E4. Supplier Responsibility

Code 7.0

Process to communicate Code requirements to Suppliers and to monitor Supplier compliance to 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 process.
  • iii. Assigned responsibility.
  • iv. Proof of implementation.
• 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 the next-tier suppliers.
• b. Next-tier major suppliers have been identified.
• c. Adequate and effective process to ensure that the next-tier major 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.

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.
  • i. Enforcement language on the implementation of the RBA Code of Conduct provisions applicable to the type of supplier.
  • ii. 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 RBA code implementation verification process for next-tier major suppliers is established such that:
  • 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 with assigned workers to the site.
  • iii. If during the visit or audit a major Health & Safety or Environmental non-conformance or risk is observed, then it will be noted in the conclusion and will require a Corrective Action plan.
  • iv. If there is any allegation or indication of nonconformance with an excluded Major Supplier, then an audit must be performed.
• e. An obligation to go through the CAP process with the Supplier if non-conformances are detected, with a commitment to not immediately de-source at a priority non-conformance discovery state but only at the non-implementation of the CAP process, and to increase Supplier RBA code implementation performance to close all Priority findings.

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. A corrective action plan for non-conformance areas identified.
• e. A verification mechanism that corrective actions are implemented (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

• The percentage of workers working through Labor Agents and Contractors that cannot state how their employment terms and conditions meet the relevant labor requirements of the RBA code is greater than 20% (Priority); greater than 5% and not more than 20% is rated Major.
• For indirect full-time assigned workers of on-site service providers, a priority non-conformance is confirmed on provision A3 (Working Hours) or A4 (Wages and Benefits).
• For indirect full-time assigned workers of on-site service providers, a Major non-conformance is confirmed on provision A3 (Working Hours) or A4 (Wages and Benefits).
• No closure audits for Priority findings after CAP closure.
• No CAPs for Priority findings.
• A Priority finding after CAP closure and closure audit.

2.0.0 (2022-06-01)

Changed

• Added an explicit Major rating for A3/A4 findings on on-site service provider workers and new Priority CAP-management conditions: E4.3 adds an explicit Major rating: 'For indirect full time assigned workers of on-site service providers a Major non-conformance is confirmed on provision A3 or A4'. Under 7.0.0 (E12.2) a Major (non-priority) A3/A4 finding had no direct rating and a facility could still pass, so a facility with such a Major A3/A4 finding that passed under 7.0.0 now fails E4.3 — a prior pass can become a fail, hence major. E4.4 also adds new mandatory Priority conditions for supplier-CAP management (no closure audits for Priority findings after CAP closure, no CAPs for Priority findings, a Priority finding after CAP closure and closure audit) that a previously- passing facility could trip.

1.0.0 (2021-01-01)

Changed

• Initial historical baseline — Supplier Responsibility (RBA Code of Conduct 7.0): Earliest imported version of the criterion. Requirements for participants to communicate RBA Code requirements to suppliers and monitor supplier compliance: supplier identification, contract requirements, risk assessment, auditing, corrective action plan development, and ongoing monitoring of next-tier suppliers including labor agents, contractors, and on-site service providers. Rated under 7.0.0 E12.2, with a Priority trigger for a confirmed priority non-conformance on on-site-service-provider workers.