Ethical Sourcing Policy

CODE OF CONDUCT FOR MANUFACTURERS AND SUPPLIERS OF CHANODIL LTD

Introduction 

Corporate Responsibility at Chanodil, and its affiliates, means doing business successfully and responsibly while respecting human rights, trading ethically, and protecting the environment.

As a growing company, Chanodil recognizes that its impact on society and the environment is increasing both locally and globally. We therefore recognize our responsibility to ensure good ethical and environmental practices both in our direct operations, throughout our supply chain and the communities in which we do business.

We also recognize the opportunities and benefits that come with acting ethically. When employees, suppliers and workers are treated with respect and dignity the benefits are added all along the value chain through increased productivity, quality, and worker recruitment and retention. This includes Chanodil employees, social auditing companies, or another representative of Chanodil at the supplier or factory level.

Chanodil is committed to ensuring that we continuously drive improvement and work towards assuring good ethical performance across our supply chain.  We are also committed to our and our business partner’s duty to respect human rights under the UN Guiding Principles of Business and Human Rights and will work collaboratively with our business partners to accomplish these goals.

Our Ethical Sourcing Policy outlines the minimum standards we require our contracted suppliers to comply with. We expect them to apply the same standards within their own supply chains and operate in a responsible manner including not be involved in any act of corruption, extortion, embezzlement, nor any form of bribery – including but not limited to – the promising, offering, giving or accepting of any improper monetary or other incentive. This includes Chanodil employees, social auditing companies or any other representatives of Chanodil at the supplier or factory level. The Principles of Implementation outline the commitments Chanodil, and our suppliers agree to when entering a business contract to ensure the Ethical Sourcing Policy is effectively implemented.

This Policy is based on core International Labor Organization (ILO) conventions, the internationally recognized Ethical Trading Initiative (ETI) base code, Social Accountability International’s SA8000 standard and the UN Guiding Principles on Business and Human Rights.

Chathura Sudharshan

CEO – Chanodil Ltd.

 

ETHICAL SOURCING POLICY

The Chanodil Ethical Sourcing Policy (the “Policy”) outlines the minimum compliance standards for all Chanodil suppliers, including suppliers’ representatives, subsidiaries, employees, sub-contractors, temporary workers, contracted workers, and home workers (“Suppliers”). In addition to the Policy, Suppliers are also required to comply with all national and local laws and the UN Guiding Principles. In geographies where local law and regulation differs from that outlined herein, Suppliers will comply with whichever provides the highest protection to its workers and the environment.  We strongly encourage and expect our Suppliers to go beyond minimum standards.

REFERENCES:

  1. Core International Labor Organization (ILO) conventions: The ILO was founded in 1919 and became the first specialized agency of the United Nations in 1946.  The main focus of the ILO is to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues. http://www.ilo.org/global/standards/subjects-covered-by-international-labour-standards/lang–en/index.htm;
  2. Ethical Trading Initiative (ETI) Base Code: The ETI Base Code is founded on the conventions of the International Labor Organization (ILO) and is an internationally recognized code of labor practice. http://www.ethicaltrade.org/eti-base-code;
  3. United Nations Guiding Principles on Business and Human Rights (“UN Guiding Principles”): The UN Guiding Principles on Business and Human Rights were proposed by a UN Special Representative on business & human rights and endorsed by the UN Human Rights Council in June 2011. http://business-humanrights.org/en/un-guiding-principles/text-of-the-un-guiding-principles.
  4. Social Accountability International – SA8000 Standard Guidance 2013: The SA8000 Standard is one of the world’s first auditable social certification standards for decent workplaces, across all industrial sectors.  It is based on the UN Declaration of Human Rights, conventions of the ILO, UN and national law, and spans industry and corporate codes to create a common language to measure social performance. http://sa-intl.org/_data/n_0001/resources/live/SA8000ConsolidatedGuidance2013.pdf

 

POLICY REQUIREMENTS:

Employment is freely chosen

(Relevant ILO conventions are: No. 29 and 105 – Relevant ILO Recommendation: No. 35)

  • There is no forced, bonded, trafficked, involuntary, or prison labor.
  • Workers are not required to lodge “deposits” or their identity papers with their employer and are free to leave their employer after reasonable notice.

