Fairware Ethical Sourcing Ebook: How to Assess Your Supply Chain

T HE BEGINN E R' S GU IDE TO:

ETHICAL SOURCING 6 T i ps Fo r Assessin g Your B2B Suppl y Ch a in

PRODUCT WITH PURPOSE

about

FAIRWARE Fairware helps you to better engage your customers, employees and partners through the creation of sustainable, custom branded products. We ensure your promotional merchandise helps tell your story and animate your brand.

Our mission is to change the world through the simple act of buying. We’re committed change makers and we’re serious about sustainability.

We bring emerging retail, consumer and sustainability trends to the forefront of promotional campaigns and product assortments. We’re sustainable brand strategists and merchandise is our medium.

We do the homework on ethical sourcing and sustainable materials so you can rest assured that your marketing merchandise lines up with your values.

Cheers, Team Fairware

Ethical Sourcing Fairware is a certified B Corporation and full service promotional merchandise company – we provide custom branded promotional products and corporate gifts to North America’s leading sustainable brands and changemakers. We have North America’s leading selection of environmentally responsible and ethically sourced promotional products and work with our clients to ensure their merchandise reflects their values and animates their story.

Our clients are passionate about doing the right thing – but many of them aren’t sure where to start when it comes to assessing their supply chain to ensure suppliers meet environmental, social and product safety standards.

When your brand reflects a commitment to social and environmental responsibility, your reputation is on the line with every client and employee interaction. It’s good to know how to select suppliers you can trust share your values and goals.

This is the beginners guide to assessing your supply chain and will serve to start you down the path of finding suppliers that share your social and environmental goals.

Contents 06

The What and The Why

08

Educate Yourself

10

Find Your ‘People’ When Seeking Out New Suppliers

12

Adopt a Code of Conduct for Suppliers

14

Start the Conversation with Current Suppliers

17

Formalize Your Efforts

18

Engage Your Industry for Broader Change

20

How It Works for Fairware

22

Conclusions

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Glossary

05

THE WHAT & THE WHY

WHAT IS ETHICAL SOURCING AND SUSTAINABLE PURCHASING? Simply put, ethical sourcing dictates that you mitigate harmful social and environmental impacts in your supply chain. Adopting an ethical or sustainable purchasing policy enables your company to assess and make decisions based on information about the suppliers, materials and the products you’re sourcing.

LICENSE TO OPERATE In an age of transparency, knowing where your products are coming from, how they’re made and what’s in them is a basic license to operate.

WALK THE TALK Aligning your corporate values with your spending habits is an often overlooked way to walk the talk. For example, if you’re an organic food company, it makes sense to make sure your staff apparel also reflects your commitment to organic. Addressing sustainability issues in your supply chain shows a consistency in what you say and what you do.

SUPPLIER PARTNERSHIPS As you get to know more about your suppliers, you deepen commitments and relationships which can lead to better terms and service.

REPUTATION MANAGEMENT If your logo is on a product, it represents you. It’s good to know how to select suppliers you can trust who share your values and goals. You don’t want to end up eroding brand trust because of the t-shirts you choose.

07

T I P # 1 - E D U CAT E YO U RS E L F Learn about International Code of Conducts. Companies that have Code of Conducts in their supply chain base them on International Labour Organization (ILO) standards. These Codes are similar across companies and industries and it’s good to understand the key issues they’re addressing. For more details on codes of conduct, check out the FLA (Fair Labor Association).

Read up on the business case for sustainable supply chain.

Adopting sustainable purchasing programs can generate positive impacts, including financial, environmental and socio-economic benefits. Knowing some of these can help you ‘make the case’ to your team. Take a look at this report for more insight.

Understand the barriers to change. Nobody likes change even if it’s for the better. Understanding how individuals react to change and how to manage it is key to getting your co-workers and suppliers to change habits. Here is a good, short read on the psychology of change so you can have a higher chance of success.

