With heightened publicity about Apple’s reliance on low-wage factories in China for the production of its iPhones and IPads, just when President Obama is launching a campaign for “insourcing” workers back to the USA, the latest soundbites in the Apple saga have to do with the company’s decision to bring in an independent auditor of working conditions at its “outsourced” supplier factories. This independent auditor happens to be the Fair Labor Association, an organization that we know well. Established in 1999, the FLA grew out of the Apparel Industry Partnership in the US and became a multi-stakeholder initiative dedicated to ending sweatshop conditions in factories worldwide. It has since expanded to monitor participating companies from outside the US, such as H&M and Adidas as well as suppliers headquartered in China, El Salvador, Hong Kong, Korea, Pakistan, Singapore, Sri Lanka, Thailand, Turkey and Vietnam. The FLA Board has a three-way balance among participating company representatives, civil society organizations and college and university representatives. The FLA methodology consists of corporate endorsement of a code of workplace practices, collecting compliance information and addressing compliance issues. We have known its CEO and President Auret van Heerden since well before the founding of the FLA in 1999. In fact, he was instrumental in conducting a survey of labour practices in export processing zones while an employee at the International Labour Organization in the 1990s and left the ILO to mobilize cooperation among diverse stakeholders who were looking to go beyond surveys and structured tripartism of governments, employers organizations and trade unions. We know that he is an inspirational and committed believer in multi-stakeholder cooperation to find lasting solutions to exploitative labour practices.

We are not surprised, then, to see that Apple, a dominant company in the technology world, has turned to the FLA to conduct an independent audit of three of its major suppliers for iPhones and iPads in China. We understand that Apple had already sought the FLA’s assistance on improving its own auditing methodology. So when the New York Times published reports in January 2012 and media attention escalated with further reports of hazardous and exploitative working conditions in factories producing Apple products, the FLA was called upon to conduct what is being described as the “most detailed factory audit in the history of mass manufacturing”. Apple has also joined the FLA as a full Participating Company member. See the announcement here. We interpret this to mean that Apple has agreed to unannounced independent external monitoring audits of factories in its supply chain, and that the company endorses the FLA Workplace Code of Conduct and 10 FLA company obligations oriented to publicizing non-compliance and implementing corrective actions.

Foxconn Technology Group is the first Apple supplier to be audited, to be followed by audits at factories run by two other suppliers, Quanta and Pegatron.  The audit will involve interviewing thousands of employees presumably in circumstances that protect their freedom of expression.  We know that Apple’s own audits since 2006 have turned up violations of failure to pay overtime, forced overtime, underage workers, and unsafe working conditions involving hazardous and toxic chemicals.  This latter includes the unsafe levels of aluminum dust that has been described as contributing to explosions that killed and injured workers in a Foxconn plant.   Without waiting for the audit, however, Foxconn has announced a 16 to 25 percent increase in wages and a reduction in overtime hours for assembly line workers in Shenzhen, with a base of CNY 1800 for a junior worker ($290 per month) and up to CNY 2200 (about $350 per month) for an employee who passes a technical examination.  This is well above the mandatory minimum wage in Shenzhen.  Some NGO critics, however, including a Hong Kong-based group called Students and Scholars against Corporate Misbehavior (SACOM), want to see these companies commit to a “living wage”.  In the SACOM website, a living wage in Shenzhen is estimated to be roughly CNY 2300 per month, or approximately $365.  See here.

Apple is the first technology company to join the FLA.  This is a very significant breakthrough for the FLA.  However, we also know that the FLA had already expanded beyond the monitoring of textile, apparel and shoe factories to work with CMBD Member Syngenta on a comprehensive Syngenta Seeds Project to adapt the FLA methodology to farmers, their families and communities in agriculture.  Syngenta started its involvement with the FLA in 2003 to cooperate on addressing child labour and unsafe working conditions in its cotton seed business in India.  Even after this business was sold, Syngenta shifted the cooperation to its vegetable seed business, also in India.  The Syngenta Seeds Project has introduced task-mapping and risk assessment tools in place of a compliance checklist and has also reinforced the importance of working in compliance projects with local stakeholder involvement.  The FLA has described this inclusive strategy as a necessary component of its cooperation with Syngenta.  See the FLA report of the project here and Syngenta’s report here.  Syngenta might not have apple seeds in its repertoire, but we will be happy to join the iconic “Johnny Appleseed” in the cultivation of Apples and Blackberries and all kinds of technological gizmos for sustainable growth – and Decent Work -  in the 21st century.

