Bsci Annual Report 2008

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B U S I N E S S S O C I A L C O M P L I A N C E I N I T I A T I v E

ANNUAL REPORT 2008


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page2 BSCI Annual Report 2008

P01 INTRODUCTIONForeword 3

Oer iew of te ear 2008 4

P02 OUR INITIATIVETe BSCI Code of Conduct 6

Te BSCI Process 7A strengtened strateg 8Building capacit 10

P03 OUR MEMBERSWat does it mean to be a BSCI member? 14

P04OUR STAKEHOLDERSTe BSCI Stakeolder Board 16Inoling te local stakeolders 16Deeloping snergies wit oter initiaties 18Dialogue wit political leaders 20

P05 OUR P ROGRE S S General Oeriew 22Progress per countr 23Conclusions 31Goals and perspecties 2009 33

Contact 35

TABLE OF CONTENTS

March 2003launc of te BSCI wit 20 companies

August 2004

f irst BSCI awareness raising training sessions

November 2004launc of te BSCI Database

November 2005

f irst BSCI conference on social comp liance

May 2006f irst BSCI annual rep ort

January 2008100 members in te BSCI

September 2004start of official audit process

August 2005te BSCI becomes a member of te UN Global Compact

January 2006organisational stakeolder of te Global Reporting Initiatie

March 2007

first Primary Production audits

December 2008245 members in te BSCI

REPORTING IN TRANSPARENCy

Tis annual report coers te BSCIactiities carried out from Januar toDecember 2008 in order to reac our goal:te improement of te working conditions

in te global suppl cain of our members.Te structure and content of tis report asbeen designed to meet te r equirements ofte Global Reporting Initiatie to wicBSCI is an organisational stakeolder.Te GRI is an international organisation tatdeelops globall applicable guidelines forsustainable reporting of companies on teireconomic, social and enironmentalperformance. As te BSCI is a non profitorganisation, we cannot report on somedisclosures wic concern corporations.On oter essential questions, our report

goes beond te GRI criteria.

More information is aailable on:www.bsci-eu.orgwww.globalreporting.org


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page3BSCI Annual Report 2008

increasingl focus on training actiities as well ascapacit building. In 2008, we trained suppliersof consumer goods in Cina, India and Turke andepanded our actiities to food suppling countries l ikeSout Africa, Kena and Morocco.

In 2009, deeloping actiities for our members andteir suppliers to enance improement wit regard

to working conditions in te factories will be our firstpriorit. We will also continue to broaden and deepenour relationsip wit our stakeolders in Europe andespeciall in sourcing countries. We will continue toactiel support te UN Global Compact wic proidesus wit a platform for discussions wit goernments,companies, labour and ciil organisations. We will alsocontinue te implementation of te primar productionmodule.

Tis ear wil l be a toug ear for companies worldwidewit structural canges in business, reduction ofimports and increasing pressure to reduce costs

to adjust to te global economic slowdown. In tiseconomic situation, sustainabilit is more importanttan eer for companies tat wis to remain successfulin te long term. We will continue discussions wit alltose wo sare te same goal as ours to work towardsmore social compliance in te suppl cain. Togeterwe can make it and we inite ou to join us!

FOREWORD

D E A R R E A D E R ,

2008 was an intense ear for te BSCI as we coninceda great number of new retailers, brands and importersto join our initiatie. We finised te ear wit amembersip of almost 250 companies engaged in usingte BSCI sstem to improe social compliance in teirinternational suppl cain. howeer, becoming bigbrings callenges to remain dnamic. In 2008, we aedeeloped ourseles to retain te leel of support and

efficienc offered b our sstem. We ae increasedour uman resources, updated our tools, adopted newpolicies and processes, strengtened our members'commitment and launced new projects in order toremain a credible and effectie sstem.

Companies ae responsibil ities tat go beondbuing and sell ing products. Te also ae accepteda responsibil it towards te workers wo produce teitems te sell . Cange towards sustainabilit in teglobal suppl cain will be more efficientl eecuted if done in a joint effort of companies in a standardisedmanner and on a worldwide scale. Tat is te essence

of BSCI.

We are committed to improe te working conditionsin te global suppl cain. We do tis troug teimplementation of our Code of Conduct wic is saredamong all BSCI member companies and troug temonitoring of factories. In parallel to auditing, we

I N T ROD UC T I ON

Ferr den hoedPresident

Jan A. EggertCEO

- 5 years experience in improing workingconditions in suppl cains worldwide.

- 245 members wit 300 billion turnoer.

- 3257 initial audits & 1732 re-a udits performed

in 2008.

- More tan 2,2 million workers reaced trougBSCI audits.

- 1602 suppliers aing participated in worksops

in 2008.

Te BSCI in 2008


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I N T ROD UC T I ON

OvERvIEW OF ThE yEAR 2008

AreaObjectives fixed in

the BSCI action plan 2008Measures taken

Level of

achievement

Capacity

building

Define training needs - new training polic establised hig

Increase te number of trainingsessions for suppliers

- training sessions in Cina, Kena, India, Turke hig

Organise training sessionsfor BSCI members

- organisation of quarterl BSCI information seminar for BSCI members- BSCI information seminar becomes mandator for eac new member

- online r egistration sstem for information seminar

- partnersip wit Social Accountabilit International (SAI) and oter

organisations to perform traini ng sessions for BSCI members staff

hig

Get international and nationalinstitutions inoled in trainingactiities

- training sessions in Turke wit support of te European Commission Medium

Common training sessions witoter sstems

- training sessions wit Social Accountabilit International (SAI ) and Cina

National Tetile and Apparel Council (CNTAC)- training sessions wit Istanbul Tetile & Apparel Eporters A ssociation (ITKIB)

- ongoing discussions wit oter sstems

Medium

Auditing

Improe auditing capacit - contract wit two new auditing companies hig

Improe te qualit of audits

- launc of BSCI rei sed auditing tools

- new audit duration for better qualit of audits

- suspension of non-compliant auditing compan

- furter sur eillance audits wit Social Accountabilit Accreditation Serices

(SAAS)

hig

Stakeholders

Stakeolder dialogue in Europe

- regular meetings of Stakeolder Board

- launc of Suppl Cain Laborators website

- organisation of ig -leel meeting between te European Commissioner in

carge of social affairs and CEOs of BSCI members

Medium

Round Tables and meetings ofstakeolders in supplier countries

- Round Tables in Kena, Sout Afr ica, Cina, I ndia and Morocco Medium

Cooperation wit oter initiaties

- Memorandum of Understanding wit International Council of To Industries

(ICTI)

- ongoing discussions wit oter initiaties

- monitoring of ISO 26000

Medium

System

consolidation

Implementation of primarproduction module

- launc of reised tools for primar production

- introduction of a primar production commitmentMedium

Ealuate opportunit for an"enironmental" module

- launc of enironmental pilot project Medium

Other measures that were notforeseen in the BSCI Action Plan

- update BSCI risk countries for primar production and industr module

- adoption of measures in case of non-cooperatie suppliers- adoption of a new commitment for BSCI members

- reision of te BSCI goernance

hig

Membership

Improe supportto members

- new website wit improed members area

- more staff members

- regular meetings of national contact groups

Medium

Attract new members

- meeting in Spain for potential members

- broaden scope of BSCI membersip to new countries

(e.g Austria, France, Spain, UK, Sloenia)

- broaden scope of BSCI products to new sectors suc as DIy, jeweller,

electronics, ouseold goods and furniture, etc

- more user-friendl online registration sstem for new members on

te BSCI website

hig

InformationInform te public about te BSCIactiities

- publication of annual report

- press actiities in Ci na, Ma and in Brussels, June- new and improed website

- new communication commitment

hig


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OUR INITIATIvE

"After a toroug bencmarking process,

we found BSCI was te best option forus to improe te social compliance

standards of our supplier base. Te BSCI

elps companies to learn, sare tools and

implement a metodolog. Tis resultsin a more credible approac and a better

guarantee for our customers. If we ad todo it on our own, no doubt it would be more

time and resources consuming."

Bernardo Cruza Martos,

Central de Compras/Buying Office

Director Business to Business

EL CORTE INGLES


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Te BSCI Code requires, for instance, te workplaceas well as communal workers' areas to be safe andnot azardous to te ealt of te workers.

Te role of te auditor is to ceck if terequirements are properl implemented in tefactor of a BSCI member. Te auditor isits teproduction units and all communal workers'areas suc as te fi rst-aid room, te canteenand te toilets. Te auditor uses te BSCI auditquestionnaire and answers te 89 questions relatedto ealt and safet issues. Te auditor takespictures to illustrate te situation in te factor inte audit report and cecks issues suc as:

- te eistence of a ealt and safet polic in tefactor

- te qualit of te working enironment (noise,space, ligt)

- te equipment and licences for fire figtingmaterial

- te personal training for first-aid and te content ofte first-aid bo

- te giene of communal areas- te aailabilit of personal protectie equipment

and te enforcement of i ts use- te eistence of signalling in te factor (e.g.

emergenc eit signs, eacuation plot plan)

OUR I N I T I A T I v E

ThE BSCI CODE OF CONDUCT

T h E B S CI CO D E O F CO N D U CT I S B A S E D O N T h E M O S TIMPORTANT INTERNATIONAL CONvENTIONS PROTECTINGWO R K E R S ' R I G h T S S U Ch A S T h E I N T E R N A T I ON A LL A B O U R O R G A N I S A TI O N ( I L O ) CO R E L A B O U R A N D O T h E RCONvENTIONS AND RECOMMENDATIONS.