If you want a high impact primer on the perils of our global supply chain, watch TRUE COST, a documentary on the fashion industry, consumers, and the workers that manufacture what we wear.

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TIP #2

FIND YOUR ‘PEOPLE’ WHEN SEEKING OUT NEW SUPPLIERS Seek out like minded suppliers and brands to purchase from. It’s easier to work with suppliers who already have a commitment to your values than to educate new suppliers about what is important to you. For example, seek out B Corporations or members of the FLA or use the Green Pages to find new vendors. Leveraging third parties like these takes some of the guesswork out of the supplier selection process and can make it more efficient.

“ Traditional promotional products rarely

align with Aveda’s ear th-friendly mission.

It ’s great to work with a company like Fairware that delivers sustainable products with smar t design and meet our needs without harming the planet.

”

— Kyle Schmit, Manager Shows and Production, AVEDA

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TIP #3

ADOPT A CODE OF CONDUCT FOR SUPPLIERS Determine which Code of Conduct or standards you want to use to engage your supply chain. You may want to adopt their industry association (e.g. for us, Promotional Products Association International has a Supplier Code of Conduct for distributors and suppliers to use). Many universities adopt the Fair Labor Association and some companies use the B Corp Assessment Tool or Green America Green Business Certification to guide their efforts.

Once you have your own Code of Conduct, you’re ready to start talking to suppliers.

PRO TIP — Don’t ‘make up’ your own code, most codes are based on international labor and product safety standards such as the ILO International Worker Rights Standards. Look to an industry or international standard that makes sense to adopt.

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TIP #4

START THE

CONVERSATION WI TH CUR R E N T S U PPLI E RS

“I don’t know where to start” We hear that from a lot of colleagues and clients when the topic of assessing supply chain comes up. In our experience, starting a conversation with a supplier or potential supplier doesn’t have to be a big deal. We’re surprised by what we find out.

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STARTING THE CONVERSATION Call your suppliers and ask if they have a social compliance, environmental management or product safety program.

Send your suppliers a simple survey so you can document your findings and be consistent in the questions you ask.

CASE I N POI N T — You won’t know if you don’t ask. For example, after our first conversation with a new ceramic mug supplier, they sent through a laundry list of third party certifications on both the social and environmental performance of their factories (SA8000 and ISO 14,001) – something that was not publicly noted on their website.

TIP #5

F O R M A L I Z E YO U R E F F O RTS Create a policy or set of procedures for onboarding new suppliers. Writing up a formal policy or set of procedures for your workplace will ensure the commitment lives on and can help with consistency across departments and teams. We often see commitments die off after a passionate advocate leaves the role, so if you care enough to start the process, formalize it.

Meet with others from your company who can improve your company’s impact. Are your administrators ordering organic food? Does your office supply company provide recycled products?

Document your findings. If you’re collecting information about suppliers, make sure you have a way to track it. A simple spreadsheet to identify if a supplier has responded to your request, or a notes field to track what information they sent you will be helpful when you review suppliers in the future.

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TIP #6

ENGAGE YOUR INDUSTRY FOR

BROADER CHANGE Seek out peers in your industry or region. Engage them on these issues.

Ask marketing, sustainability or procurement staff from local companies or industry leaders what they’re doing. See if you can find templates or examples to start with - it also helps get leadership buy-in when you can point to competitor examples.

The power of collaborating with industry peers can’t be underestimated.

We’ve seen great progress in other industries - for example the apparel and footwear industry came together to create the early inspiration for the Sustainable Apparel Coalition, where a collective voice has been able to drive change at a faster pace than individual companies could.

PRO TIP — Timing is everything, leverage key moments like a ‘RFP’ or contract renewal or before you place a large purchase order.

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HOW I T WO RKS FOR

FAI RWARE

Every effort to find a new supplier starts with some basic research and a conversation (see Tip #1). An introductory call or email is a great way to gauge whether the supplier has experience with social compliance programs, product safety testing or environmental programs. An initial conversation is a great way to diffuse any anxiety they may feel about the process. At Fairware, our approach falls into 3 tactics.

1.

We call potential suppliers and tell them about our values and what products we’re sourcing. We always ask who the best person is to contact to talk to about their supply chain, and we let them know we’ll be sending an email with a supplier survey or we'll set up an initial call to let them know about our supplier assessment process. These first calls let the supplier know we care about how our products are made and identify if they have processes to ensure their products are made by facilities that meet international standards.

2.

We ask suppliers to review our Code and answer a 4-5 page questionnaire on their own supply chain practices. As Licensee of the Fair Labor Association (FLA), our code has always been modeled by that of the FLA. The introductory letter tells the supplier about us and our clients and clarifies what we’re asking for. We only accept surveys signed by a senior leader in the company.

The questionnaire includes questions on: • Country of origin for their products • Certifications the facilities may have (e.g.

ISO Certifications, SA8000, Fair Trade) • Whether their facilities have been audited for social and environmental performance , and by which brands and standards and when • Highlights of any social, community or environmental programs they have

3.

We audit our factories on a case by case basis at the request of clients who are placing large orders or long term programs.

At Fairware, we audit facilities on a costshared basis to the client Code of Conduct specifications.

Any of these efforts (calls, surveys or audits) will give you a sense of where your supplier stands on these issues. And it will send a signal to them that you care and are looking to support businesses that also care. And don’t forget, it’s important to reward your suppliers when they make improvements.

Nothing says thank you like a purchase order.

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For many, the thought of auditing a factory is daunting, but it’s not as overwhelming as you may imagine. To start, it is relatively inexpensive if you’re considering a key part of your supply chain. On average, a factory audit for social compliance will cost between $1000 and $1500 USD. Because of the nature of our business and our size, we can’t afford nor is it realistic to audit all the manufacturers we use. We started looking at key bag and water bottle suppliers, as they are two of our top selling commodities.

To be blunt, auditing a factory is easy – you hire experts to do the actual auditing. The difficulty lies in ensuring you have the buy-in from your factory partners to address any issues that may arise in the findings. The remediation and follow up steps from an audit are generally the part that poses the most challenges.

CONCLUSION At Fairware, we’ve also filled out surveys and code of conduct assessments that customers have asked of us. We know from experience it’s hard work and it can also be enlightening.

We’ve used both Green America’s Green Gain Tool and the B Corp Assessment to review our own operations.

Our clients have told us that the only difference between our pitch and our competitors was the level of detail and transparency we provided on our quote document. Our clients trust our deeper understanding of our supply chain and are grateful to be provided with information they can share with their team and the recipients of their branded merchandise.

We believe every product should have a good story and supply chain efforts should be driven by that belief.

#changemaker

The biggest take-away for getting to know your supply chain better is this: just ask. It might sound obvious but we continue to be amazed at what we find when we ask our suppliers about their supply chain.

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WANT M O R E ?

Check out some of our resources below to learn more about sustainabilit y and how you can make an impact as a company!

S u sta in a b le Pro d u c ts Re d u c in g o u r E nv iro n t m e n ta l F o ot p r in t Co m m u n it y I m p a c t B Co r p o ra t io n M ove m e n t D i versit y & I n c lu sio n STA RT A P R OJ E CT

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SOCIAL COMPLIANCE STANDARDS

GLOSSARY THE FOLLOWING ARE SOCIAL COMPLIANCE FRAMEWORKS THAT ARE SPECIFIC TO THE PROMOTIONAL PRODUCTS INDUSTRY: PPAI Code of Conduct: This is the industry’s Code for both suppliers and distributors. “The social responsibility pillar of a compliance program demonstrates the commitment to responsible operations that an organization expects from its management, employees, supply chain partners and other stakeholders. The policies and practices defined in a social responsibility program should mirror the behavior and outcomes (i.e., doing the right things) that an organization seeks in all of its operating practices while living up to their respective purpose, values and principles.” There is no formal auditing protocol or expectations that the supplier has a robust management framework for assessing their supply chain. It’s a ‘starting point’ for many.

