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© Assent Compliance 2016Confidential and Proprietary to Assent Compliance. © 2016 Assent Compliance Inc.
The Labour Standards Assurance System: What You Need To Know
© Assent Compliance 2016
Today’s Presenters
James CalderAssent ComplianceDirector, Compliance Programs
Kate DunbarAssent ComplianceSubject Matter Expert, Human Trafficking
[email protected] | www.assentcompliance.com | TEL: 1(866)964.6931
© Assent Compliance 2016
Assent ComplianceINTRODUCTION
© Assent Compliance 2016
Assent Product SuitesOur Market Leading Platform
Ethical Sourcing
Materials Management
Supplier Information Management
InspectionsConfigurable Surveys & Declarable Substance
Lists
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© Assent Compliance 2016
REGULATORYMaking sure specific regulations are being met
Some of the Companies We Work With
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© Assent Compliance 2016
The UK Labour Standards Assurance Requirements
© Assent Compliance 2016
Agenda
Understanding LSAS:
1. What is LSAS
2. Background
3. Requirements
Getting Started:
1. Building the Business Case
2. Policy Development
3. Management Representation
1
2
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© Assent Compliance 2016
Understanding LSAS
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Labour Standards Assurance SystemWhat?
Assurance system placing a contractual obligation on suppliers to have effective systems in
place to monitor and address concerns raised over labor standards.
Who?
● Developed by NHS Supply Chain (NHS SC) and UK Dept of Health
● Affects Medical Goods Industry
Why?
Prevent labor standards abuses in the supply chain of the UK National Health Service (NHS).
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Labour Standards Assurance System
Huge purchasing power:
● NHS = publicly-funded UK health system
● 83% total healthcare expenses in UK
● NHS #1 customer for medical goods
industry in UK
● UK NHS spent £116 billion on healthcare in
2015/2016
● Fifth biggest employer in the world
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© Assent Compliance 2016
BackgroundLSAS response to serious labor abuses:
● Child labor, trafficking and worker’s rights abuses
in Pakistan, Malaysia and Thailand
● Pakistan = 100m surgical instruments produced
every year, 10m for NHS
● 150 billion pairs of gloves produced each year
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‘Workers [..] pay extortionate fees [..]work long hours with limited rest, their passports are often confiscated, they are offered poor standards of accommodation.‘
© Assent Compliance 2016
The LSAS 15 Action Point Matrix
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1. Policy 2. Management Representatives3. Labour Standard Status Review4. Legal & Other Requirements5. Objectives, Targets and
Programmes6. Roles & Responsibilities7. Competence, Training & Awareness8. Communication
9. Documentation & Records10. Operational Control11. Supply Chain Management12. Emergency & Critical Issue
Response13. Performance Monitoring &
Measurement14. Corrective Action15. Management Review
Policies - Processes - Practices
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REGULATORYMaking sure specific regulations are being met
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Understanding the LSAS Performance Levels
LEVEL 1: FOUNDATION(6 months)
LEVEL 2: INITIAL IMPLEMENTATION
(18 months)
LEVEL 3: ESTABLISHED IMPLEMENTATION
(optional)
LEVEL 4: PROGRESSIVE(aspirational)
● Supplier has the building blocks for labor standards management in place.
● Supplier has considered how labor standards relate to its business.
● Initial documentation in place for auditor review.
● Supplier is demonstrating progression towards implementation processes & procedures to manage labor standards.
● Supplier has selected and assigned responsible individuals and departments
● Supply chain risk assessment processes have begun.
● Risk mitigation has begun.
● Supplier have a viable system in place for managing and monitoring labor standards risk.
● Supplier can evidence through records and examples that supply chain risk assessment has occurred.
● Supplier can evidence that they are taking actions to mitigate identified risks, including in the supply chain.
● Supplier demonstrates leadership is involved in LSAS implementation.
● Supplier goes beyond audit to address and change non-conforming labor practices.
● Evidence of key stakeholder engagement, partnerships and related projects are in place.
Phased approach with mandatory audits
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Targeted Products
Phased approach to LSAS implementation within NHS SC contract portfolio:
● 2014 - gloves, procedure packs, disposable curtains, suction consumables and miscellaneous sundries.
● 2015 – polymer, urology, theatre clothing, bowel management & continence.● 2016 – general wound care, office furniture, podiatry, disposable continence
& washable continence.
