Ethical trade is promoting decent working and environmental conditions in global supply chains. Ethical trade consists of the efforts made by enterprises to promote human rights, workers’ rights and environmental stewardship in their supply chains. Social responsibility in the supply chain, sustainable supply chain management and responsible trade are other terms used to describe such improvement processes.
Frequently asked questions
What, why and how? Ethical trade, social responsibility, benefits, obligations, guarantees, acceptance requirements and supply chains. The questions are often many, and many things can seem complicated and difficult to grasp. Here we provide you with a selection of frequently asked questions about ethical trade and social responsibility.
What is ethical Trade?
What is CSR/CR?
“Corporate Social Responsibility” (CSR) means that a business voluntarily integrates social and environmental considerations into its business activities in order to meet the needs of its stakeholders.
Various other terms are also frequently used, such as “Corporate Responsibility”, “Corporate Sustainability”, “Corporate Governance” and “Corporate Citizenship”. These are most often almost synonymous with CSR.
CSR has the following main characteristics:
- Responsible entrepreneurship.
- Voluntary initiatives which go beyond requirements imposed by law and contractual obligations.
- Activities which benefit employees, groups relevant to the business (including society at large), or the environment.
- Makes a positive contribution to relevant target groups, while at the same time avoiding negative impacts on others (for example the environment).
- Regular activities linked to corporate strategy, rather than individual incidents.
Why ethical trade?
IEH - Ethical Trading Initiative Norway’s work is based on the principle that trade promotes development if workers enjoy decent working conditions and environmental damage is minimised throughout the production process.
Today, global trade and production employs millions of workers who routinely face extreme overtime, work environments which are hazardous to health, and wages which barely cover living and food expenses. Gross forms of child labour and forced labour also occur, and some businesses engage in activities which cause severe environmental damage.
The causes of poor working and environmental conditions are often linked to poverty and weak national legislation.
National authorities have the main responsibility for ensuring compliance with human rights, workers’ rights and environmental standards. If a state lacks the ability or will to do so, it is wrong for businesses to exploit the situation at the expense of workers and the environment at the production site. According to UN Special Representative John Ruggie, companies have a responsibility to avoid contributing to human rights breaches, and to help to remedy such breaches, including in the supply chain.
Ethical trade is primarily the work companies do to help ensure that the goods they purchase are manufactured in accordance with internationally recognised standards relating to working conditions and environmental considerations. In practice, this often involves promoting compliance with local laws in producer countries.
What and who is IEH - Ethical Trading Initiative Norway?
IEH's goal is to strengthen its members’ efforts to promote decent working and environmental conditions in their supply chains, and to strengthen support for ethical trade.
Norwegian Church Aid took the initiative to establish IEH in 2000, along with Virke – the Federation of Norwegian Enterprises (formerly HSH), the Norwegian Confederation of Trade Unions (LO) and Coop Norway.
IEH is a member organisation for companies, organisations and public enterprises.
Being a member of IEH means tackling challenges in the supply chain and reporting openly on the status and progress of efforts. Membership involves a commitment to continuous improvement efforts, and secures access to courses, networks and forums for exchanges of experience, seminars and advice.
IEH - Ethical Trading Initiatve Norway is:
- a member organisation for companies, organisations and public enterprises
- a promoter in relation to its members and a promoter in relation to the Norwegian authorities, to encourage them to facilitate ethical trade in the private and public sectors
- a member of KOMpakt, the Norwegian government’s forum for promoting corporate social responsibility
- a member of the UN Global Compact
- formally independent of, but a close collaborator with, likeminded organisations and local experts in many producer countries.
IEH’s values are based on key UN and ILO conventions.
What does it cost to be member of IEH - Ethical Trading Initiative Norway ?
The subscription fee for IEH members is based on the type and size of enterprise. There are different fee structures for different kinds of enterprises (companies, organisations, public enterprises).