Boosted by the dialogue and debates that took place at the Busan in November and the G20 Seoul Summit Multi-Year Action Plan on Development, news items coming out of several international organizations this week focus on the multi-stakeholder approach to development and the role of business specifically. At the UN Population Fund Executive Board meeting last week, the agency’s Executive Director, Dr. Babatunde Osotimehin declared that the next three years are critical for the global development agenda. He remarked about how new partnerships, particularly with the private sector, through the “7 Billion Actions” campaign, help to raise awareness not only of the global challenges faced, but also with the interconnectivity of all sectors and institutions, public and private. He remarked that it is “clear that development models based on multi-lateral partnerships, which include several stakeholders from different sectors, are the way forward”. He offered as just one example a new partnership with Intel focused on improving skills of health workers, and made specific reference to the Busan high-level conference on aid effectiveness, the outcomes of which call for enhanced engagement by the private sector in the development process. See articles here and here.

A seminar at the International Fund for Agricultural Development a few weeks ago, organized by IFAD and the International Food Policy Research Institute, focused on “Measuring Impact, Maximizing Resources: A Strategy for Effective Development”, and here, too, another aspect of the renewed global attention to development is adding to the knowledge base. The key question of the seminar was “How can we make the best possible use of the resources we spend on development”? Answers and prognostics given included:

• identify the causal pathways between interventions and results
• conduct counter-factual analysis – what would have happened had a project not been undertaken – by considering the paths of control groups not involved in the project
• recognize the distinction between the outcomes and the impacts of a development project, with the impact evaluation designed at the beginning of a project, not the end

Projects that work, based on rigorous analysis of causation, objectives and results, are the ones to scale up and apply repeatedly. This micro-economic approach is giving new momentum to distinguishing the specific value of each intervention and building from that to the selection of which projects to scale up.

Focused on a more global level, the UN Secretary-General’s High-level Panel on Global Sustainability last week released its report entitled Resilient People, Resilient Planet: A Future Worth Choosing, with 56 recommendations to “mainstream” sustainable development into economic policies. We reported on the impending release of this report in the CMBD News where we provide more detail about its specific recommendations, but it is worth highlighting the significance of this report here. Georg Kell, Executive Director of the UN Global Compact remarked that “The Panel’s work confirms our long-held belief that a lasting transformation of the global market requires a seismic shift in the way we look at the cost of externalities and the integration of long-term thinking into strategic planning”. He also emphasized the need for businesses to take a more pro-active role in addressing concerns of human rights, labour issues, environmental sustainability and corruption. See the Panel’s report here, and more about Georg Kell’s remarks here.

These dialogues add strength to the background materials that are being developed in support of the upcoming CMBD meeting on Business in Development: An Overview of the Changing Concepts of Development and Linkages to the Private Sector, to be held in Geneva on 23 February. We are looking forward to an interesting, in-depth yet informal discussion on the issue of heightened involvement by the private sector in the development process, with participants from a broad swath of international organizations, diplomatic missions and private sector interests. See more information here.

We sat in on the event co-hosted by UNCTAD and the ILO to tout the recently released book: Trade and Employment: From Myths to Facts. A sizable crowd turned out to hear several of the book’s editors and authors, including the ILO’s Marion Jensen, Coordinator for the Trade and Employment Programme; ILO Executive Director José Manuel Salazar-Xirinachs; and Ralf Peters, Economic Affaris Officer, UNCTAD.  The premise of the discussion is that while there have been repeated assertions that trade liberalization contributes to growth and hence creates jobs, perceptions that there have been negative effects on labour markets persist.  These perceptions may have been exacerbated by the “Great Recession”  of 2oo8/2009 and its aftermath, policy makers fear.  Evidence in support of claims that increases in trade yield increases in employment is elusive.