Te Code includes te ten following ke elements: freedom of association and te rigt to collectie

bargaining proibition of all forms of discrimination pament of legal minimum wages no ecessie working ours ealt and safet at te workplace proibition of cild labour proibition of forced labour and disciplinar measures respect of enironmental issues implementation of a polic for social accountabilit establisment of an anti-briber and anti-corruption

polic.

All compan members of te BSCI accept te BSCICode of Conduct. In doing so, te epress te wisto do business wit suppliers wo respect te rigts

of teir workers. Te BSCI Code of Conduct applies tote suppliers wit wom our compan members aea direct business relationsip. Te Code also as tobe respected b subcontractors wo are inoled inte final manufacturing stages carried out on bealfof BSCI members. Te compliance wit te BSCI Codeis assessed troug te auditing process. Te Code ofConduct is aailable on our website: www.bsci-eu.org

ThE BSCI PROCESS

Definitely not successful Decision by participating BSCImember company

Successful Decision of supplierfor a certification or not

Not

successful

Awareness

raising phase(optional)

Qualif ication phase (max 12 months):ControllingCoachingTraining

Audit Phase

Re-Audit Phase

Correction Phase

BSCI Members Suppl iers Audit companies

Self Assess ment/Audit

Code of Conduct

Initial Audit (every 3 years)

Successful

Not

successful

B SC I S oc ia l R eq ui r em en ts ( ma nd at or y ) B es t P ra ct ic e ( o lu nt ar y )

Corrective Action Plan ( max 12 months)

B SC I S oc ia l R eq ui r em en ts (m an da to ry ) B es t P ra ct ic e ( o lu nt ar y )

Re-Audit

hOW TO ChECK ThE BSCI REQUIREMENTS?


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All audits are eclusiel conducted b SocialAccountabilit Accreditation Serices (S AAS)-accredited auditing companies. Currentl weae signed contracts wit tirteen auditingcompanies to ensure a ig qualit of audits.

We insist tat auditors ae eperience in BSCIauditing but also region and issue-specificepertise, including command of te locallanguages. In addition, te audit team mustcomprise at least one SA8000 trained leadauditor. Te full l ist of accredited auditingcompanies is aailable online: www.bsci-eu.org

SAAS also conducts sureil lance audits forte BSCI to ceck if te audit guidelines areapplied in a correct manner b te auditors. Teobjectie is to ensure tat all BSCI audits arecomparable and reliable, een wen performedb different auditing companies and in different

countries. In 2008, tirteen sureil lance auditsae been completed b SAAS.

A BSCI audit implies answering more tan 400questions translating te objecties of teBSCI Code into concr ete requirements. Te BSCIaudit inoles an inspection of te site anda toroug eamination of te compan fi les

and records suc as emploment contracts andtimeseets. Te auditor also as to interiewte management of te factor and a proportionof te emploees. Emploee interiews ar eessential to identif problems suc as lack offreedom of association and te rigt to collectiebargaining. Te audit duration depends onte size of te factor. In 2008, we e tendedte audit duration to gie auditors more timeto complete te BSCI audits and to inter iewemploees. Tus a BSCI audit can take up to4 working das to complete. Te audit is notto control and punis te supplier but to elp

im improe te conditions in te factor to tebenefit of is workers and for is own business.


ThE BSCI PROCESS

T h E B S CI P R O CE S S I S A S T E P - WI S E A P P R O A Ch T OMONITOR AND IMPROvE COMPLIANCE WITh ThE BSCICODE OF CONDUCT

S T E P 1 : Te BSCI Code of Conduct

BSCI members are requested to accept and disseminatete BSCI Code bot internall and in teir supplcain and inform emploees and suppliers about tecompan's dedication to social compliance.

S T E P 2 : Self-Assessment

Prior to te audit, members request a self-assessmentof teir suppliers. Te objectie is to introduce temto te practicalities of te BSCI Code and to preparefor te audit. It also proides our members a goodunderstanding about te situation at te factor, testructure of te suppl cain and potential risks.Awareness raising worksops ar e eld for suppliers bte BSCI to support tis process.

S T E P 3 : Transparenc troug auditing

Te BSCI audit aims to assess te performance of a

supplier against te BSCI Code of Conduct. Te initialaudit is repeated eer tree ears. If it sows non-

ThE ROLE OF ThE AU DITOR

compliances wit te BSCI Code, re-audits are perfor medafter te initial audit to ealuate te implementation ofte Correctie Action Plan.

We ae deeloped standardised management tools andguidance documents aailable in twent languages tatae to be used during all steps of te BSCI. For teleel of primar production in agriculture, a specific setof tools as been designed. For all oter sectors, temanagement tools for industrial products are used.

S T E P 4 : Te Correctie Action Plan

Following te audit, te factor management and teauditor discuss and agree on te Correctie ActionPlan (CAP) wic prescribes te necessar correctieactions to remed te non-compliances. Eer s inglecorrectie action as a set deadline. We offer adancedtraining sessions for management of suppliers to elprectif specific non-compliances.

S T E P 5 : Measuring I mproement

At te latest twele monts after te initial audit, a re-audit wil l take place to ceck tat all correctie actions

ae been implemented.

INDEPENDENT ExTERNA L AUDITING COMPANIES


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A STRENGThENED STRATEGy

In 2008, we can look back at fie ears eperiencein improing social compliance in te suppl cain.We also ad to face a remarkable increase in ourmembersip. Based on tose elements, we aestrengtened our approac. Te si pillars wicsupport te BSCI strateg ae been renewed f orgreater efficienc of our sstem.

1. CONCRETE COMMITMENT TO IMPLEMENTATION

Our members commit temseles to inole 2/3rdsof teir buing olume or number of suppliers of softgoods in te BSCI process witin 3 ears afterjoining te in itiatie. Tis commitment applies tosuppliers in so-called risk countries. In 2008, webroadened our commitment to ard goods; tis appliesas of 1st Januar 2009.

Additionall, eac member inoled in te primarproduction module commits to audit fie primarproduction suppliers or 10% of its primar productionsuppliers in risk countries in 2009.

2 . D E v E L O P M E N T O R I E N T E D A P P R O A Ch

Te BSCI does not require its company members towork only wit tose suppliers wo meet all te BSCIrequirements. A pass or fail approac is certainlynot appropriate to elp suppliers improe. Somefactory issues, wic migt be culturally or politicallydetermined, need time to be canged. Tus we elpsuppliers to implement te Code in a gradual anddeelopment oriented approac troug te support oftraining actiities.

In 2008, we also addressed problems wit te

suppliers' inolement. Teir lack of cooperationcan take arious forms suc as te refusal to let teauditor enter te factory, to sign te BSCI Code ofConduct or to implement te Correctie Action Plan.We adopted recommendations concerning supplierswo refuse to cooperate or to improe te socialcompliance leel of teir factory. After at least tworeminders to te suppliers explaining te requestedactions, BSCI members sould cancel existingcontracts for te upcoming season or suspendte contracts. Altoug our system i s based oncontinuous improement of te supplier, willingnessand cooperation between BSCI members and suppliers

are a must to ensure te efficiency of te entireprocess.

3 . CO O P E R A T I O N I N R E T A I L M A R K E T S A N D S U P P L I E RCOUNTRIES

We beliee audits proide transparenc about tesituation on te factor but do not necessaril makete improements appen. Tus we increasingl focuson training our members to ensure te understandte implication of te BSCI membersip. We put aparticular empasis on te buing department of ourmembers as we beliee a sustainable sourcing policcan onl be acieed if it is eplicitl defined as acorporate objectie of te compan and is insertedin te suppliers' contracts and buing practices.

We also elp suppliers understand te social andeconomic benefits of a true implementation ofte BSCI requirements. In 2008, te needs of ourmembers ae been analsed carefull in terms ofqualification actiities. Te findings encouraged us toreise our training polic and to focus additionall onqualification actiities for workers to elp tem claimteir rigts. ( p.10)


SA8000 i s a social management sstem proidinga factor certification. It is run b SocialAccountabilit International (SAI), wic is anon-goernmental organisation tat promoteste understanding and te implementation ofSA8000. SAI conenes ke stakeolders to buildand continuall refine consensus-based eticalworkplace standards. SAI works wit SocialAccountabilit Accreditation Ser ices (SA AS)to accredit qualified organisations to erifcompliance wit tese standards.

( www.sa-intl.org)

SA8000

Te BSCI was created in 2003 under te auspicesof te Brussels based Foreign Trade Association(FTA). Te FTA is te association for Europeancommerce tat specialises in foreign trade issues.

( www.fta-eu.org)

ThE FOREIGN TRADE ASS OCIATION


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4 . CO N T I N U O U S I M P R Ov E M E N T O F O U R S y S T E M

BSCI member companies are directl inoled in tegoernance structure of te BSCI. Wit te boomingmembersip of te BSCI in 2008, te goernanceprocedures ad to be adapted to maintain teefficienc of te initiatie. Te Members' Assemblis still te core bod in te BSCI sstem but focuseson strategic questions, suc as te action plan, tebudget, te Code of Conduct and te Sstem Rules andFunctioning. All oter specific and tecnical questionsare dealt wit and decided upon in te si epertcommittees. Te Superisor Board is composed of

senior managers of BSCI members, FTA Board membersand a representatie of te Eecutie Office. ( p.35)Its role is to approe new BSCI members, to reiew teimplementation of BSCI members' commitments and tosuperise te Eecutie Office and Committees.