For companies, the subscription fee is a percentage of the company’s turnover, with a minimum fee of NOK 5,000 and a maximum fee of NOK 100,000.
You can easily calculate the subscription fee for your enterprise by using IEH's Subsciption fee calculator.
What benefits do members of IEH - Ethical Trading Intitiative Norway receive?
IEH’s aim is to provide member services which help to strengthen members’ efforts to promote decent working and environmental conditions in their supply chains.
The member benefits include:
- Individual advice. This includes written follow-up and advice regarding members’ annual report to IEH, advice on sources for risk assessments in producer countries, advice regarding local cooperation partners and advice on dealing with breaches of decent working conditions.
- Courses and training. IEH offers a portfolio of courses adapted to employees with different roles within a company. The courses are for members only, and are offered at cost price. IEH arranges separate courses for members’ suppliers in a number of producer countries. These supplier training events are free for our members' suppliers.
- Resources and tools. IEH members have exclusive access to a range of resources through the members' area on our website, including tools, templates, reports, analyses and best practice examples.
- Access to a national and international network of companies and experts. IEH's members have exclusive access to our members' forum where members meet to share experiences and learn about new developments in particular fields, regions or industries.
To what do IEH - Ethical Trading Initiative Norway members commit?
IEH members commit to supporting IEH's statement of principles, which means working actively to improve working and environmental conditions in the supply chain. Members commit to adopting their own ethical trade guidelines which are at least as comprehensive as the IEH guidelines. A key member commitment is to report annually to IEH on the status and progress of ethical trade efforts. The report is made publicly available. In addition, IEH's members also commit to paying an annual membership fee.
“Everyone” is talking about social responsibility – what is special about IEH - Ethical Trading Initiative Norway ?
Corporate social responsibility covers a number of areas such as socially responsible investment, recruitment and retention of staff, anti-corruption, community development, social entrepreneurship, as well as sustainable supply chain management for the production of goods and services.
IEH's core activity is ethical trade. Ethical trade is a voluntary initiative by enterprises to improve working conditions and environmental standards in their supply chains.
IEH takes the view that national authorities have the primary responsibility for protecting human rights and the environment. If states lack legislation in these areas, or the legislation functions poorly, businesses should not profit from this. In other words, everyone who imports or manufactures goods in Norway and abroad should have ethical guidelines in place, and should use such guidelines to impose requirements on manufacturers and suppliers.
IEH also represents unique cooperation between voluntary organisations, trade unions, companies and public institutions. These bodies may have conflicting interests, and clash on ethical issues. Through IEH, the members commit to constructive, targeted cooperation to improve production conditions in their supply chains, and can exchange knowledge and experience with other companies, organisations and local authorities.
Does IEH - Ethical Trading Initiative Norway have acceptance requirements for potential members?
IEH does not have acceptance requirements in the sense that companies, public bodies or organisations have to meet minimum ethical or social responsibility requirements to become members. This is entirely intentional.IEH's objective is to improve conditions in supply chains, not to give a stamp of approval to importers and manufacturers who already appear to be doing many things “right”. However, the absence of acceptance requirements does not mean an absence of requirements for IEH members. Members must demonstrate willingness to change, and must commit to working actively to secure improvements in their supply chains, and to reporting transparently on their efforts.
Does membership of IEH - Ethical Trading Initiative Norway guarantee that everything is fine in the supply chain?
No. IEH is not an assurance, verification or certification scheme. Membership of IEH is a way for enterprises to openly communicate their commitment to working actively to improve conditions in their supply chains, and an intention to do so through accessing the expertise available in the IEH community.
Members who fail to submit reports, fail to pay their annual subscription or otherwise grossly or repeatedly breach other obligations under the statement of principles shall be excluded from IEH.
Can members of IEH - Ethical Trading Initiative Norway be excluded?
Yes, members can be excluded from IEH. This is linked to the obligations which members assume upon joining (see questions three and four).