With these notions as a backdrop, Mr. Salazar explained the three objectives of the book: to fill knowledge gaps by taking stock of available evidence and analyses; to contribute to the “tool kit” for conducting analysis of trade impacts on employment; and to assist in the development of policies to enhance the quantity and quality of jobs stemming from increased trade. It was clear from the discussion that there are a myriad of considerations that need to be taken into account when formulating coherent policies to enhance trade while promoting job growth.  Beyond the consideration of growth in output (and hence growth in jobs) are the issues of job quality (with respect to labor standards, wages, working time and conditions of work etc); gender considerations; and social protection.  Policies applicable to one country may not well serve another. The informal sector cannot be ignored. The distribution and mobility of skills, educational and workplace opportunities, contributions of foreign direct investment and the promotion of domestic private investment, the state of infrastructure, levels of development of institutions for policy formation and implementation — all of these factors enter into the mix for assessing trade impacts on employment.  In the end, our impression is that while much has been done to address the issues, much more is still needed before definitive conclusions can be drawn.

The book can be obtained as a pdf file from the ILO website.  Click here to go to the download page. Coincidentally, the ILO has issued its annual report on global employment trends and the jobs.  Click here for details.

At the 16 December 2011 meeting of the Board of the UN Global Compact, the Secretary General asked that the Board reconstitute itself in the lead-up to the Rio+20 Summit as a Global Compact Partnership Board with the capacity to provide guidance on the rapidly evolving sustainable development agenda”. See his statement to the Global Compact Board here. The Board was meeting at the same time as the second Inter-Sessional Meeting for the Rio+20 Summit at the UN in New York. The tone of this meeting seemed more upbeat than usual as delegates basked in the afterglow of the satisfactory, last-minute outcome of the Durban Conference of the Parties on Climate Change (which adjourned two days late as delegates had stayed on to reach the compromise agreement on negotiating a replacement for the Kyoto Protocol, as reported in last week’s CMBD News Commentary). In New York, the attention of environmentalists was directed to the 6000 pages of submissions on the two main themes of the Rio+20 Summit, the green economy and the institutional framework for sustainable development. Helping to set this tone, the Under Secretary-General Sha Zukang opened the Inter-Sessional Meeting with the guiding observation that Rio+20 must deal with the “new” sustainable development issues of food security, volatility in energy prices and the resurgence in financial instability and unemployment. See here for a report of the ISM.

We note that Secretary Ban Ki-moon has already emphasized that he wants to see a “private sector track” for the Rio+20 Summit. The business coalition for Rio+20, Business Action for Sustainable Development (BASD) has embraced this request with plans for a week-long Corporate Sustainability Forum in connection with the 20 to 22 June 2012 Summit in Rio. (The business coalition’s activities will also be overlapping with the B20 if all goes according to plan for the G20 Los Cabos Summit on 18 to 19 June 2012.) During the Inter-Sessional Meeting last week, the Business and Industry Group for the Rio+20 Summit was supported by several of its coalition members, reiterating the common business stance in the meeting itself. And they organized some notable side events on the importance of technologies for sustainable development (organized by the ICC) and another on knowledge and technology sharing for sustainable agriculture (organized by CropLife International among others). The Swiss Agency for Cooperation and Development also joined in a side event focusing on agriculture at Rio+20. See here for information on the side events.

The Secretariat for Rio+20 will be circulating a “zero draft” of an outcomes document in mid-January to consolidate those 6000 pages of submissions and the messages from the Inter-Sessional Meeting. The debate featured interest in (but no consensus on) a green economy roadmap, “Sustainable Development Goals” to augment the MDGs, the upgrading of the UN Environment Programme to a full-fledged UN specialized agency, the creation of a “sustainable development council” and an international financing mechanism for technology transfer. The S-G has repeated in many forums that sustainable development is the top priority for the UN looking to the future. All of this contributes to the momentum for this notion of a “Global Compact Partnership Board” to spearhead transformational system changes, which Secretary-General Ban Ki-moon sees as taking business engagement with the UN to the next level — that of an active partnership in the UN’s “broader mission”.