Aligning Business Growth with Social and Environmental Responsibility

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D&S Products specializes in the production of toys, electronics and consumer products at its 10,000m² state-of-the-art factory in Shenzhen. Amongst its clients is Hallmark, which contracts the company to supply electronic greeting cards.

Founded in 1987, D&S employs 230 people, including R&D staff, production technicians, and management personnel.

Below we hear from Director of Operations, Matthew Chan and HR Manager Xiaohua Zhang, who spoke to us passionately about their factory’s mission to guarantee worker well-being and improve its environmental impact.

The challenge: Aligning social and environmental goals with business growth

“Prior to joining ESCP, the factory was facing a number of problems, such as adhering to labour laws and safety standards,” says Matthew, who joined in 2018.

“At a local level, one of the problems was that because the local safety management department doesn’t award any type of certification or provide guidance on the regulations, we were struggling to understand the detail of what was required to meet the requirements. We could be punished with a fine, but we didn’t knowhow to control the risk factors, and had no support on this.”

“The other challenge was improving our competitiveness. It’s important for us to meet the consumer demand for eco-friendly products, so we wanted to get the environmental certification and green accreditation that would help us to increase our market share.”

The solution: Tailored support and training to meet stringent compliance standards

“We joined ESCP in2012 and over the intervening years our membership has saved us a lot of time and given us access to specialist resources that we wouldn’t otherwise be able to afford,” says Matthew.

Becoming certified with ESCP helps factories to meet customers’ compliance and sustainability obligations. A single ethical and responsible sourcing standard that is trusted by international buyers, and used by more than1,000 suppliers around the world, ESCP certification is required or accepted by over 98% of global retailers.  

Matthew notes that the requirements from China's environmental protection department provide an excellent foundation standard, but the ESCP takes a more advanced approach. He explains that, typically, if there are no complaints, the factory is deemed compliant by the government authorities post a spot check by the local environmental bureau. Additionally, while the local bureau may not conduct annual audits, the factory commits to regular internal audits to ensure ongoing compliance.

So, did this difference lead to any worries that ESCP’s social compliance standard may not be achievable for the factory? HRManager Xiaohua says, “When we made the decision to join ESCP, there were some concerns about how we were going to fulfil the certification requirements. How were we going to pay the required salary for workers? How were we going to be able to treat them better? How were we going to comply with the maximum labor hours?”

Matthew says:“With ESCP’s help, we took a step back and looked at how we should manage the factory, how we could change our plan and structure. We learnt that if the right system is in place, we’d be able to meet the requirements.

“The guidance we receive is undoubtedly very beneficial. Xiaohua and his colleagues attend ESCP training twice a year, to help us understand how to identify and address any social compliance concerns. This and the progress visits we receive mean we’re in a great position to make continuous improvements in the business.”

Progress visits (PVs) are one of the many benefits ESCP factory members receive after they’ve achieved certification. Led by a team of PV Specialists, progress visits are key to helping factories remain in compliance with our standards after the auditors have left.

They involve an announced visit to the factory, where ESCP provides support through discussion, review and the sharing of best practice. “Progress Visits are an essential tool for us,” says Xiaohua. “They are really different from the formal auditing. Philip [Liu, one of ESCP’s PV Specialists] and his team encourage us to share any areas of concern, and then work together with us to understand the root causes and provide relevant training programs.

“They understand the labor laws very well, helping us to deal with any changes that have come, as well as advising on environmental protection issues, which are having more and more focus in this region. They also know every detail around safety compliance and can point out any issues during the visit. When the PV was conducted last year, some issues with the fire evacuation map were identified, so ESCP gave us very detailed guidance on the placement of fire signs, for example.”

The benefits: Zero accidents and stronger environmental credentials… leading to enhanced competitiveness

“Our operations have become more standardized and formalized,” says Matthew, “and our customers know that we are a trusted company when they see that we have theESCP certificate.”

“Themodernization of our hiring practices and the implementation of advancedenvironmental and safety measures have been particularly impactful. Ourenvironmental performance has seen significant improvements, with reduced wasteemissions and lower pollution.

“Thishas reduced potential legal risks and enhanced our competitiveness in theindustry. And, with ESCP's support, we’ve learnt how to ensure that we areenvironmentally conscious in our work every day.

“Similarly, we have had no issues with labor law violations and our safety compliance rate remains high, with no infractions. ESCP enables us to promote worker protection very effectively. We’re proud that we had no employee injuries or accidents at the factory last year – and this is all down to good preparation and risk prevention.The ESCP team help build our capacity to meet the safety requirements, both in terms of production safety and the prevention of potential hazards.

“What their ongoing expertise and assistance means is that we don’t have to do any special preparation before being audited – because we have embedded best practice into our processes. ESCP doesn’t only help us to detect problems, but also to solve them. What’s more, we’re benefiting from the specialist knowledge, tools and best practice they share with us, which is helping Xiaohua to carry out his job even better.”