Membership involves no legal obligation other than the payment of the membership subscription fee. The declaration of intention which members sign when joining is not legally binding. However, it is a public declaration of a policy commitment to which members can be held accountable by their boards of directors and the general public.
Members who fail to submit reports, fail to demonstrate progress in their ethical trade efforts, fail to pay the annual subscription fee or otherwise grossly or repeatedly breach other obligations under the statement of principles shall be excluded from IEH.
Excluded members are able to re-apply for membership after a quarantine period (usually 48 months) upon satisfying the Board that they will not breach their obligations under the statement of principles.
How much time do IEH - Ethical Trading Initiative Norway members have to improve conditions in their supply chains?
Strictly speaking, IEH never achieves its objectives, as the aim is continuous improvement. That is why no deadlines are imposed in the declaration of intention which members sign. However, such deadlines are set in specific agreements between IEH and each individual member. Once one goal is reached, a new one is set.
What is SA8000?
SA8000 is the most well-known standard for certifying workplace conditions. If your manufacturer holds an SA8000 certificate, it means that external experts have approved the working conditions at the production site(s) in accordance with the SA8000 standard. The standard covers all key requirements in UN and ILO conventions relating to working conditions. More information on SA8000 can be found here.
What is ISO 26000?
ISO 26000 is an international standard that provides enterprises with guidelines for how to work with social responsibility, based on the following seven principles:
- Ethical behaviour
- Respect for stakeholder interests
- Respect for the rule of the law
- Respect for international norms of behaviour
- Respect for human rights
ISO 26000 is not a certifiable standard, but is a comprehensive set of guidelines based on the seven core subjects:
- Organisation governance
- Human rights
- Labour practices
- The environment
- Fair operating practices
- Consumer issues
- Community involvement and development
ISO 26000 covers a wide range of issues relating corporate social responsibility, and is not limited to sustainable supply chain management. Nevertheless, there is a large degree of overlap between the intentions of our Code of Conduct and Declaration of Principles both when it comes to the principles for social responsibility outlined in ISO 26000 as well as the core subjects in which enterprises are encouraged to work. More information about ISO 26000 can be found here.
How can we exercise control over our entire supply chain?
Global production takes place across national borders, and in independent production units over which Norwegian enterprises have no formal influence. Accordingly, enterprises are not expected to exercise full control over the entire supply chain straight away. It is normal to set priorities regarding which suppliers will be worked with more closely first. IEH - Ethical Trading Initiative Norway gives advice and has tools for risk and opportunity assessments to help members build an accurate risk profile for their supply chain.
How can we protect ourselves against child labour?
Norwegian company representatives are very unlikely to meet child labourers at production sites as they are often hidden from western buyers and/or work in an enterprises further up the value chain, with which the Norwegian business usually has no direct trading relationship. Norwegian businesses can make an effort to reduce the number of child labourers, by:
- selecting suppliers with a policy against child labour;
- cooperating with suppliers and/or local organisations to identify risks in the supply chain;
- providing financial support to organisations who work to combat child labour; and
- pay a price for the goods that enables the manufacturer to pay a decent wage to adults.
IEH - Ethical Trading Initiative Norway provides advice and guidance on preventive measures, and on how, and with whom, an enterprise can cooperate locally to make a constructive contribution to the fight against child labour.
Why do IEH - Ethical Trading Initiative Norway members have to adopt the IEH Code of Conduct?
The IEH Code of Conduct for purchases is based on internationally accepted ILO and UN conventions, and deals with risk of breaches of human and workers’ rights and production which is hazardous to the environment. By adopting ethical guidelines for procurement that are at least as comprehensive as IEH's guidelines, a company can be sure that its own code of conduct deals with the most relevant areas of risk. Identical ethical guidelines also ensures increased harmonisation, something which is in particular welcomed by manufacturers. Enterprises which are members of IEH are well aware that purchasing codes of conduct set out aims, not requirements which can be met overnight. This is why members commit to working towards continuous improvement.