Corporate America's Sweatshop Police

Business backs an initiative on global working conditions

Can the same approach that businesses have taken to ensure worldwide manufacturing quality standards be used to improve quality of life for workers around the globe? That's the aim of a new initiative by the Council on Economic Priorities (CEP), a New York public interest group. CEP and a group of influential companies has come up with a scheme called Social Accountability 8000, or SA8000, which is designed to piggyback the ISO9000 quality-auditing system of the International Standards Organization, now used in 80 countries.

The SA8000 push, launched on Oct. 7, involves a broad spectrum of U.S. and foreign companies, including Avon, Eileen Fisher, Sainsbury, Toys `R' Us, and Otto Versand (which owns Eddie Bauer), plus labor and human rights groups and accounting firms KPMG-Peat Marwick and SGS-ICS. At the kickoff at Avon Products Inc.'s New York headquarters, the group approved an initial lineup of standards (table). Beginning next year, companies can apply to have the accounting firms certify that their factories meet those benchmarks.

OUTCRY. The CEP effort represents a potential breakthrough not just on sweatshops, but on common labor standards for the global economy as a whole. The companies involved are responding to the public outcry against sweatshops in the U.S. and abroad. They hope the standards will reassure consumers that the goods they buy aren't made by exploited workers. If enough companies sign up, it could spur improvements in global wages and working conditions more effectively than governmental trade pacts. "There are real problems around the world with child labor, low wages, and so on," says Fitzroy Hilaire, Avon's director of supplier development. "We're trying to come up with standards" to deal with these issues.

As with ISO9000, companies that want to comply with the CEP standards can apply for certification by an outside auditor. CEP has set up an agency to accredit the auditors. Most are likely to be accounting firms, which see a great opportunity for new business. But CEP also will approve auditing units set up by unions or nonprofit groups.

By early next year, the system should be up and running, says CEP President Alice Tepper Marlin. Companies that apply won't have to meet every standard right away. Instead, each factory will set a timetable to address deficiencies and document progress in fixing them.

Hilaire says that Avon plans to certify its 19 factories and ask its suppliers to do likewise. Toys `R' Us, which controls more than a fifth of the U.S. toy market, will ask its 5,000 suppliers to get their plants certified, too. Eventually, "they will have to be certified to sell to us," says Tom DeLuca, vice-president for imports.

The effort has plenty of skeptics. Human rights and labor groups worry that CEP audits, which companies will pay for, won't require real change in sweatshops. "We're concerned that CEP's monitoring process will be used as a cover by companies to reassure the public without doing anything different," says Mark Levinson, chief economist at the Union of Needletrades, Industrial & Textile Employees.

CONSUMER POWER. Indeed, his union has been battling over the issue on a task force on apparel sweatshops that President Clinton appointed in 1996. Last April, the task force came up with a code of conduct similar to the CEP standards. The apparel companies on the task force want accounting firms to inspect factories to make sure the code is followed. But the human rights and labor groups insist that they should have access to all factories, too, to verify that workers tell auditors the truth about working conditions. CEP's plan won't give these groups automatic access, although they can challenge a certification. "If this stuff isn't public, why should consumers believe it?" says a human rights representative on the apparel task force.

Can the CEP effort succeed where others have failed? Its standards are similar to those of the International Labor Organization, which governments have failed to enforce for decades. But CEP figures it has a better enforcement mechanism: a market of millions of consumers who will insist on SA8000-approved products.