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© Assent Compliance 2016
Implications for LSAS Implementation
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Content:
What data to collect?
Risk assessment criteria?
Training content
Labor standards status review
Process / Systems:
How to collect and analyze data
Audit trail
Training dissemination and tracking
Progress tracking
Incident management
© Assent Compliance 2015 Confidential
Where To Start?
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First Steps in Establishing a LSAS Program
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1 2 3
Building the Business Case
Reviewing/ Developing
Policies
Identifying Management
Representative
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The Business Case
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● Remain competitive NHS SC supplier● Better supply chain understanding and visibility● Reduce risk ● Protect against reputational damage● Protect against loss of contract● Prepare for LSAS scope expansion ● Strategic competitive advantage ● And of course.. Protect your workers!
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LSAS Policy Requirements
Policy Requirements - Level 1
● Documented policy in relation to labor standards● Approved by top management● Appropriate to nature and scale of the organization● Commit to continual improvement● Set out defined set of minimum relevant legal and
other requirements (reference these)● Commit to making necessary resources available● Commit to compliance with relevant labor standards
(ILO & local law)
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REGULATORYMaking sure specific regulations are being met
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LSAS Policy Discussion
Relations Between Policies
Current:● Supplier and employee code of conduct● EHS policy● CSR or human rights policy● HR policies ● Procurement policy● Global human rights policy
Additional policies relevant to LSAS: ● Ethical procurement policy (standalone or integrated)● Labor standards policy (standalone or integrated into
human rights?)
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Discussion: Approaches to Ethical Procurement Policy Development
Two approaches:
1. Standalone2. Incorporate into existing procurement
policy(ex. commitment to risk assessment and supplier requirements)
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Goals (building on business case)Scope Who is responsible for policy implementation? Board level supportRelationship to other policiesCommitment to a code of conduct Assurance and verification procedures (see LSAS action points)Statements on communication and training on policyCommitments to addressing significant issues (for example LSAS action points)Expectations on suppliersPolicy review process
+ Supplemented by supplier code of conduct.
Labor Standards and/or Ethical Procurement Policy Checklist
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REGULATORYMaking sure specific regulations are being met
23
Labor Standards Policy: Essential Clauses
ETI base code:1. Employment is freely chosen2. Freedom of association and collective bargaining3. Working conditions are safe and hygienic4. Child labor shall not be used5. Living wages are paid6. Working hours are not excessive7. No discrimination is practiced8. Regular employment is provided9. No harsh or inhumane treatment is allowed
+ Prohibit Modern Slavery enablers:● Recruitment fees● Untrained labor providers● Withholding identity documents● Failure to provide return transportation● Failure to provide housing that meets safety and housing standards
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Management Representation
Requirements Responsibilities Cross-functional working group
?
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LSAS Manager: Responsibility, Authority & Reporting
Requirements - Level 1:
● Identification ● Defined responsibility and authority for:
○ Establishment○ Implementation○ Maintenance○ Reporting
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LSAS Manager: Sample Responsibilities
Strategy and action plans Awareness-raising and training for procurement managers Risk assessmentDevelop supplier minimum standards Communicate expectations to suppliers Collate and review supplier self assessments/third party auditsSupplier engagementRemediation programsProgress reporting to board/senior managementBusiness case
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Best Practices:● Make the links (national, regional, global,
inter-departmental)● Create cross-functional working group● Get senior leadership endorsement● Review responsibilities, resources and focus
regularly● Input from external stakeholders● Start with a pilot? Then roll-out
How Does this Fit in Your Organization?
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© Assent Compliance 2016
● ETI Ethical Procurement for Health: Workbook http://www.ethicaltrade.org/resources/ethical-procurement-health-workbook
● BMA ‘Is this Ethical Procurement’ feature: https://www.bma.org.uk/features/isthisethicaltrade/
Additional Resources
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© Assent Compliance 2016
[Webinar] Chapter 3: Looking ahead: Human Rights Reporting and AccountabilityTuesday, August 23rd | 1PM
Upcoming Educational SummitsOctober 20, 2016 | ChicagoNovember 17, 2016 | BostonFebruary 8, 2017 | San Jose
Joint Materials Management Conference with Tetra TechDecember 1, 2016 | Chicago
Upcoming Events: Webinars & Conferences
More details to come at:www.assentcompliance.com/events
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© Assent Compliance 2016
Q&A Discussion
Questions?
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