In addition, stakeolders par ticipate in te BSCIsstem troug constructie dialogue and i nolementin te Stakeolder Board. Tis bod can adise andcriticise te deelopment of te BSCI and, erimportantl, it can i nitiate projects tereb gettingengaged in concrete actiities for te improement ofte workers liing conditions. Te trade union and NGO

members can also get engaged in indiidual projectswit member companies.

5 . S A 8 0 0 0 A S O U R B E S T P R A CT I CE

We consider te standard SA8000, deeloped b SocialAccountabilit International (SAI), as our best practice.Terefore suppliers wo meet all BSCI requirements areencouraged to appl for SA8000 certification. Tosesuppliers wo alread ae a alid SA8000 certificateare not inoled in te BSCI process.

6. FOCUS ON RISK COUNTRIES

Te BSCI focuses on tose important sourcingcountries wic are known for teir risk of workers'

rigts iolations and non-compliance wit local labourlaw and i nternational labour standards. Terefore,te focus lies mainl on deeloping and newlindustrialised countries in Asia for non-food productsand Africa and te Americas for agricultural products.Te list of risk countries was updated in 2008 toreflect te latest economical and social deelopmentof te countries concerned. BSCI members are free todecide on an indiidual basis to implement te BSCIsstem in non-risk countries. Te latest list of riskcountries is aailable on www.bsci-eu.org.


- Supervision of Executive Office

- Accept new members

- Supervise commitments of Members

- Supervise Committees

Supervisory Board

Members & FTA

Stakeholder BoardTrade Unions, NGOs, Suppliers,

EU Commission,

Consumer organisations, Academia

The BSCI Governance

Executive OfficeCEO, Managing Directors

Secretariat

- Implementation of the Action Plan

- Operational decisions

Members' Assembly

All regular and associated

Members

- Strategic decisions:

Budget, Action Plan, BSCI Structure

Initiates, approves, advises on policy

and systemic questions

System

Committee

Primary

Production

Committee

CBs and

Accreditation

Committee

Qualication

& Training

Committee

Communication

Committee

Members

Acquisition

Committee


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BSCI members are recommended to participatein training sessions tailor-made for socialcompliance managers and buers. We belieetime and cost pressure can preent suppliersfrom implementing te BSCI Code of Conduct.Tese seminars elp to integrate te idea of te

BSCI into dail business and decision makingprocesses, especiall of tose staff memberswo - l ike te buers - ae a close relationsipwit suppliers. In 2008, te BSCI organisedseeral training sessions for buers at teeadquarters of BSCI members. We ae alsoworked in par tnersips wit organisations sucas Social Accountabilit International and otereperts to offer suc training sessions. Tetraining sessions elp buing organisations toaoid da to da friction and lead to a long termimproement of te qualit and performance at

competitie costs.


ADvANCED TRAINING SESSIONS

We also organise adanced training projects to proidete middle management of te suppliers wit teknowledge, skil ls and te tools to successfull fulfi l teBSCI requirements. Tese training sessions tpicalltake place after an audit and focus on specific socialissues tat are particularl problematic in a certainarea or among cer tain suppliers.

Adanced training sessions can also elp towardsbuilding a so cial management sstem: an impor tantelement in te BSCI primar production module is te

necessit for te supplier to build a social managementsstem to ceck te working conditions on te farms.

Man organisations, including goernmentalorganisations, trade unions and NGOs, are al readrunning programmes to deal wit specific local labour-related issues. Were possible, te BSCI is promotingsuc programmes, engaging suppliers in lo cal actiitiesor cooperating to deelop te necessar local skil ls.

In 2009, we will deelop a series of adanced trainingactiities notabl in Cina and India. We beliee tosespecific training sessions are a critical tool to elptose suppliers wo failed to compl wit te BSCI Code

and need to implement te correctie action plan beforebeing re-audited.

WORKER TRAINING SESSIONS

In te long run, we wis suppliers to take oer teirsocial responsibil it and be more independent. Tus teBSCI intends to organise, wit te elp of appropriatestakeolders, training actiities to increase workers'knowledge about teir social rigts. Te objectie is toelp tem influence teir own situation. Tese trainingsessions will focus on tose issues were workers alsoae a responsibil it to ensure good and safe workingconditions. We will also pa par ticular attention togie recommendations on ow to build a constructiedialogue witin te compan. To ensure te efficiencof tose training actiities, it is cr ucial to organisemanagement training sessions at te same time.

WO R K I NG WI T h A S O L I D N E T WO R K O F T R A I N E R S

In 2009, we will build up a pool of eternal trainers andconsultants to proide qualification serices. We definerequirements for trainers and for consultants to wicall applicants ae to compl. Te approed trainers a nd

consultants will be eligible to conduct training actiitiesfor BSCI, for our member companies and suppliers.

BUILDING CAPACITy

After fie ears of eperience, our g reatest callenge isto support suppliers in adapting canges for sustainableimproement. We need to conince te suppliers of tebenefits of improing te working conditions in teirfactories. Ten we need to motiate tem to tackle teissues found during te audit and elp tem to rectifte non-compliances.

In 2008, we ae re iewed our training polic based onour eperience to offer tree different capacit buildingactiities.

G E N E R A L A WA R E N E S S R A I S I N G WO R K S h O P S

We regularl organise awareness raising worksopsto introduce te background, principles and processof te BSCI and eplain its requirements based onILO Conentions and national labour legi slation.Tese worksops are arranged for suppliers andsubcontractors wo ae not et been audited.

In 2009, we wil l continue to deelop training sessionsas te represent te BSCI basic tool to understand andappropriatel prepare for te initial audit.

TRAINING ThE BUyERS IS ThE KEyTO SUSTAINABLE SOURCING PRACTICES


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OUR MEMBERS

"Te S Group is one of te biggest retailcompanies in Finland. Our consumers

and customers are increasingl interested

in product safet as well as te productionand working conditions of te products

te bu. Intrade Partners O, as te SGroup's purcasing compan for consumer

goods, considers te BSCI as an impartial,

widel supported and well known model forensuring CSR buing from risk countries. In

practice te BSCI model is an important

part of te buing criteria in our sourcingprocess and is integrated into Intrade

Partners O's dail use."

Jouko Nieminen,

Managing Director

INTRADE PARTNERS OY


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O U R M E M B E R S

ThEy ARE ALL MEMBERS OF BSCI !

Abeko _________________________________________________SEAdam Mateis____________________________________DE

Adolf Sauter _______________________________________DE

Accessu fasion _______________________________DEAold ___________________________________________________NL

Aldi Nord _____________________________________________DEAldi Sd ______________________________________________DE

Alltrade Topo __________ ____________ ____________ ____ DEAmefa _________________________________________________NL

A&M holmberg __________________________________FI

AQ Fasion _________________________________________NLArcandor ____________________________________________DE

Arnold Kock Tetil ____________ ____________ ____ DEAtlas Krawatten hitscler ________________DE

Auluna _______________________________________________DKA.S. Watson ________________________________________hK

A-Te ____________________________________________________DKAvE ______________________________________________________DE

Balancia-Midania _______ ____________ ___________ SEBaumueter International _______________ DE

B&C ____________________________________________________ BEBerendsen Sourcing ___________ ___________ __SE

Bierbaum Wonen _______ ____________ _________ DE

Bjrn Borg _________________________________________SEBjrnklder _______________________________________SE

Braington _________________________________________UKBremel Import/Eport ___________ ___________ AT

Bremte Groep B.v ___________ ____________ _____ NLBM_____________________________________________________AT

BSB-Obpacer Gmbh ________________ _______ DE

Calida __________________________________________________ChCelio ____________________________________________________BE

Carles vgele __________________________________ChClaudia Strter __________________________________NL

Cloting Partners____________ ____________ ______ DK

Coen & Capman C&C Bed&Bat____UKConcept _____________________________________________BE

Continental handels_________________________ChComazo ______________________________________________DE

Conne Warenandel __________ ____________ _DEContrast ____________________________________________DK

Coop ____________________________________________________Ch

Crecon ________________________________________________DECroenert _____________________________________________DE

Crstal Trading ____________ ____________ __________ NLDan Group Tetile _________ ___________ _________ DK

Dansk Supermarked ____ ___________ _________ DKDario ___________________________________________________DE

Date Mode______________________________________DEDe Bijenkorf _______________________________________NL

Deicmann ________________________________________DE

Difra __________________________________________________NL

Distra Warenandels __________ ____________ DEDorel Europe _____________________________________NLDmer-Clarsse _______________________________DE

Drogas ___________ ___________ ___________ ___________ ____ Lv/LTDW-Sop _____________________________________________DE

Eberle _________________________________________________DEEco Erlicster ___________ ____________ ___________ DE

El Corte Ingles ___________________________________ESEmile Nlting ____________________________________DE

Eros heimtetilien ___________________ _________ DE

Esgano-Scue _________ ___________ ____________ _DEEsprit __________________________________________________DE

Etam ___________________________________________________FREternit Cloting ___________ ___________ _________ UK

Euretco _______________________________________________NLEurogloes ________________________________________SE

Falke ___________________________________________________DEFasion Team ____________________ ___________ _____ AT

Filtral _________________________________________________DEFipo Group _________________________________________DK

Florett Tetil ______________________________________DER. Francetti ______________________________________SEFriedola Gebr holzapfel ____________________DE

Mundus Design ___________________ ____________ __ DKGEBRA nonfood handels ____________ ______ DE

Ginatricot __________________________________________SEGildouse ___________________________________________SE

GGE (Global Imp- Eport) ___________ ____ DEGlobus ________________________________________________Ch

Gromann Scuimport ____ ____________ __ ATGTI Golf Tetil _____________________________________DE

Grausam handels __________________ ___________ AT

Gudrun Sjdn Design ____________________SEGueldenpfennig ___________ ____________ _________ DE

h&P ____________________________________________________ DE

h. Utoft _______________________________________________DKhamm-RENO-Group _________ ____________ _____ DE

hansen Tetile__________ ____________ ____________ _DKhapp horse ____________ ___________ ____________ ___ NL

helge Rasmussen Tetiles A/S _______DKhellenic Trading _________ ____________ ___________ SE

hema _________________________________________________NL

hSM Scumarketing Gmbh __________DEheunec _______________________________________________DE

h&h handelsgesellscaft _______________DEhonos verlag _____________________________________DE

holub Fasion GES.m.b.h ________________AThopp __________________________________________________DE

hoss Intropia ____________ ___________ ____________ __ EShPh ____________________________________________________Ch

hudora Gmbh ___________ ___________ ____________ __ DEhunkemller ___________ ____________ ___________ ____ NL

h.Wittmann & Son ___________ ____________ __ ATIBENA Interior Tetil Gmbh ______________DEICA ______________________________________________________SE

IC Compans _____________________________________DKICI Paris xL _________________________________________BE

Iduna __________________________________________________SEIIC-Intersport International _____________Ch

Impe-Trading __________ ____________ ____________ _DEIne Partners ____________________________________FI

Intercoop ____________ ____________ ___________ _________ hK

Intrade Partners ______________________________FIISA-Traesko Group __________ ____________ _______ DE

I. Scroeder - non food ____________ _________ DEISM-Kraemer ____________ ____________ ___________ ___ DE

Jnig Gmbh Direkt ___________________________DEJC ________________________________________________________SE

JE Bijouterie A/S _______________________________DKJOy ______________________________________________________SE

Juslink________________________________________________ UK

J. an Zanten B.v. ____________ ____________ ______ NLJySK Group ________________________________________DK

Kaiserfasion ___________________ ____________ _____ DE


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O U R M E M B E R S

KappAl ______________________________________________SEKarl Rieker _________________________________________DE

K.E. Leisure _______________________________________DK

Kesko _________________________________________________FI

Koninklijke an Kempen & Begeer ___NLKreissig _____________________________________________DEKruidat _____________________________________________NL

Leineweber ____________ ____________ ____________ ____ DELeinss _________________________________________________DE

LIDL _____________________________________________________DE

Linde ________________________________________________SELondr-hatten _______________ ____________ ________ SE

M & S __________________________________________________ NLMacintos Retail Group Soes ________ NL

Madison hosier ____________ ____________ _______ UKMarksljd __________________________________________SE

Marionnaud _______________________________________FRMaeda DIy Group ____________ ____________ _____ NL

Meister-Werkzeuge ____________ ____________ ___ DE

Mer Markenprodukte _____________________ _ DE

Metro Group ____________ ____________ ____________ ___ DEMigros _________________________________________________ChMiles Fasion ____________________________________DE

Millenium 2000 hegener & Weiner ____DEMiro Radici _________________________________________DEMiss Etam __________________________________________NL

MQ ______________________________________________________SE

Multifort _____________________________________________ChMundia _______________________________________________NL

Nanso Group ______________________________________FI

NCC Purcasing Group ___________ __ CN/SENilson Group ______________________________________SEN.I. Teijin Soji europe ____________ _________ DE

Noi Footwear ____________ _____________ ____ SG/ChOBI _______________________________________________________DE

OLyMP Bezner Gmbh &Co. _____________ DE

Oriental ______________________________________________DKOtto Group ____________ ____________ ____________ ______ DE

Oibell_________________________________________________DEPaks ____________________________________________________NL

Par ____________________________________________________NLPeek & Cloppenburg ___________ ____________ __ DE

Perr Sport ________________________________________NLPKZ _____________________________________________________ChPlagro Europe _________________________________NL

P.M.T. Koepcen ____ ____________ ____________ ____ DEPolarn O. Pret _________________________________SE

Prnatal______________________________________________ NL

Promiss ______________________________________________NLPromte Group __________________________________DE

Reindl _________________________________________________ATRewe Group ____________ _____________ ____________ ___ DE

Ricard Ber & Co ____________________________DERossman ____________________________________________DE

Roalbeac Spiel-

& Sportartikel vertriebs ___________________DERueff ___________________________________________________AT

Saddler ______________________________________________SESandrds handels ___________________________SE

Sarlini Modeaccessoires B.v. __________NLSaer___________________________________________________UK

SBB(Scweizerisce Bundesbanen) Ch

Scancom International ____________________DKSChILD ________________________________________________Ch

Scorett________________________________________________SESeidensticker International Ltd ______ hK

Simba-Dickie-Group ____________ ____________ _ DESiss-Bo ___________________________________________NL

s.Olier _______________________________________________DESpeidel ________________________________________________DE

Spektr Group______________________________________RU

Sport 2000 ________________________________________DE

Springill Tetile _______________________________SES&R Tetil handels ________________ ___________ DEStarco _________________________________________________NL

Stockmann ________________________________________FIStreetlife Music ___________ ____________ __________ DE

Strellson _____________________________________________ChStrumpffabrik Scaefer ___________________DE

Sunte ________________________________________________DK

Superdrug __________________________________________UKSutari __________________________________________________DE

Senska Glitter Logistik AB _____________SETAA Mosgen ___________ ____________ ____________ _____ DE

Telstar Trading _________________ _____________ _____ NLTeco ___________________________________________________NLTe Idea ______________________________________________DE

Tetilimportrerna____________________________SETe Perfume Sop ____________ _____________ ___ UK

Tule Organization Solutions __________hKTicket to heaen ____________________ ___________ DK

Tom Tailor ___________________________________________DE

Trade Wind ________________________________________DKTrafic ___________________________________________________BE

Trekpleister ___________ ____________ ____________ _____ NLTrere Innoation ___________ ____________ _________ IT

Trudel __________________________________________________ChTuko Logistics ___________________________________FI

Unibrands __________________________________________SEUnikatti d.o.o. ____________________________________SI

Unique Fasion ______________ ____________ _______ DE

van der Ere _____________________________________BEveldoengroup _____________ ____________ _______ NL

versteeg ___________ ____________ ____________ ________ NL

vGS ______________________________________________________NLvOG AG ________________________________________________ATvroom & Dreesmann___________ _____________ NL

Wacsmut & Krogmann ________________DEWalser_________________________________________________AT

WE ______________________________________________________NL

Wekamp ___________________________________________NLWink Accessories _____________________________NL

Woll & Co _________________________________________DKWonderful Eart _______________________________hK

Wil. Wlfing _____________________________________DEW.K.Te ______________________________________________DE

yuppie _________________________________________________DE

Members of BSCI as of 31st December

2008. Te latest list of BSCI Membersis aailable on our website.


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WhAT DOES IT MEAN TO BEA BSCI MEMBER ?

BSCI membersip offers companies man adantages,suc as te use of an efficient and credible sstem forsocial compliance wit compreensie managementtools and te possibilit to reduce costs and timeb saring audit information. It also offers teopportunit to sare eperience wit man oterimporting companies and te possibilit to inole

suppliers in traini ng worksops a nd projects. howeer,membersip also brings obligations.

INTEGRATE ThE BSCI CODE OF CONDUCT IN ThE COREBUSINESS

All BSCI members accept tat te BSCI Code ofConduct becomes part of teir sourcing actiities andis adopted in teir buing practices. Tis measureeffectiel ensures tat te commit to implement teCode in teir suppl cain.

DEMONSTRATE CONCRETE INvOLvEMENT OF SUPPLIERS

Our members commit temseles( p.8).Tis commitment is regularl controlled b teSuperisor Board. A strict disciplinar procedureapplies for tose companies wic do not fulfil teirobligation. Aboe all, te members are responsible forsupporting te improement process of teir suppliers.

S h A R E A U D I T R E S U LT S

Te BSCI database contains in formation about BSCIaudit results wic are sared eclusiel betweenBSCI members. In order to protect suppliers' a ndmembers' core business data, access is restricted.Te database aoids multiple auditing of te samesuppliers and elps to track non-compliances foundin audits. It si multaneousl indicates were capacitbuilding for suppliers is needed.

E N G A GE T I M E A N D E F F O R T WI T h T h E B S CI

Te member companies top management as to backte entire approac of te commitment to so cialcompliance and set responsibilities among staffmembers suc as buers. Buers pla a ke role and

ae to take into account te social performance ofsuppliers as well as price, qualit and delier time.

Decision-makers witin te BSCI member companiesae to sign te declaration of membersip to sowteir support. In 2008, seeral actiities in Europe andin Cina took place to encourage top management ofcompanies to support te BSCI approac. ( p.19)

BE ACTIvE IN BSCI LIFE

Te representaties of BSCI member companies aresaping te BSCI troug teir actie participationin te BSCI Members' Assembl and Committees. Tisguarantees tat te BSCI reflects teir needs a ndtakes teir input into consideration in te decision-making process. In seeral countries, National ContactGroups ae been formed b te members to ecangeeperiences wit oter members on local aspects ofte BSCI membersip and specific CSR discussions onteir respectie national leel.

COMMUNICATE ABOUT ThE INvOLvEMENT

Te BSCI encourages its members to actielcommunicate teir BSCI engagement. Transparenc isa ke for credibilit - tis inoles information aboutow social compliance is improed in te suppl cain,but also wic concrete measures ae been taken.

O U R M E M B E R S


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OUR STAKEhOLDERS

"Te Otto Group as been a pioneer in tefield of deeloping and armonizing social

standards for te suppl cain eer since

te 90s. Since its inception, we aeterefore strongl supported te Business

Social Compliance Initiatie. Todas worldis canging rapidl, posing new callenges

to all of us. We are confident tat togeter

wit our BSCI partners we will be able tosuccessfull deelop eer new, continuall

improed and sustainable solutions for te

welfare of te people and our planet."

Andreas Streubig,

Division Manager - Corporate Responsibility

OTTO GROUP


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OUR S T A K E h OLD E RS

ThE STAKEhOLDER BOARD

Te BSCI as conducted discussions wit stakeolderssince its launc in 2003. Te ecange witgoernmental organisations, trade unions, busi nessassociations, NGOs, academia and oters is impor tantto include te eperience and iews from tosewo sare our objectie: te improement of socialcompliance in te global suppl cain.

At te European leel, we ae deeloped an opendialogue wit arious stakeolders si nce 2007. TeSuperisor Board meets on a regular basis andproides feedback on our actiities and planning. Italso initiates discussions and projects on topics tedeem important for us to deal wit.

MEMBERS OF ThE STAKEhOLDER BOARD

Erbil Ciangir Istanbul Tetile & ApparelEporters' Association (ITKIB)

Tomas Dodd European Commission

Jan Furstenborg Uni Europa Commerce

Amad Munir International Tetiles a ndCloting Bureau (ITCB)

Nico Roozen Solidaridad

Cristian Rousseau Test-Acats

Alice Tepper Marlin Social AccountabilitInternational (SAI)

Meetings of te Stakeolder Board took place inDecember 2007 and October 2008 in Brussels.During te meeting i n 2008, BSCI s takeolder

representaties were informed about te compleitof te callenges tat BSCI members face to recti ftose non-compliances tat are er muc linkedto sensitie political and economical situationssuc as working time in connection wit migrantworkers. Indeed in man countries, people leae tecountrside to work in factories and tose migrantworkers increase teir working ours oluntaril toearn more mone to send back to teir famil. Testakeolders also recommended focusing on trainingactiities for suppliers and buers and to continuedeeloping common training projects suc as te

project deeloped wit SAI and ITKIB for suppliers andsubcontractors in Turke.

Alice Tepper Marlin,

President and CEO of SocialAccountabilitInternational (SAI)

"BSCI, SAI and ITKIB cooperated as projectpartners in an innoatie training projectin Turke, deliering it in a manner tat wascollaboratie, inclusie, transparent, focusedand coordinated. Tis program tested newapproaces to improing compliance at botsuppliers and teir sub-contractors trougtargeted capacit building, interactie trainingand tecnical assistance. Tis is a good eampleof well-working stakeolder collaboration andresponding to UN Special Representatie JonRuggie's call to scale up initiaties at a moresstematic leel."

Te Stakeolder Board also ecanged iews witregard to oter social compliance initiaties and

te danger of proliferation of additional codes andsstems.

In 2009, we will seek contact wit more organisationsto broaden our dialogue wit stakeolders. Te goalis to etend te potential of partnersips for capacitbuilding actiities, but also to proide a betterunderstanding of te work and te acieements of teBSCI.

INvOLvING ThE LOCALSTAKEhOLDERS

Our eperience teaces us tat man social callengescan be better dealt wit on te national leel of asupplier countr. Indeed local stakeolders aete necessar epertise about national laws andte respectie political, cultural and economicenironment to elp finding concrete solutions.

Tus our strateg consists of regular meetingsand open discussions wit ke actors in suppling

countries. We beliee social compliance can alreadbe improed if goernmental autorities enance te


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Cina is a strategic sourcing countr for BSCImembers. Despite te adoption of a series oflaws in recent ears tat increase te rigts ofworkers, te true implementation of tese lawsis still lagging beind. In tis contet, te BSCIparticipates at least once a ear at a RoundTable in Cina to discuss social callengeswic became eident in te BSCI auditingprocess.

On 19 Noember 2008, Cina WTO Tribuneosted a Round Table during wicrepresentaties from te Cinese Goernment(notabl from te Ministr for Labour and SocialSecurit), te Cina Federation of TradeUnions, an emploer association, internationalorganisations suc as te International LabourOrganisation (ILO), academics and seeral oterinstitutions came togeter to discuss currentsocial topics.

Te participants agreed tat enancing te

social compliance of Cinese companies isessential to keep te industr's competitieposition and i nternational attractieness.Cinese manufacturers pla a ke role ininternational suppl cains, but te moreand more face clear demands from buingorganisations regarding social compliance. TeCinese suppliers as well as ke stakeoldersin Cina ae terefore taken an actie role inaddressing tese epectations.

Te enforcement of te new Cinese LabourContract Law tat entered into force on 1

Januar 2008 was te main topic of discussion.Participants ae asked te net Round Table tofocus again on suppl cain and on food issues.It will discuss a metodolog to encourageCinese companies to fulfil CSR objecties andte opportunit to embark on practical projects.Stakeolders ae also epressed teirwis to inole more Cinese and Europeancompanies in te Round Table discussions asteir knowledge and feedback from te factorfloor are of great alue. Te BSCI sees tedeelopment of te Round Table Cina as a ig

priorit on its 2009 agenda.


implementation of eisting legislation and if tere is acollaboratie social dialogue between emploers andemploees and teir respectie organisations.

Te stakeolder meetings take place in differentsuppling countries and wen more settled andformalised, suc as for eample in Cina, India orTurke, te are called Round Tables. Tese meetingsare organised b national organisations as we belieeit elps tem to understand teir responsi bilitfor te deelopment of teir own countr. Te BSCIalso encourages oter initiaties engaged in socialcompliance to join te Round Tables.

In tese meetings, goernmental organisations,business associations, trade unions, NGOs andacademia engage in a constructie dialogue on socialissues wilst at te same time receiing input from teBSCI. Bringing te ownersip of te process to localactors is a long term process. In 2009, we will proposetat te Round Tables work more on c oncrete projectswit te BSCI to tackle suppl cain problems directl.

Gefei Y in,

President of Cina WTOTribune,Organiser of te RoundTable Beiji ng

"During te Round Table wic met in Beijingin Noember 2008, par ticipating stakeolders

were informed about te er important effortsacieed b te BSCI in promoting a responsiblesuppl cain in Cina. We agree wit BSCItat cooperation, continuous improementand capacit building in forms of trainingand qualification is te best wa towardssustainable solutions to CSR callenges. We areer glad tat more intensie cooperation willsoon take place troug te Cinese translationof te CSR-Suppl Cain Portal, a Europeanwebsite proiding suppl cain standards andtraining materials. Obiousl, our joint efforts

will be more effectie to promote responsibleglobal suppl cain management at large."

ROUND TABLE ChINA


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NO ChILD LABOUR ALLOWED

Te BSCI is committed to protecting cildren fromeconomic eploitation and from performing anwork tat is likel to be azardous, interferes witteir education, or is armful to te cild's ealt,psical, mental or moral deelopment. As stipulatedb ILO Conentions, a person sall not be admittedto emploment or work if ounger tan 15 ears. In

some countries on te Indian subcontinent, work isallowed as of 14 ears. In tose cases, we beliee aparticular protection must be gien.

PREvENTION OF ChILD LABOUR

Een if cild labour stil l eists in man countries,some suppling countries - suc as India orBanglades- are particularl sensitie in tisrespect. Cild labour is a product and sector relatedissue. Some products bear a ig risk: tis is forinstance te case wit embroideries and oterandcrafted accessories in te apparel and footwear

sector.We beliee tat a toroug implementation ofte BSCI auditing and qualification process isa good wa to monitor and ensure tat no cildlabour is inoled in te production processes.Te auditor needs to ensure tat te managementof te factor is wil l ing and able to detect cild

labour. Te management must be properl trainedto determine te age of job seekers as it is notsufficient to be mindful of te psical appearanceof workers. It is also necessar to ceck te IDs ormedical tests if tere is no documentation aailableto proe te cild's age. Furtermore, we insist onte importance of requesting suppliers to guaranteea cild labour ban in case te subcontract a partof te production or in case te use informal

emploment (e.g. ome workers).

