Is a corporate ethics line fit for purpose in the supply chain?

We get asked this question a lot. There seems to be a groundswell of companies looking to strengthen grievance channels in the supply chain. Extending a whistleblower hotline used for corporate or retail employees may be seen by companies as an easy – and often cost-effective – way to do it. However, this might not be fit for purpose.

There are four main drivers behind the increased buyer commitment to worker reporting:

1. Workers are active on social media platforms and starting to “name and shame” their employers by posting negative information about working conditions – a major risk to brand reputation.
2. The pace of business requires faster and more reliable insight to business risk, and workers are increasingly seen as a canary in the coal mine, providing advance warning of risk and potential supply chain disruption.
3. New legislation has come into effect, such as France’s Duty of Vigilance law (2017), which requires companies to have an ongoing alert mechanism that surfaces potential risks.[1]
4. The UN Guiding Principles on Business & Human Rights expect companies to establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted (Principle 29).[2]

There’s also a strong business case for suppliers. Workers with effective grievance channels are 3 times more likely to say they plan to stay at the factory 1 year.[3] (This is a stronger driver of worker retention than work atmosphere, wages and hours.)

If workers are the best monitors of conditions in their workplaces, then the question is how to ensure they have a safe space to report? According to ELEVATE EiQ data extracted from ELEVATE Worker Sentiment Surveys, 82% of workers have not raised a suggestion or complaint in the last 12 months.[3] In India, for example, fewer than half of workers surveyed (45%) are willing to speak up if they have a suggestion or complaint at work, and about 1 in 4 workers (26%) say their complaint will not be treated seriously by management.

In this context, introducing a corporate ethics hotline to the supply chain may create a false sense of security. Workers need to understand it, trust it, and know how to use it. If not, the risk profile you receive will be incomplete.

Common mistakes we’ve observed

Here are some common mistakes we have observed from our work advising companies on grievance mechanisms:

1. Having workers’ calls picked up by staff in another country. One company told us they have factory workers in China calling the reception desk at their HQ in California. Corporate employees answering the phone do not speak the right language or have the subject matter expertise to understand and address worker concerns.
2. Feeling reassured when workers do not report significant concerns. Often companies use their corporate ethics line as a grievance channel for workers. When few cases come in, it’s easy to feel reassured that workers are safe. We know from experience that the more workers trust a grievance channel the more they will use it. In a mature system, we would expect to see one to two calls per month for every thousand workers.
3. Leaving it to factories to train their workers. On one hand, factories or farms will be in the best position to train their workers cost-effectively. But we find with external channels that workers do not always trust the system if the promotion is done by their employer.
4. Going it alone. More than other areas, external grievance channels benefit from collaboration. Amader Kotha is a world-class helpline benefiting 1.5 million workers because the Rana Plaza disaster served to catalyze resources from a large group of partners all at once. Effective grievance systems rely on infrastructure that can be shared like utilities.

Our recommendations

To strengthen grievance mechanisms in your supply chain, ELEVATE has a few recommendations:

1. Start with the internal channels. Assess and strengthen the internal grievance channels of your strategic suppliers. Factories need to take ownership for soliciting and solving worker feedback.
2. Leverage infrastructure that can be shared. Trained operators with the right language capabilities and skill set to build trust with workers are a shared resource. You can also plug into existing grievance mechanisms that work, such as Amader Kotha in Bangladesh.
3. Think about the last mile. If you are using a corporate ethics line with workers, how can you improve on it? Worker training is necessary to build trust and can increase the return on investment in any hotline system.

Interested in ELEVATE’s grievance mechanism services? Contact us to learn more

These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.

Footnotes and sources

[1] France Corporate Duty of Vigilance Law, 2017 (Loi relative au devoir de vigilance des societes meres et des enterprises donneuses d’ordre, 2017)

[2] The UN Guiding Principles on Business & Human Rights
https://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

[3] Anonymous worker survey data from 1,798 factories in 10 countries (2018-2019)