 

Working conditions are safe and hygienic

(Relevant ILO conventions are: No. 155 – Relevant ILO Recommendation 164)

  • Suppliers will comply with occupational health and safety regulations or with international standards where domestic legislation is weak or poorly enforced.
  • Suppliers shall ensure that there are systems in place to detect, assess, avoid and respond to potential threats to the health and safety of workers.
  • A safe and hygienic working environment shall be provided. Adequate steps shall be taken to prevent accidents and injury to health arising out of, associated with, or occurring in the course of work, by minimizing, the causes of hazards inherent in the working environment.
  • Where relevant, all forms of personal protective equipment shall be provided to workers free of charge, together with training on proper use of such equipment and policies that mandate proper and consistent use.
  • Workers shall receive regular and recorded health and safety training, and such training shall be repeated for new or reassigned workers.
  • Access to clean toilet facilities and to potable water, and, if appropriate, sanitary facilities for food storage shall be provided.
  • Accommodations, where provided, shall be clean, safe, of adequate size and meet the basic needs of the workers.
  • Suppliers shall respect the workers’ right to exit the premises from imminent danger without seeking permission.
  • The company observing this policy shall assign responsibility for health and safety to a senior management representative.
  • Facilities will undergo environmental and safety risk assessments and must maintain all required documentation and permits regarding structural, electrical and fire safety.

 

Child labor shall not be used

(Relevant ILO conventions are: No. 138 and 182 – Relevant ILO Recommendation No. 146 and 190)

  • There shall be no recruitment of child labor (persons under the age of 15, or 14 in certain developing countries as designated by ILO Convention.)
  • Suppliers must establish robust age-verification procedures as part of their recruitment process, which may not be in any way degrading or disrespectful to the worker.
  • Companies shall develop or participate in and contribute to policies and programs which provide for the transition of any child found to be performing child labor to enable her or him to attend and remain in quality education until no longer a child.
  • Children and young persons under 18 shall not be employed at night or, in hazardous conditions. Suppliers must comply with all international and national laws regulating young workers including educational opportunities.
  • These policies and procedures shall conform to the provisions of the relevant ILO standards.
  • Where child labor is found, Suppliers must commit to remediation of the issues to be in line with Chanodil’s Child Labor Remediation Policy (contained herein below).

 

Living Wages are paid 

(Relevant ILO conventions are: No. 95 and No. 131. Relevant ILO Recommendations are: No. 131 and 135) 

  • Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income.
  • Overtime will be paid at a premium rate, which is recommended to be not less than 125% of the regular rate of pay, but will be at a minimum compliant with national legislation.
  • All workers shall be provided with written and understandable information about their employment conditions with respect to wages before they enter into employment. All workers must also be provided with wage slips that include the particulars of their wages for the pay period covered each time that they are paid.
  • Wages will be paid without offset, in a regular and timely manner, in fully legal tender.
  • Deductions from wages as a disciplinary measure shall not be permitted nor shall any deductions from wages not provided for by national law be permitted without the expressed permission of the worker concerned.

 

Working hours are not excessive

(Relevant ILO conventions are: No. 1)

  • Working hours must comply with national laws, industry standards and collective agreements; whichever provides the greater protection for workers.
  • Working hours, excluding overtime, shall be defined by contract, and shall not exceed 48 hours per week.
  • All overtime shall be voluntary. Overtime shall be used responsibly, taking into account all the following: the extent, frequency and hours worked by individual workers and the workforce as a whole. It must not be undertaken on a regular basis.
  • Workers shall be provided with at least one day off in every seven-day period or, where allowed by national law, two days off in every 14-day period, unless exceptions defined by collective agreements apply.
  • Reasonable annual leave will be granted to every employee, based on a clear, formal policy.
  • Workers shall be given the right to resting breaks in every working day.

 

No discrimination is practiced

(Relevant ILO conventions are: No. 100, 111 and 183 – Relevant ILO Recommendation: No. 90 and 111)

  • There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement based on race, caste, birth, national or ethnic origin, nationality, religion, age, disability, gender, marital status, family responsibilities, sexual orientation, social background, diseases, union membership, political affiliation or any other condition that could give rise to discrimination. In particular, workers shall not be harassed or disciplined on any of the grounds listed above.
  • Migrant, contract, part-time and home-workers will receive the same rights, benefits and opportunities for advancement as other workers performing similar activities.

 

Regular employment is provided

  • To every extent possible work performed must be on the basis of recognized employment relationship established through national law and practice.
  • Obligations to employees under labor or social security laws and regulations arising from the regular employment relationship shall not be avoided through the use of labor-only contracting, sub- contracting, or home-working arrangements, or through apprenticeship schemes where there is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through the excessive use of fixed-term contracts of employment.

 

Freedom of Association and Collective Bargaining

(Relevant ILO conventions are: No. 87, 98, 135 and 154 – Relevant ILO Recommendation 143)

  • Suppliers shall respect that workers have the right to lawfully associate or not associate with groups of their own choosing and bargain collectively.
  • Suppliers shall have an open attitude towards the activities of lawful employee associations and related activities.
  • Workers’ representatives are not discriminated against and have access to carry out their representative functions in the workplace and are not prohibited from interacting with workers.
  • Where the right to freedom of association is restricted under law, Supplier does not hinder the development of parallel means for independent and free association.

 

No harsh or inhumane treatment is allowed

  • Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other forms of intimidation shall be prohibited.
  • All disciplinary procedures must be fully compliant with local laws, established in writing, and are to be explained verbally to workers in clear and understandable terms.
  • All disciplinary action must be recorded.
  • Suppliers will establish a whistle-blowing policy and process for workers.

 

Ethical Business Behavior

  • Suppliers will not, without prejudice to the goals and expectations set out in this policy, be involved in any act of corruption, extortion or embezzlement, nor any form of bribery- including but not limited to – the promising, offering, giving or accepting of any improper monetary or other incentive. This includes Chanodil employees, social auditing companies or any other representatives of Chanodil at the supplier or factory level of the supply chain.
  • Suppliers are required to maintain accurate information regarding their activities, structure, and performance, and to disclose these in accordance with applicable regulations and industry benchmark practices.
  • Suppliers will not participate in falsifying such information, nor misrepresent any Chanodil or performance of the supply chain.
  • The collection, use and other processing of personal information will comply with privacy and information security laws and regulatory requirements.
  • Suppliers will allow unfettered access to Chanodil’s employees or agents to facilities, documents, and employees when visits are either announced or unannounced.
  • Suppliers will comply with all relevant local, national and international legal requirements.

 

Protection of the Environment

  • Suppliers will take the necessary measures to avoid environmental degradation to the expectations set out in this policy.
  • Suppliers are required to conduct an environmental risk assessment at the facility level to assess significant environmental impact of operations, and establish effective policies and procedures that reflect environmental responsibility.
  • Suppliers will, as appropriate to the size and complexity of the business, implement adequate measures to prevent or minimize adverse effects on the community, natural resources, biodiversity and the overall environment.

 

Migrant Labour

  • Chanodil maintains a “no fees” policy and suppliers, factories and facilities are required to ensure that migrant workers are not responsible for paying fees or expenses to secure or maintain employment with a factory or facility at any point during the employment life cycle.

 

Uzbekistan, Turkmenistan and Xinjiang Cotton

  • Chanodil’s suppliers and authorized subcontractors will not knowingly source cotton from Uzbekistan, Turkmenistan or Xinjiang cotton. We oppose the use of forced child and adult labour in the harvest of cotton from these regions and will not use cotton from these areas in the manufacture of our partner’s products.

 

PRINCIPLES OF IMPLEMENTATION:

Chanodil recognizes that compliance with the Policy may not be immediately achievable but is committed to continually driving compliance throughout the supply chain. Recognizing that the most significant ethical risk will lie in the lower tiers of our supply chain, away from our direct contractual control, Chanodil takes a collaborative approach to the implementation of the Policy. We are committed to working with Suppliers to measure, monitor and improve their ethical sourcing performance and support policy implementation throughout their own supply chains.

Chanodil therefore commits to:

  • Acknowledge specific national, regional or cultural challenges.
  • Recognize Suppliers’ own standards where they are comparable to Chanodil’s standards.
  • Ensure that all Chanodil employees are aware of the Policy.
  • Cease working with Suppliers demonstrating a persistent disregard for the Policy.
  • Give appropriate consideration to the impact of terminating business with Suppliers and the communities in which they operate.
  • Work collaboratively with our Suppliers to improve social, ethical, and environmental standards where Chanodil’s support is appropriate and required.

 

EFFECTIVE IMPLEMENTATION:

To ensure effective implementation of the Policy Chanodil commits to:

  • Communicate the Policy to all new and existing Chanodil employees.
  • Allocate the appropriate resources to effectively implement the Policy.
  • Assign responsibility for the Policy and its implementation to an officer or department of Chanodil.
  • Continually measure Suppliers’ level of compliance with the Policy.
  • Support Suppliers to continually improve and move towards full compliance with the Policy by identifying Supplier’s appropriate factory improvement plans.
  • Maintain an internal system to record and monitor Suppliers’ level of compliance with the Policy.
  • Periodically review the Policy to ensure that it remains relevant and robust.