IF ChILD LABOUR IS FOUND, WE LOOK TO ThEChILD'S BEST INTERESTS

If cild labour is found, te BSCI insists tat asolution is proposed tat fits te cild's bestinterests and elps to improe its future. We alsodemand tat te cild is remoed from productionand is returned to te scool sstem immediatel.Neerteless te cild's earnings can be a crucialincome for te rest of te famil and te attendanceat scool inoles indirect costs. Tus we

recommend paing te salar until a long termsolution is found in order to improe te cild'ssituation. If possible, we also encourage te factorto offer work to an older relatie. We also adise tatte compan contacts local organisations or NGOsfor adice ow to ensure and improement of tecild's and famil's situation.


DEvELOPING SyNERGIES WIThOThER INITIATIvES

We seek to create more snergies wit otercompanies and organisations aing te sameobjectie. Tese efforts, troug saring ofinformation, tools and combining capacit buildingactiities can lead to reducing costs and aoidingduplication.

E U R O P E : CR O S S - I N D U S T R y E x Ch A N G EO F B E S T P R A CT I CE S

At te European leel, BSCI is engaged in teResponsible Suppl Cain Laborator, togeter witte tink-tank CSR Europe and te lead companieshewlettPackard, L'Oral, Titan and volkswagen.Tis laborator, wic as been created under teroof of te European Alliance for Corporate SocialResponsibilit in 2006, as created a webportalproiding an oeriew on enironmental and social

compliance related standards and scemes as wellas training materials for suppliers and buers from

BSCIS POLICy ON ChILD LABOUR


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India is a sourcing country were cild labour isstill a major callenge. In tis context, te IndianRound Table wo met on 29 April 2008 and wasfacilitated by te Federation of Indian Cambersof Commerce and Industry (FICCI) decided toaddress te issue of Indian cildren working belowte statutory minimum age. Representaties ofinternational autorities suc as United NationsIndustrial Deelopment Organisation (UNIDO),goernmental autorities, seeral exportpromotion councils and NGOs expressed teirwis to deelop concre te projects tat couldfocus on tis particular issue. Prof. Santa Sina,

cairperson of te National Commission of te

Protection of Cild Rigts of te Goernment ofIndia, addressed tis callenge and underlinedte importance tat more cildr en attend scoolfor a longer time tan current practice sows.Se explained tat tere is a direct link betweencild labour and education. Many cildren dropout scool before completing teir studies andten graitate towards work. Te importanceof education as to be better explained in asociety wic as a rater indi fferent attitudetowards te problem. Te BSCI sared its policyand requirement is--is cild labour wit teparticipants. It was decided to focus again on tis

callenge during te meeting of 2009.

Te Cina National Tetile and Apparel Council (CNTAC)deeloped te CSC9000T management sstem for teCinese tetile industr. Altoug te sstem doesnot meet all BSCI requirements, it is a positie step

towards te implementation of social c ompliance inCina. Te BSCI and CNTAC agreed to increase common

capacit building actiities for Cinese factories in2009. Additionall, improed mutual information

and cross-audits will be organised in order to assesste similarities and te differences obtained after aBSCI and a CSC9000T audit. Te objectie of tis is to

ealuate te comparabilit of te tools and practices

of bot sstems and to eplore te possibilities ofmutual recognition.

In te food sector, numerous initiaties focusing

on fair trade and enironmental issues, but also toimproe social compliance, alread eist. BSCI elddiscussions w it tese in order to aoid duplication

and focuses its actiities on products or marketswere social compliance needs broader enancement.

GlobalGAP as set tecnical standards for goodagricultural practices, and as also created a

module containing a documented ceck on certainsocial issues. BSCI and GlobalGAP ae agreed on acooperation to ensure a complimentar approac of

teir sstems related to social topics. We are alsodiscussing cooperation possibilities wit Rainforest

Alliance wic works to consere biodiersit andensure sustainable lielioods.

arious industries. Te discussion process in tislaborator as contributed to learning more about teCSR actiities of all participants laing te ground formore cooperation and armonisation across differentsectors of business. ( www.csr-supplcain.org)

ChINA: AGREEMENT ON MORE COOPERATION

Te Cina National Tetile and Apparel Council (CNTAC)represents a major industr in te most importantsourcing market of BSCI members. BSCI as cooperatedwit CNTAC s ince 2007, conducting supplier awa renessworksops and training sessions for companies on

specific social issues. On 18 Noember 2008, botorganisations conened te Sino-EU Suppl CainLeaders Summit in Beijing, bringing togeter toprepresentaties of European and Cinese companies.Te discussed te true benefits of embeddingcorporate responsibilit into teir business strategiesand igligted te actions still needed to improesocial compliance in Cina.

M O R E S y N E R G I E S WI T h O T h E R S y S T E M S

BSCI enjos a longstanding cooperation wit SocialAccountabilit International (SAI), as we recognisete SA8000 certification sceme as our best practice.In addition, BSCI as agreed at te end of 2008 tocooperate closel wit te International Council of ToIndustries (ICTI), focusing on transparent informationsaring and concrete projects aiming at te capacitbuilding in te to industr.


ROUND TABLE INDIA


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DIALOGUE WITh POLITICALLEADERS

IN EUROPE

Leading goernment representaties in Europepla a ke role in addressing te importance ofcorporate social responsibilit in te public and inteir discussions wit te goernments of suppliercountries. Terefore, political leaders of te EuropeanUnion's institutions and member states are important

interlocutors for te BSCI.In order to demonstrate te engagement andmotiation of European business, te BSCI inited in cooperation wit CSR Europe vladimir Spidla,European Commissioner for Emploment, Social Affairsand Equal Opportunities to a meeting wit seniorrepresentaties of BSCI members. During tis occasion,Mr. Spidla pointed out tat te Commission does notaim at new standards for social compliance. howeer,e agreed tat progress in te enforcement of eistingstandards could be more isible. Te participantswelcomed is readiness to support efforts to create

more snergies, dissemination of good practices, teinolement of SMEs, and practical projects.

IN SUPPLyING COUNTRIES

We also address goernments in supplier countrieswic ae te main responsibilit to ensure teenforcement of eisting regu lations te aetemseles adopted. Tis dialogue is eld in teframework of te Round Tables and oter stakeoldermeetings. We also address our epectations andconcerns also troug direct lobbing of nationalgoernments.

Vladimir Spid la,Commissioner forEmploment, Social Affairsand Equal OpportunitiesEuropean Commission

"CSR remains a priorit for te EuropeanCommission. It is part of a long-termstrateg and is about qualit of l ife,wic is someting tat sould notbe put to one side in an economicdownturn. Altoug tere migt bepressure on companies to reduce teirCSR in te sort-term, we ope tatte will tink about te longer term aswell. I welcome te oluntar initiatiesof BSCI and its member companies increating a social standards monitoringsstem tat trains and builds capacitiesto address uman rigts weaknesses inproducing countries around te world."


Uzbekistan is te tird biggest eporter ofcotton in te world. During arest time tenational autorities requisition free workforceand organise cild labour. Altoug BSCImembers do not bu tetile fibres, some of teirsuppliers suc as te ones in Banglades masource te cotton from Uzbekistan. We decided

to address te issue directl to te Presidentof Uzbekistan asking im to ratif te ILOConentions 138 and 182 about te abolitionof cild labour and ILO Conention 87 aboutfreedom of association and enforce tose tets.In parallel, we asked for te support of seeralEU politicians.

A few weeks later, under te common pressureof man European and American organisations,Uzbekistan ratified ILO's Minimum AgeConention (C138, 1973) and adopted a law onte guarantees of rigts of te cild. Te ILO will

now closel monitor te true implementation oftese tets.

COTTON FROM UZBEKISTAN


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OUR PROGRESS

"We joined te Business Social ComplianceInitiatie in 2005 and are now in te

process of implementing te BSCI

programme wit all our corporate brandsuppliers in ig-risk countries. Our

reasons for joining BSCI are tat it elps tofulfil our mission for social accountabilit

to build sustainable suppl cains founded

on our coniction tat economic successsould be balanced wit social and

enironmental responsibilit. Furtermore

it is a transparent, credible, uniform andwell-documented sstem tat elps to

aoid duplication in te suppl cain. Also

it is one Code of Conduct tat applies to all

suppliers, regardless of te products teproduce, te countr in wic te operate

or te retailer wic te suppl."

Hugo Byrnes,

Director Product Integrity

ROYAL AHOLD


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B.1 Management PracticeB.2 DocumentationB.3 Working TimeB.4 CompensationB.5 Cild LabourB.6 Forced, Prison Labour/ Disciplinar MeasuresB.7 Freedom of Association/ Collectie BargainingB.8 DiscriminationB.9 Working ConditionsB.10 healt and Social Facilit iesB.11 Occupational healt and SafetB.12 DormitoriesB.13 Enironment

GRAPhIC LEGEND FOR AUDITS AND RE-AUDITS

P A R T B : B S CI S O CI A L R E Q U IR E M E N T S

G Good G

IN Improement Needed IN

NC Non compliant NC

NA Non applicable NA

Initial audits:

G Go o d G

IN Improement Needed IN

NC Non compliant NC

NA Non applicable NA

Re-audits:

To assess te compliance of te supplier, we use anealuation grading sstem based on four rates. Tesupplier can be:

Good (G): no deiation or onl minor deiationsfrom te BSCI requirements ae been foundduring te audit. Additionall full protectionof emploees is gien w it regard to teimplementation of te ILO Core Conentions. Teauditor can assess an audit as good, if tereare not more tan two deiations in non-crucialpoints.

