Kevin Thomas, Director of Advocacy, Maquila Solidarity Network
Over the past decade, newspapers and magazines, websites, commercial services and non-governmental organizations (NGOs) have published all sorts of indices which rate, rank and measure company progress on corporate social responsibility (CSR) issues. Some of these focus on environmental issues, some on broad social and environmental performance, and some on internal governance and employee satisfaction.
Can these ratings really tell you which companies are better at respecting labour rights than others? Can a
labour rights rating help you decide where to buy clothes, or where to invest your retirement savings?
The short answer is “maybe”. A rating can tell you some things about a company, but it depends on what you want to know. When consumers, investors and others support or avoid companies based on their relative ratings on key indicators, it can help to drive changes. For that to work well, however, depends largely on the design and implementation of the rating system itself.
Can CSR ratings help improve labour practices in global supply chains?, a new paper published by the Maquila Solidarity Network (MSN) and the Project on Organizing, Development, Education and Research (PODER), examines the potential of rating systems to drive improvements in supply chain labour practices. Through interviews with CSR experts, representatives from companies like Levi’s, Gap and others that have been rated on supply chain labour issues, labour rights advocacy groups, and rating system developers, the paper highlights some key challenges facing rating systems and how some rating systems have tried to overcome, or at least minimize, those challenges.
As organizations concerned with the rights of workers in global supply chains, MSN and PODER have paid close attention to efforts to rate companies on their supply chain labour practices. Can CSR ratings help improve labour practices in global supply chains? is our contribution to the debate on the role, value and effectiveness of rating systems.
Although MSN and PODER are clear that none of the rating systems out there right now are perfect, some are better than others, and understanding how these systems work will help you to tell the difference.
Although we provide a longer list of questions for rating systems designers and labour rights advocates in the full publication, we’ve developed a short-list of five questions for consumers and investors to ask themselves about a labour rights rating system before deciding if it’s giving them the information they need to make informed choices:
1. Do you know what the rating system is measuring?
Is it measuring whether the company has management systems in place to identify and correct labour rights violations? Is it rating whether the company has made formal commitments to respect labour rights and/or address specific issues? Are serious efforts being made to incorporate data on actual working conditions in the ratings?
2. Does the rating system give more weight to the most important issues?
Are the indicators weighted to give more points for more substantial commitments on critical issues? Are issues of most concern to you given sufficient weighting? Are some key issues lost in ratings that consolidate a number of related issues?
3. Do you know where the rating system gets its data?
Does the rating system depend solely on what is reported by the company? If so, is that information publicly available or is it provided on a confidential basis? Does the rating system also use other more independent sources of data and, if so, how reliable and credible are those sources? Is the data used relevant and sufficient for the indicator being measured? Are the sources reliable and credible?
4. Is the rating agency credible?
Do you trust the organization(s) or individuals doing the rating? Who funds them? Are they truly independent from the companies being rated or are there some potential conflicts of interest? Do they have expertise and experience on the issues being rated? Is there any mechanism for oversight by labour rights experts, or an opportunity for interested parties to challenge the ratings?
5. Is the rating up-to-date?
How old is the data being used for the ratings? How often is it updated?
If you’d like to learn more about rating systems, how they work and how they could work better, read all about it in Can CSR ratings help improve labour practices in global supply chains? a new discussion paper from MSN and PODER, available here: