ESCP's President & CEO, Carmel Giblin, shares and reflects on the past twenty years of progress at the Ethical Supply Chain Program with Toy World Magazine.
Read Toy World Magazine's October 2024 Issue here.
This article was published in Toy World Magazine's October 2024 Issue, read here.
October 12th, 2024 marks the Ethical Supply Chain Program’s 20th year in operation. This is an incredible achievement for the non-profit and presents an opportunity to reflect on what has been accomplished over these past twenty years.
The Ethical Supply Chain Program was founded with an ethos of continuous improvement by the toy industry in 2004, to safeguard and improve ethical and sustainability standards in the global supply chain. Following a series of tragic incidents in factories in the 1990s, toy companies began to create their own codes of conducts to prevent future incidents and set clear standards suppliers needed to comply with in order to do business with them. This raft of standards did make progress to improve working conditions, but with an estimated 70 varying standards, made it difficult for factories to achieve compliance and increased costs due to audit duplication. In-consistency of buyer requirements became a threat to progress continuing.
The International Council of Toy Industries (ICTI) created their unified Code of Business Practices in 1995 and in 2002 they unanimously agreed to support the creation of an organisation that would operate independently of ICTI to implement the code. The ICTI CARE Process, now known as the Ethical Supply Chain Program, was launched in 2004.
What the Ethical Supply Chain Program has developed since its beginning in 2004, is a holistic approach to improving the lives of supply chain workers globally whilst meeting the needs of employers and buyers. From robust supplier certification to trusted grievance mechanisms and employer-funded childcare facilities for workers; each service and solution has been developed in direct response to identified needs.
In 2007, the organisation launched its first factory management training program called the ‘Continuous Improvement Program’, the nine-month program covered topics including changes in labour contract law, productivity and management. This approach of speaking with factories and stakeholders, understanding their issues and working together to find a solution remains core to ESCP’s approach and is the key to the success of the organisation today.
Supply chains are agile and fast changing, this means that companies are always onboarding new suppliers. These new suppliers need support in achieving the standards required and ESCP works with them to ensure they can be approved, with their products on retailers’ shelves quickly. Educating manufacturing suppliers on their customers’ requirements is an important part of ESCP’s work and an example of their beyond-audit approach. This commitment to education has seen a decline in non-compliances in key areas including the most challenging areas of Health & Safety and Wages &Benefits where measurable declines in recent years are reported. Issues of child or forced labor are now very rare indeed.
This same year, ESCP launched a new database system making it possible for any stakeholder, including consumers, to access information about individual factories in the program, enhancing transparency in the global supply chain.
This commitment to transparency was further strengthened this year when ESCP published their Certified Supplier list on Open Supply Hub (OSH). Open Supply Hub mission is to make supply chain data open, accessible and trusted through its worldwide open data platform.
Data from ESCP certified factories was added to the Open Supply Hub platform in July 2024 and will be refreshed on a bi-annual basis. The collaboration will strengthen relationships across the supply chain. Buyers benefit from a wider choice of ethical suppliers using this free and accessible tool, while factories which are doing business ethically can be found more easily.
Natalie Grillon, CEO and Executive Director at Open Supply Hub, said: “We’re thrilled to be hosting data from the Ethical Supply ChainProgram. Too often, suppliers aren’t cantered on the supply chain platforms that they contribute data to. Leveraging a collaborative, open dataset, our aim is to help more suppliers see the value and business case for transparency and give them a free, public avenue to show that they are serious about making their supply chains safe and sustainable.”
The Worker Helpline arrived in 2010, introducing a free and confidential grievance mechanism as a requirement of Certification. ESCP was the first labour standards program to require workers be given access to such a mechanism. This was a momentous step in further enhancing transparency across the supply chain and fundamentally enabling workers voices to be heard. It’s continued achievements and value are recognized globally.
“Worker helplines and grievance mechanisms are essential tools for improving the lives of supply chain workers. By providing a safe and confidential way for workers to report issues and concerns, these mechanisms can help to identify and address systemic issues within supply chains. We are very impressed with the impact of ESCP’s Helpline and the impressive outcome of this work in addressing worker issues”. Matt Friedman, CEO, Mekong Club
Fast forward to July 2024, the Worker Helpline has supported over 23,000 workers and resolved more 27,000 cases. We are pleased to see governments all over the world today requiring businesses have grievance mechanisms in place for the workers in their complete supply chain. Legislation such as the Corporate Sustainability Due Diligence Directive (CSDDD) and German Supply Chain Act (LkSG), to name two, are contributing to driving better business practices and empowering workers’ voices globally.
As ESCP plans for the future, they will continue to invest in the Worker Helpline increasing access to it for workers and companies globally.
ESCP is special, and although it now operates in many categories it does not forget its history and will always be committed to meeting the needs of the global toy industry. The commitment and collaboration of the toy industry is something to be proud of and in 2016 when the organization needed to better balance its income they launched Buyer Membership. Buyer Membership has enabled the organisationto expand its services and grow geographically.