Improvements needed (IN): te factor auditsows tat tere is fulfilment of at least alf of te requirements and no deiation on crucial

points. Non-compliance (NC): te supplier is in non-

compliance wit alf of te requirements and/orin crucial points.

Non-applicable (NA): Te requirements do notmatc te compan structure. For instance afactor as no dormitor.

GENERAL OvERvIEW

h O W D O WE E v A L U AT E T h E S U P P L I E R S A G A I N S T T h EBSCI CODE OF CONDUCT?

Te BSCI audit questionnaire consists of tree parts:

Part A: contains 89 questions and is called "MasterData". It gaters arious information about tebusiness structure of te compan suc as tenumber and sites of production units, te number ofsubcontractors and sub-suppliers. It also contains

te requirement to inform about te businessactiities and te reenue, te production structureand te emploment structure.

Part B: contains 232 questions and is called "BSCISocial Requirements". It translates into concretequestions all te requirements from te BSCI Code ofConduct. Te assessment and implementation of par tB is mandator for all suppliers.

Part C: contains 28 questions and is called "Bestpractice for industr". Te criteria of part C arebased on SA8000 criteria. It mainl concerns

questions suc as te implementation of a liingwage, remediation in case of cild labour, full-responsibilit for sub-suppliers, te eistence of aCSR polic and CSR communication wit te factor.Te assessment of te suppliers under part C isobligator but te implementation sould f ollow ina second step after te supplier was alread able tomeet all requirements of part B.

On te following pages, we will focus on te resultsunder te mandator BSCI requirements of part B.

Te grapics in tis progress section sow te

improement of tose suppliers wo ae been auditedand re-audited under te BSCI process since tebeginning of our initiatie. Troug tis metodolog,we are able to ceck te true efficienc of te BSCIsocial compliance sstem.

O U R P R O G R E S S


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Good (39,21%)

Improvements

Needed (13,4%)

Non Compliant

(47,39%)

T OTAL RE SUL T S RE -AUDI T S

Good ( 12,77%)

Improvements

Needed (9,44%)

Non Compliant

(77,79%)

T OTAL RE SUL T S I NI T I AL AUDI T S

A U D I T S RE-AUDITS

Suppliersin te process

3785 1541

Suppliers auditedand re-audited

1112 1112

PROGRESS PER COUNTRy

CHINA

Oer te last few ears, Cina as become te mostimportant supplier of consumer goods.On te social leel, a new Labour Contract Law enteredinto force in Januar 2008. Tis new law aims attigtening job securit, makes dismissing workersmore difficult and guarantees seerance pa of onemont's salar for eac ear of emploment.Additionall, Cina adopted new job discriminationlaws making it easier to file complaints againstemploers. Te implementation of tese laws was aburden on suppliers causing an increase of labourcosts wic contributed to te inflation of commoditprices and of finised goods. It put certain eportsectors especiall te tetiles sector to te test.

In late 2008, Cina in creasingl faced teconsequences of te global economic downturn asforeign demand for Cinese eports fell for te firsttime in seeral ears. Indirectl, te protectionof workers - especiall of migrant workers from

rural areas - as become a priorit in order to aoidetensie social turmoil. In tis contet, Cina asdrafted a law tat could include insurance againstwork injuries a nd unemploment. Tis law couldnotabl faour domestic migrant workers allowingtem to pa pension premiums in one cit or proinceand draw mone in anoter if te migrate. Tisproposal is a positie first step. howeer, we ope tatte economic crisis will not slow down te adoptionand te real implementation of te new Cinesesocial law.

BSCI Activities

Awareness raising worksops for suppliers(19 Ma 2008, Beijing)(20/21 Ma 2008, Sangai)(23/24 Ma 2008, Senzen)Stakeolder Round Table(19 Noember, 2008)Sino-EU Suppl Cain Beijing Leaders Summit(18 Noember 2008, Beijing)


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page24

INDIA

After fie ears of remarkable growt, 2008 saw adecrease in te performance of te Indian econom.Te reasons are to be found in te increase of rawmaterial prices and te international financialcrisis. Eports, wic still weig eail in teIndian econom, fell notabl owing to a reduceddemand for manufactured goods. At te social leel,poert, mainl in rural areas and in big cities, isstill a uge callenge. Unemploment is also on terise as te working age population grew faster tante total population.

howeer, seeral improements ae to be noted.India is determined to etend basic social securitcoerage and to take care of te workers' rigts inits uge unorganised sector. Additionall, India asrealised tat it as one of te largest labour forcesin te world but a poor number of skilled workers.So it is putting efforts into improing its educationalsstem and as alread adopted a series ofmeasures to eliminate te use of cild labour in teeport-oriented industries.

India is te second most important sourcing countrfor our members. Te improement rate in te re-audit results is remarkable and sows te benefitsof te implementation of te BSCI Code. howeer,some non-compliances are particularl importantin terms of working time (B3), compensation (B4)and management practice (B1). Indeed, te maincauses of strikes in India are linked to wages andworking ours. It is wort mentioning te goodrepresentation of trade un ions at least in te non-agricultural sectors. howeer, tere is a problemof rialr among tose unions wic as led to aradicalisation of trade unions.

Finall, cild labour (B5) and discrimination (B8)

are still big issues but are difficult to track trougaudits. Tat is w we address tose issues trougour on-going dialogue wit arious stakeolders inte Indian Round Table.


Cina is te most important sourcing countrfor our members. More tan alf of te audits areconducted tere. Te results of te re-audits sow animproement of te social situation in te factoriesinoled in te BSCI process. Neerteless, weobsere substantial difficulties creating a sustainableimproement for working time (B3) and compensation(B4).

As independent trade unions do not eist, teBSCI Code requires suppliers to gie room for so-

called "parallel means" of independent and freeorganisation of workers to negotiate wit te companmanagement. We address tese sensitie issues inregular Round Table meetings wit stakeolders butalso troug continuous ig-leel political contacts.Finall te improement in management practice (B1)and ealt and safet (B11) is still lagging beind asre-audits ae demonstrated. Tese non compliancessould be easier to tackle troug te deelopment ofspecific training sessions addressing tose particulartopics.

Initial audits : G IN NC NA

Re-audits : G IN NC NA

TOTAL INITIAL AUDIT AND RE-AUDIT RESULTS

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %

B.13

B.12

B.11

B.10

B.9

B.8

B.7

B.6

B.5

B.4

B.3

B.2

B.1

BSCI Annual Report 2008


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Good (75,86%)

ImprovementsNeeded (10,92%)

Non Compliant

(13,22%)

TOTAL RES ULTS RE-AUDI TS

Good (38,98%)

Non Compliant(48,59%)


TOTAL RES ULTS I N I TI AL AUDI TS

Initial audits :G IN NC NA

Re-audits : G IN NC NA


0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %

B.13

B.12

B.11

B.10

B.9

B.8

B.7

B.6

B.5

B.4

B.3

B.2

B.1

BSCI ActivitiesAwareness Raising worksops for Suppliers(21/22/23 Apri l 2008, Gurgaon)(25 April 2008, Tirupur)Stakeolder Round Table(29 April 2008, New Deli)



56 4 177


177 177

In April 2008, te BSCI organised two series ofworksops in Gurgaon and Tirupur dedicatedto suppliers' management. BSCI members'representaties from te buing offices in Indiaalso participated.

Eac session coered te requi rements of teBSCI Code of Conduct, te implementation of teBSCI process and te auditing criteria. It alsodetailed te most important Indian social non-compliances found troug te BSCI auditing

process and oter important trends suc ascild labour wic cannot be found in te auditresults but are still critical in Indian factories.Additionall, it was igligted tat te risk ofcild labour is iger wen subcontractors areinoled in te production.

Finall, we were app to learn tat tere are anincreasing number of social compliance officersemploed in Indian factories. Tis r eflects tefact tat tis BSCI requirement on managementpractices is indeed being implemented more and

more.

AWARENESS RAISING WORKShOPS IN INDIA


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TURKEY

Turke's econom is, owing to its eportdependenc, ulnerable to eternal trends. In 2008,te countr suffered a slowdown in its economicgrowt because of te significant fall in eports ofmanufactured goods.

Man factories ad to close, especiall in tetetile sector. At te social leel, te diff icultiesencountered b Turke towards EU accession aenot encouraged te countr to launc te necessarsocial reforms in arious areas suc as te figt

against corruption, te circumention of taes andte rigts of te trade unions.

Neerteless in te contet of te loans granted bte International Monetar Fund to Turke, someimportant improements are taking sape. Notabl,Turke adopted in 2008 legislation on socialsecurit reform wic establises a new uniersalealt insurance.

Turke is te tird most important sourcing marketfor our members. Te implementation of te BSCIrequirements sows a good improement in te

audited factories. Neerteless ke callengesremain in te fields of management practice(B1), compensation (B5) and working time (B3).Additionall, documentation (B2) is also a commonreason of non-compliance and is linked to tepractice of f raudulent double book-keeping.