 

To ensure effective implementation of the Policy Chanodil requires its Suppliers to:

  • Advise and update Chanodil of all suppliers (including sub-contracted, temporary, contracted and home workers) used to produce Chanodil goods.
  • Communicate the Policy to all employees, suppliers, sub-contractors, home workers and temporary and contract workers engaged in the supply chain for Chanodil goods.
  • Comply with the Policy, all applicable laws in the countries in which they operate and all relevant ILO conventions and the UN Guiding Principles. Wherever standards differ, the standard which offers the greater degree of protection to the worker shall apply.
  • Train relevant staff on social, ethical, environmental and human rights standards to support compliance with the Policy.
  • Allow unfettered access to Chanodil’s representatives or agents to its facilities, documents, and employees when visits are either announced or unannounced.
  • Communicate to Chanodil when compliance to the Policy is not occurring.

 

SUPPLIER TERMINATION:

Chanodil is committed to working collaboratively with our Suppliers in the spirit of mutual benefit and to drive compliance throughout the whole supply chain. Where assessments or audits uncover issues of non-compliance, we will work with Suppliers to implement appropriate improvement plans.  We require all Suppliers to be open and honest about their performance and problems where they may occur, so that we can make tangible improvements.

While we recognize that full compliance to the Policy may not be possible, immediately, we do expect to see each Supplier improve over time.

Chanodil considers the termination of a Supplier to be a last resort, but in Chanodil’s commitment to ensure good ethical practices we will terminate business relations with Suppliers who demonstrate:

  • Persistent and serious issues of non-compliance.
  • Persistent disregard for the Policy.
  • No motivation or dedication to comply with the Policy or continually improve compliance levels.
  • Any deliberate attempt to misinform Chanodil or its representatives (e.g., auditors) of ethical performance. (For example double book-keeping)
  • Unauthorized subcontracting of Chanodil products.
  • Any instances of corruption or bribery by the supplier or factory.

 

In such instances, Chanodil will fully inform the Supplier that a formal termination process has begun, which will follow the following escalation process:

  • First Escalation – Communication will be sent to Supplier, detailing Chanodil’s reasons for their intended termination. (For example, persistent issue of non-compliance and history of non-remediation). The First Escalation will include one final opportunity for the Supplier to remediate the issue(s) in question, or provide acceptable evidence that the issue(s) are being managed.
  • Second Escalation – Communication will be sent to Supplier, confirming contract termination and that no further orders will be placed. All efforts will be made to maintain existing orders at the Supplier unless non-compliance is deemed critical by Chanodil.
  • Final Escalation – Communication will be sent to supplier confirming the termination of the contract and business relationship along with details leading to such termination.

 

CHILD LABOR REMEDIATION POLICY:

Chanodil recognizes that child labor cases need to be managed with care and with the protection of the child being the utmost importance.  Where assessments or audits find child labor in use, Chanodil expects its Suppliers to remediate such child labor responsibly.

Chanodil’s child labor remediation policy applies to all children in all work situations regardless of their employment status or length of service. This includes permanent, temporary, or casual labor, whether directly or indirectly employed by the management of the workplace, as well as children who have been trafficked or sold into work.

Suppliers must have a defined company policy, hiring procedures and remediation plans, whether or not children are found to be working in the factory. The policy and plan should be effectively communicated to all employees.

When these systems fail the supplier should be prepared to protect underage workers and to enroll them in a long term program (until each child is 15 or exceeds compulsory schooling age as required by national legislation, whichever is higher) so as to remove child workers from the workplace, to help enroll them in school, and to ensure they do not suffer more than if they were to remain working.

Suppliers should work with the child’s parents and local social service organizations (non-governmental organizations (“NGOs”), community groups, etc.) if appropriate to ensure that adequate schooling or day care facilities are available.

Providing support may include ensuring that children are able to secure school fees, uniforms, books, and the like.  It may also include establishing and maintaining a school or effective educational services in underserved areas with, for example, local government and NGOs.

Other required support would include such action as hiring the child’s next available family member or if that proves unfeasible, providing for a family stipend to replace a child’s lost wages until the worker is of legal working age.

All of these actions and mentioned financial support must be effective, complete and independently verifiable to the satisfaction of Chanodil.  Chanodil’s Child Labor Remediation Policy is based on SA8000 Standard Guidance 2013.