Organisations such as Walmart, Mattel, Hasbro, and Crayola were early adopters of the membership program which provides Manufacturers, Vendors, Retailers and Licensors with a range of value-added services and support. These include unlimited access to Connect, dedicated account support, capability building services, insights and much more. Importantly becoming a Buyer member is a demonstration of a company’s commitment to ethical trade and responsible sourcing and through this fundingESCP will continue to develop new products and services that ensure the ESG performance of suppliers improve, and buyers objectives are achieved. If you are not yet a buyer member, get in touch with todd.merton@ethicalsupplychain.org to find out more.
ESCP has always focused on the positive impact that can be achieved through audit but simply requiring an audit is not sufficient. That is why ESCP goes beyond audit. ESCP certifies factories, which means any issues found are remediated. That delivers peace of mind for buyers. But they believe there is an even bigger opportunity to create supplier ownership and commitment to responsible business, free of exploitation and where workers can thrive.
To improve supplier capability in managing labor standards Progress Visits were launched in 2018. These replaced ESCP’s required Progress Audits. Different from a traditional audit approach, Progress Visits are announced factory visits to review and discuss progress in maintaining ESCP certification. Progress Visits promote communication, enhance capability and build trust and transparency by providing opportunities for factories to openly share and discuss social compliance challenges.
Data shows that ProgressVisits have a positive effect and have reduced the number of critical non-compliances found on audit.
By working closely with suppliers ESCP has unrivalled insights into the challenges and opportunities they face. This insight led to the creation of the Family-Friendly Spaces program (FFS). Factory management shared their challenge of worker shortages and the impact that had on their business, speaking then with workers ESCP discovered workers were leaving because they had no access to childcare. Since launch the FFS program has grown year-on-year, starting as a small-scale pilot at 2 factories in 2016to supporting more than 2,000 children in 51 factories and 4 community spaces in China this year.
One of the 1st factories to participate in the FFS program was Best Top Toys who operate in Yingde, China. Operating FFS since 2016 and expanding from a summer program to provide all year young childcare.
They are unequivocal about the positive effect of this focus on worker well-being.
“Employee satisfaction, productivity, efficiency and harmony have all increased, while our turnover rate is around a quarter of what it was [5.2% in 2023 compared with 19.7% in 2016]. The number of injuries and defective products has also fallen.” Huaping Xiu, Head of Compliance, Best Top Toys.
Worker Well-Being programs at ESCP has gone from strength to strength with ESCP announcing an ambition at the end of 2023: to support 30,000 children through 100 Family-Friendly Spaces (FFS) and publicly recognising 50 factories as Family-Friendly. Born in China the FFS program inspired the development of the Family-Friendly Factory Program. The program has now expanded from China to Vietnam and Mexico and will continue to expand geographically. ESCP Worker Well-Being programs are deployed by many product categories including toys, apparel, footwear, packaging and home appliances. This October, ESCP will host its 1st Worker Well-Being Conference where plans to greatly expand access to the program will be on the agenda.
ESCP can be characterised by these 3 words. By being alert to the changing needs of their members they have developed a raft of new services including the Social Impact Assessment program, specifically designed for the licensing community, and the Environmental Assessment tool, enabling organisations of all sizes to kickstart their environmental reporting journey. In the coming months we will hear more news from the team at ESCP as they introduce new solutions to help companies meet their regulatory obligations including for the Digital Product Passport and Chemical Safety Assessment requirements for Recycled Materials, and of course on-going support for companies to meet investor and consumers growing ESG expectations.
Collaboration is important to ESCP, it supports innovation and responsiveness. Earlier this year, Licensing International announced that ESCP was its preferred social compliance partner. Through the newly formed partnership, more than 1,200 members of Licensing International will now have access to resources and programs to support their ESG compliance journey and ensure they are adhering to the highest ethical standards.
Maura Regan, President of Licensing International, said: “We are thrilled to name the Ethical Supply Chain Program as Licensing International’s preferred social compliance partner. Consumer demand for ethical and sustainable practices continues to grow and, with new regulations launching around the world, we are working to provide our members with the resources they need to continue to grow while meeting these demands. We look forward to working with ESCP to launch new content and programming in support of the global brand licensing industry.”
On 02 October, ESCP and Licensing International will host a webinar for members to learn about the latest regulatory changes impacting the licensing community and how to protect theirIP. To discover how ESCP’s partnership with Licensing International—and its Social Impact Assessment Program—can help you elevate your licensing business and drive sustainable growth we recommend you register to attend.
The Ethical Supply Chain Program was established with continuous improvement at its heart, this is exactly what the organisation has done over the past twenty years and what it will continue to do for the next twenty. We should take pride that labour standards have significantly improved, thankfully issues of child labour and forced labour are rare but we cannot be complacent. We all have a responsibility to play our part in making global supply chains better and to leave a legacy to be proud of.
Carmel Giblin, President & CEO of ESCP says “My biggest hope is that companies change their mindset from thinking of how to cut compliance costs to grasping the opportunities presented by being a responsible employer and business partner. Improvements to the bottom line are achieved with this approach”. She continues “The leadership shown by many in the global toy industry over the last 2 decades has been inspiring and delivered real improvements for millions of workers and their families. On behalf of the workers who have benefitted, the team at ESCP, and myself, I thank these leaders for their support, together we make a difference”.
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