BSCI Activities

Adanced supplier training sessions(26 Februar/ 5 Marc 2008, Istanbul)Tecnical assistance for suppliers(October 2008, Istanbul)

Initial audits : G IN NC NARe-audits : G IN NC NA

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %

B.13

B.12

B.11

B.10

B.9

B.8

B.7

B.6

B.5

B.4

B.3

B.2B.1


Good (62,37%)



TOTAL RES ULTS RE-AUDI TS

Good (33,16%)



TOTAL RES ULTS I N I TI AL AUDI TS



539 198


194 194


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Burcu Bagci,Qualit Management headSarar Apparel,Mens Read-Wear Enterprise

"Wit bot training sessions and social

audits made during te project, we

determined te fields were we needed

to improe te organisation of our

factor. Most of te non-compliances

wic were detected at te first audit

ae been remoed wit te elp of

training. We ope tat in less tan one

ear, we will be read for te SA8000certification."

Tis ear we concluded a major tree-step training project co-organised wit teIstanbul tetile manufacturers and eporters'association (ITKIB) and Social AccountabilitInternational (SAI) and co-funded b teEuropean Commission. Te objectie of tisproject was to ealuate te soc ial improementof suppliers after aing r eceied intense tailor-

made social management trainings actiities.Te training sessions consisted of tree mainsteps:

1- Te basic training session coered teinternational and Turkis legal framework onlabour rigts, te BSCI and also te SA8000criteria and, aboe all, ow to practicallimplement tese in te factories.

2- half of te participating companies, wicad sown improements in teir socialperformance after te basic training session, joined adanced training courses. It focused

on management practices, working ours,compensation and establising a wellfunctioning dialogue between managementand workers in te factories.

3- Finall, te fie "best in class" eac receiedtwo das of tecnical assistance on teircompan premises, elping to find concretesolutions for te specific callenges tesefactories were facing.

Te innoatie element in te project was alsoto inole subcontractors in te basic andadanced training steps. Indeed, suppliers

subcontracting part of teir actiities witinTurke and also to neigbouring countries,is er common. A mong te 73 tetilemanufacturing companies inoled in teproject, 26 were subcontractors.

Te training sessions were er well receiedb te suppliers. Te notabl improed teirmetodolog to select subcontractors wicinclude more social requirements rigt from tebeginning of commercial relationsips. Tealso receied useful adice on ow to improe

dialogue between managers and emploees.

TRAINING ACTIvITIES IN TURKEy


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In October 2008, we organised a follow-upstakeolder meeting in Cape Town. One of teissues underlined was te need for sufficientaudit capacities in Africa, notabl SA8000 leadauditors. As a result of te growing requests forsocial compliance from te retail side, te entirefruit industr in Sout Africa is discussing tedeelopment of a Sout African social standardbased on te current Code requirements ofEuropean retailers tat would include te BSCICode. Te different steps and plaers in tis project

ae not et been finalised but we will monitor tedeelopment of tis process.

BSCI ActivitiesStakeolder meeting(2 October 2008, Cape Town)


SOUTH AFRICA

Sout Africa is te largest econom on te Africancontinent. For our members, it is a ke countrfor sourcing fruits. Te reersal of te seasons inSout Africa wit respect to Europe is an importantcompetitie adantage. Moreoer, its delier timesare muc sor ter tan tose of its oter competitorsof te Soutern emispere. Sout Africa suppliesour members wit citrus fruits (lemons, oranges,grapefruits and mandarins), aocados, prunes andfruit tree arests (apples, peaces, apricots andpears). Te countr is also one of te largest global

eporters of canned fruits, egetables and wine.

We started to implement te primar productionmodule in Sout Africa at te end of 2007 wen astakeolder dialogue as well as an auditor and asupplier worksop were organised. Terefore tereis no table of audits and re-audits to report et.Sout Africa as ratified all core ILO Conentionsand te Sout African labour legislation is, incertain cases, een more restrictie, suc as telegislation on working ours. In general, tere isa good leel of awareness about corporate social

responsibilit issues, especiall in te field ofealt and safet. Tere are al read seeralinitiaties tat address, to a certain etent,corporate social responsibilit and influenceworking conditions. Neerteless, some issues stillae to be tackled suc as te migration of workers,te use of labour brokers for temporar workers,te hIv/Aids problem (18,1% of te population isinfected according to UNAids) and te inclusion ofsmall farms into deelopment processes.


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callenges as tose smallolders are oftenilliterate. In tis contet, we ae identifiedte need to deelop new tools to improete understanding of our primar productionrequirements b smallolders and farmers.Finall, one of te core issues for te suppliers isduplication of audits. In some cases, oter retailersalread require tem to perform self-assessmentsand social audits in te framework of teir ownsocial programmes. Te BSCI aims at aoidingduplication and tus will engage in an actie

dialogue wit oter retailers to make te platformas broad as possible.

BSCI ActivitiesBSCI Stakeolder meeting(6 October 2008, Nairobi)BSCI Supplier worksop(8 October 2008, Naiasa)

KENYA

Kena is one of te most dnamic economies ofEast Africa. Te new plan for growt "vision 2030"was launced in 2007 wit te objectie to boostte Kenan econom. howeer, te countr's grow trate declined in 2008 not onl as a result of terising oil price wic made imports of an petrol-based products more epensie but also due topolitical iolence.

Te Kenan econom depends strongl on teagricultural sector wic emplos 80% of te

working population and eports products suc astea, coffee, sugar, flowers, fruits and egetables.Our members bu green egetables suc as peas,beans, bab corn and broccoli in Kena and alsosome tropical fruits. Te mainl bu cut flowerstere. Basicall, wit 40% market sare, Kena iste principal eporter of cut flowers for Europe.Tis sector emplos 70.000 people directl andmore tan 1.5m people indirectl. On te socialleel, Kena as ratified practicall all core ILOConentions and te leel of te national labourlegislation offers a protection almost equialent to

BSCI requirements.In 2008, we organised for te first time a supplierworksop and a stakeolder meeting in Kena.Te participants underlined te necessit toaddress some social issues suc as te eistenceof cild labour, te discrimination towards womenand te hIv/Aids problem. Anoter issue is teparticipation of smallolders in te improementprocess wic brings along new communication



30/36


MOROCCO

In Morocco, te food sector is te main drierof economic growt. Te countr eports citrusfruits, tomatoes, courgettes and melons but alsoolie-based products, canned egetables and fis.Furtermore, Morocco eports tetiles, especiallto France, Spain and to te United Kingdom. Tetetiles sector emplos 200.000 people and itsresponsieness and fleibilit makes it possible toaccommodate te necessities of te big consumermarkets and "fast fasion".

Our members work togeter wit Moroccancompanies mainl to source agricultural products,most notabl tomatoes. Te implementation of teBSCI process started in Morocco in 2007. So far, fewaudits ae been performed. Terefore, tere is notable of audits and re-audits in te report.In 2008, we organised a stakeolder meeting inAgadir to follow up on te agreed actions from telast meeting in 2007.

Some of te main social issues identified in teprimar production sector are te regulations onstrikes and trade union actiities, te insurance

of temporar workers and te applicabilit of teLabour Code in agriculture. In 2007, te stakeolderdiscussions initiated b te BSCI led to anagreement on ow to better integrate seasonal farmworkers into te social securit sstem b aing amobile office during aresting season.

In between stakeolder meetings, some of teparticipants ae also been in contact wit oneanoter and ae discussed social issues, notablte lack of guidance in te Labour Code to regulatestrikes and ensure a positie outcome for all

parties. As a result of tese arious discussions,bot witin and outside te framework of testakeolder meeting, tere i s now a commonunderstanding among te participants tatcollectie agreements between te agriculturalproducers, te goernment and trade unions mabe te best long-term solution to sole manissues currentl related to social dialogue and teapplicabilit of te Labour Code.

BSCI Activities

Stakeolder meeting(7 April 2008, Agadir)

Said Zaghloul,Moroccan NationalSecurit Autorit (CNASS)

For te Moroccan National

Social Securit Autorit, te

stakeolder meeting was a great

opportunit to deelop te relations

and ecange of information wit

arious Moroccan professional

federations and trade unions

tat were present. We took teopportunit of tis meeting to

eplain te social rigts of emploees

in general, especiall tose

working in te agricultural sector.

Te stakeolder meeting as enabled

us to answer te arious concerns of

te participants and to clarif some

ambiguities.

BSCI Annual Report 2008page30


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CONCLUSIONS

In 2008 our members performed 4989 audits in orderto ceck weter working conditions in te factories ofteir suppliers compl wit te BSCI Code of Conduct.Te number of audits aai lable in te BSCI databaseas terefore more tan doubled from 3563 auditsperformed before te end of 2007 to 8552 performedb te end of 2008 (6121 initial audits & 2431 re-audits). Tis deelopment reflects te rapid growt ofour membersip in 2008, wic as more tan doubled

in one ear.

Indeed, after a preparation pase of maimum simonts, eer new BSCI member as to star t teBSCI process b organising te initial audits of teirsuppliers. In 2008 our members conducted 3257initial audits in all sourcing countries defined as riskcountries wile onl 1732 re-audits were per formed.B region, te main sourcing countries are Cina(62,28%), far aead India (8,62%) a nd Turke (8,47%).

In order to assess te improement tat teimplementation of te BSCI proce ss as brougt tote factories of te suppliers we need to compare teresults of tose suppliers wic ae been auditedat least twice (audit and re-audit). Te results ofte initial audits sow tat te worki ng conditionsin suppling factories were greatl lagging beindte requirements of te BSCI Code (71,29%). Teresults of te re-audits proide a muc more positie

picture since te

Documents

Bsci Annual Report 2008