E4. Supplier Responsibility

Code 8.0

Participants shall establish a process to communicate Code requirements to suppliers and to monitor supplier compliance the Code.

Elements to Demonstrate Compliance to RBA Code

1. Foundation: Supply chain management responsibility framework

• a. If responsibility for supply chain management (in particular, supply chain Responsibility) is at the Corporate-level then a Corporate-level implementation should exist which includes:
  • i. Documented corporate policy.
  • ii. Documented corporate processes and controls.
  • iii. Assigned responsibility.
  • iv. Proof of implementation internally and with suppliers; with evidence.
  • v. Any facility-level processes, responsibility, and implementation; with evidence.
• b. If there is no Corporate-level implementation, then there should be a full Facility-level implementation.

2. Policy

Ensure company's supplier responsibility policy has the following elements:

• a. The RBA Code of Conduct requirements have been communicated to all next-tier suppliers as an expectation.
• b. Next-tier major suppliers have been identified.
• c. Adequate and effective process to ensure that the Major next-tier suppliers implement the RBA Code of Conduct
• d. An adequate and effective process is established to ensure suppliers' RBA Code implementation performance and continuous improvement.

NOTE: A commitment to not immediately de-source when priority non-conformance or similar are discovered; but only at the non-implementation of the CAP process after building and applying leverage.

3. Procedures & Practices

Procedures & Practices are in place (regardless of Supply Chain Management Responsibility Framework) such that:

• a. Contracts are in place for all next-tier suppliers and/or for every single Purchase Order.
  • i. Contract terms and conditions requiring suppliers to conform to the RBA Code of Conduct
  • ii. Enforcement language on the implementation of the RBA Code of Conduct provisions applicable to the type of supplier
  • iii. Labor Agents and Contractors: Compliance with legal requirements in both home and sending country/region (if foreign and internal migrant labor is used).
• b. Next-tier suppliers have been identified.
• c. Major Next-tier suppliers have been identified and expectations set:
  • i. Establish and utilize a definition of what is Major next-tier supplier.
  • ii. Establish process to communicate expectations.

NOTE: labor agents/contractors and on-site service providers are always considered as Major next-tier supplier.

• d. An adequate and effective process is established to ensure that the Major next-tier suppliers implement the RBA Code.
  • i. If a self-reported risk assessment is used, such as an RBA Facility Risk SAQ, the information needs to be validated and suppliers determined to be high-risk need to be validated via an audit (RBA VAP, CMA, AMA). If done by a third-party qualified audit firm is accepted.
  • ii. Applies to all labor agents and contractors AND On-site service providers
  • iii. If during the visit or assessment, findings, non-conformances, or risk is observed, that must be noted in the conclusion of the report and to ensure that suppliers' RBA Code implementation performance undergoes continuous improvement:
• e. Work with company suppliers to develop a CAP which includes:
  • i. Containment steps of priority items
  • ii. Determination of root cause(s)
  • iii. Description of the proposed corrective actions to address root cause(s)
  • iv. Application of a preventive action to prevent future recurrence of the problem or related issue(s)
  • v. Responsible person(s)
  • vi. The date the action is expected to be completed (should follow RBA CAP and Closure timeline above)
  • vii. Current status of the action items.
  • viii. When there is sufficient confidence that corrective actions are in place, reverify (e.g., RBA VAP Closure)

NOTE: Priority findings should undergo a priority closure assessment per the RBA VAP timelines.

• ix. Closely monitor progress and make adjustments and/or escalate to senior supplier management should the CAP become off track.
• x. Do not immediately de-source when priority non-conformance or similar are discovered. Per the UNGP's company is expected to build and apply leverage. De-sourcing is a last resort.

NOTE: If during an RBA VAP assessment of the facility the assessor identifies findings at on-site suppliers or labor agents, which have not already been identified by the facility, then a finding will be warranted.

4. Controls & Monitoring

Controls & Monitoring shall include:

• a. Contract enforcement notifications are issued to the next-tier supplier if the reviewee becomes aware of a contract violation, including a violation of the RBA Code of Conduct provisions.
• b. Report plans and progress to management on due diligence of Major next-tier suppliers.

5. Records

Records are maintained including:

• a. Contract and PO language noting the expectation of compliance with the RBA Code of Conduct
• b. Communication materials to Major next-tier suppliers, including labor agents/contractors and on-site service providers on the expectation of compliance with the RBA Code of Conduct.

NOTE: this may be a combination of Corporate and Facility level effort. Evidence of the entire effort regardless of where it occurs will be required to be shown in an RBA VAP.

• c. Review or assessment of agent and on-site supplier worker records as support that an assessment occurred:
  • i. Review of the records related to A3 for on-site service provider workers as appropriate
  • ii. Review of the records related to A4 for on-site service provider workers as appropriate
• d. CAPs for identified supplier non-conformance areas.
• e. Verification evidence of CAP implementation (e.g., RBA VAP Closure report)

6. Leading Practices

Leading Practices include:

• a. Use tools which follow the OECD Due Diligence Guidance.
• b. Your assessment of labor agents and on-site suppliers should include a very strong focus on:
  • i. A1 – Prohibition of Forced labor including understanding from workers if they paid fees to get or keep their job, signed comprehensive contracts, or offer letters which were properly explained to them, possess their passports (if they are foreign migrant workers), if they can resign without penalty.
  • ii. A3 – Working Hours including gathering of working hour and consecutive workday data
  • iii. A4: Wages & Benefits including review of payroll processes, wage slip comparison to working hours
  • iv. B7: Food, Sanitation, and Housing including visiting the workers' living accommodations if at all provided or connected with the agent, supplier, or subcontractor.
• c. Maintain records from review of labor agents and on-site suppliers
  • i. Fees, passports, contract terms and resignation clause (Code provision A1)
  • ii. Working hours, consecutive workdays (Code provision A3)
  • iii. Wages and benefits (Code provision A4).
  • iv. Housing (Code provision B7)

7. Serious conditions that will result in a severe finding

• More than 5% of workers who work through Labor Agents or Contractors cannot accurately describe how their employment terms and conditions meet the relevant labor requirements of the RBA code.
• There is a serious (i.e., priority) non-conformance related to full-time assigned indirect workers of an on-site service provider on provision A3 (Working Hours) or A4 (Wages and Benefits).
• Corrective action plans are not in place and actively managed when serious (i.e. priority) non-conformances are identified in the supply chain.
• Closure audits are not conducted after serious (i.e., priority) non-conformances are identified in the supply chain.
• The CAP and Closure process is not repeated until serious (i.e., priority) non-conformances are identified in the supply chain.

1.0.0 (2024-01-01)

Initial release.