QC Alliance: Quality Certification Alliance (QCA) is an independent, not-for-profit, accreditation/ certification organization whose mission is to provide the promotional products industry with a common set of third-party standards in an effort to consistently offer brand safety assurances to organizations that utilize promotional products as part of a broader marketing mix. They’re focussed on quality, product safety and social compliance.

It’s a low bar framework compared to the others BUT having QCA Certification is acceptable to Fairware, as the framework demands on site audits and ensures that the supplier has a management system in place for overseeing factory compliance and product quality.

THE FOLLOWING ARE SOME OF THE GROUPS FOCUSED ON SUSTAINABLE SUPPLY CHAINS THAT ARE MOST REFERENCED BY FAIRWARE SUPPLIERS: ILO International Labor Standards: Code of Conducts, regardless of the Association that has developed them, are generally based on the ILO International Labor Standards.

Fair Labor Association (FLA): The FLA is a collaboration of companies, universities, and other groups that help ensure safe working conditions. Fairware is a Category C Licensee of the FLA. Worldwide Responsible Accredited Production (WRAP): WRAP is a Virginia-based nonprofit. They are focused on providing guidance to clothing and footwear manufacturers worldwide regarding the ethical employee practices based on the International Labour Organization’s decisions.

WRAP published 12 Principles.

Business Social Compliance Initiative (BSCI): The initiative is a supply chain management framework to help companies implement socially responsible policy in factories and farms by offering a single, ready-made code of conduct and implementation system for use by brands. BSCI provides neither auditing nor certification.

Social Accountability International (SAI): Founded

by American investment banker Alice Tepper Marlin to support equitable treatment of workers, SAI developed the SA8000 audit format.

Sedex: A non-profit group of suppliers with the world’s largest platform for sharing data on ethical sourcing, the tracking of human rights, sustainable sourcing, and other social responsibility concerns, they publish the Sedex Members Ethical Trade Audit, one of the most commonly used CSR audit formats in the world.

Benefit Corporations (B Corps): Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.

Fairware is a Founding Canadian B Corp and we actively seek out B Corps as supplier partners.

Fair Trade Certified: The Fair Trade Certified™ seal represents thousands of products, improving millions of lives, protecting land and waterways in 45 countries and counting. Products with the Fair Trade Certified™ seal, you can be sure it was made according to rigorous social, environmental, and economic standards. There are not many ‘Fair Trade Certified’ products in the promotional product space. The certification started in the agricultural sector and is making it’s way into the apparel sector.

THE FOLLOWING ARE SOCIAL COMPLIANCE FRAMEWORKS NOT COMMONLY SEEN IN OUR SUPPLY CHAIN:

International Council of Toy Industries (ICTI): ICTI focuses on toy safety, ethical marketing to children, and the social responsibility of toy manufacturers.

ISO 26000, Social Responsibility: Published in 2010 by the International Organization of Standards (ISO), this document offers no certification, only a guideline for organizations considering their social responsibility. It recognizes seven basic principles of social responsibility: accountability, transparency, ethical behavior, respect for stakeholder interests, respect for the rule of law, respect for international norms of behavior, and respect for human rights.

Responsible Business Alliance (RBA) (formerly the Electronic Industry Citizenship Coalition [EICC]): The RBA structures discussion and initiatives around social, environmental, and ethical issues in the electronics supply chain.

AIM-PROGRESS: A global voluntary initiative of fast-moving consumer goods (FMCG) producers who promote responsible sourcing, they are supported by AIM in Europe and the Grocery Manufacturers of America (GMA) in the U.S.

Ethical Trading Initiative (ETI): A collaboration of companies, trade unions, and non-governmental organizations (NGOs), the ETI promotes global worker rights.

No one else does promotional merchandise quite like we do.

contact@fairware.com 604.732.3247 8 66.606.3247