible, further, we shall hold RSP over our key suppliers, meaning we shall be responsible for the follow-up of those suppliers in the BSCI platform. A key supplier is one that supplies a significant share of our total product volume (at least 10%) or products that are considered especially important to us for any reason.
What we are doing to achieve our target
We have a Supply Chain Management program to identify and address risks associated with sourcing products from third party suppliers. An important part of the program is social compliance, meaning to ensure that our suppliers meet our requirements for working conditions and safe working environment in factories. Based on the BSCI approach we make a “due diligence” assessment of our supply chain, mapping key risks in terms of geography, production processes and supplier characteristics and then design our Supply Chain Management program based on that risk assessment, to channel efforts to where they have most impact.
The BSCI Code of Conduct forms an integral part of our Supply Chain Management program. Our suppliers, including the factories, must sign the BSCI Code of Conduct and commit to adhere to the requirements of the Code. Compliance is monitored both through our internal follow-up program and through audits carried out by third party auditors, initiated by us where we hold RSP (are responsible) or by other participants where we source from the same factory and that other participant holds RSP.
The BSCI Code of Conduct is based on the International Labour Organization’s (ILO) core conventions, the UN declaration on human rights and the UN Convention of the Rights of the Child. BSCI’s main focus is on so called “risk countries”, such as China, Bangladesh and Turkey, but participants are free to include suppliers in low risk countries too in the framework.
In the revised BSCI approach, launched a couple of years ago, (BSCI 2.0) focus is placed on development over time and on close dialogue between the BSCI participant (Björn Borg) and each supplier, rather than just focusing on suppliers being approved in third party audits. Idea is that the areas of working conditions and workplace safety shall be addressed in a continuous improvement process for the supplier and also become a natural part of the day-to-day co-operation and dialogue.
Besides ourselves maintaining a continuous, active dialogue with our suppliers on workplace issues covered by the Code, we also do third party audits. The purpose of such audits is to assess, based on a structured audit methodology, if the supplier meets the requirements of the Code of Conduct and, if not, what improvements need to be implemented. We are responsible for auditing suppliers for which we hold RSP in the BSCI platform. Where needs for improvements are identified, the supplier makes a Remediation Plan outlining what improvements will be made to remedy the deviations, including a time plan, allocation of roles and responsibilities and possible investments for implementation. Once necessary measures have been taken, a follow-up audit is performed to again check the supplier’s compliance to the Code. Such follow-up audit must be done within one year of the first audit.
2016 was the first year when audits had to be carried out under the updated Code of Conduct. The updated Code is different from the previous Code, including new assessment areas and assessment criteria, and auditing is subject to a new rating grading. The new rating structure includes more layers, where A and B are considered acceptable (and a follow up audit can wait three years) and C, D and E mean that there are so many improvements needed that the supplier must do a Remediation Plan and undergo a follow-up audit within one year’s time.
In 2016, factories supplying 99 % of our total purchase volume of products were enrolled in BSCI and most, more than 90%, have now been audited under the updated Code of Conduct. During the year, 10 audits were carried out on our factories. We have taken RSP over several additional suppliers during the year, and now hold RSP over suppliers delivering over 86% of our production volume. By being the RSP holder over all key suppliers we are able to drive the development of our most important suppliers.
Four of the audits performed in 2016 were done by us, all at suppliers that supply large product volumes to us. Details of the results from these audits are set out in the table below.
|Factory||Share of production||RSP||Result|
|Factory 1, China||23%||Yes||C|
|Factory 2, China||33%||Yes||SA8000*|
|Factory 3, China||14%||Yes||C|
|Factory 4, Turkey||11%||Yes||D|
|Factory 5, Turkey||10%||No||Good**|
|Factory 6, China||6%||Yes||C|
* A supplier with SA 8000 certification is considered approved.
** This supplier was audited, and approved, under the previous audit rating structure.
Because of the change in the BSCI assessment criteria, improvements needed were identified in all audits we performed during the year. The improvements needed identified were largely similar among the suppliers audited. The most common improvement areas involved too much overtime in peak season, insufficient management systems (including need to clarify roles and responsibilities and/or policies), and lacking ability to properly cascade the BSCI requirements on to sub-contractors. Many of the suppliers also had not yet defined express long-term targets on protection of workers or had calculated the local basic needs wage, which are both new requirement under the updated Code. Another remark raised in many audits was that there was insufficient social insurance for workers. This issue is complex, since some workers do not want such insurance because part of the cost for it is deducted from their salary and they may have other alternative arrangements in place. Regarding excessive working hours, we discuss with the suppliers how our own purchasing behavior, and our planning capabilities, can influence the remediation of this problem. All improvement areas are addressed in the factory’s Remediation Plan. For the follow-up audit, our role is to support our suppliers with their work on the Remediation Plan, and improvement measures taken, including enrolling them in Capacity Building trainings arranged by the BSCI, covering relevant areas of development.
Principally we see the audits in 2016, under the updated Code of Conduct, as a new starting point for our Supply Chain Management Program, setting a new baseline for our suppliers’ performance and for working with developing our suppliers in the coming years. This view also fits well with the recent integration of our sports apparel suppliers into the BSCI structure, after having incorporated this business (previously operated by a licensee) into our Sustainability program at the Björn Borg HQ. Focus now is on making sure that our suppliers fully understand the follow-up process under our Supply Chain Management Program in general and the new BSCI Code of Conduct in particular.
Two of our factories hold SA8000 certification, an internationally recognized workplace standard for factories, which also means that these factories are considered automatically approved in the BSCI platform. These factories are still part of our general Supply Chain Management program. As part of our overall program, we also do our own semi-annual factory follow-ups. Once a year a more comprehensive evaluation of all producers is done as well. In addition, in Q4 of 2016 we did a supplier baselining assessment, covering social aspects like working conditions and workplace safety alongside sustainable fibre capabilities and environmental footprint. We have also updated our supplier evaluation format during the year, to bring it more in line with the specific targets of our Sustainability Roadmap and the updated BSCI structure.