ACT members adopt accountability & monitoring framework on purchasing practices
In September 2019, ACT adopted a joint due diligence framework for member brands to ensure that their purchasing practices facilitate the payment of a living wage as set out in the ACT Memorandum of Understanding. It is the first time in the history of the global garment and footwear sector that international brands have collectively agreed to be held accountable by a Global Union Federation for changing their purchasing practices.
Based on comprehensive consultations, ACT has adopted global commitments of all member brands to change their purchasing practices in five areas that have been identified as essential for providing suppliers with the economic space to pay for negotiated wage increases and improvement of working conditions.
The Accountability and Monitoring framework operationalizes the ACT purchasing practices commitments. It is based on 4 pillars:
- Common achievement indicators that apply to all ACT member brands
- An internal Purchasing Practices Self-Assessment (PPSA) by brands
- An anonymous survey among suppliers (Purchasing Practices Assessment/PPA)
- A confidential communication channel to raise complaints and/or concerns for suppliers and other stakeholders
This includes the adoption of the ACT labour costing protocol as the methodology for ensuring that all direct and indirect labour costs are included in costing calculations for negotiating the purchasing price.
Key elements of ACT labour costing protocol as part of the Accountability & Monitoring Framework include that:
- Brands will conduct labour costings in line with predicted wage increases as soon as the information becomes available or, where exact data is not available, the best estimate of an expected wage increase, and to incorporate this into purchasing prices.
- When other cost inputs (e.g. cost of fabric, energy costs, size of order) remain equal, wage increases will be covered through higher purchasing prices.
- Suppliers will not be expected to cover rising wage costs through unreasonable efficiency gains or reduced margins.
A protocol for responsible exit strategies as part of the accountability and monitoring framework is currently being developed.
Progress towards full implementation of the commitments will be measured annually. In 2020 both the brand-self assessment (PPSA) and the assessment by suppliers (PPA) will be rolled-out simultaneously for all ACT member brands and suppliers in ACT priority countries. The 2020 results together with further information collected through additional reporting and the confidential communication channel to raise complaints and/or concerns will serve as a baseline for the annual monitoring. The first ACT Accountability and Monitoring Report will be released in 2021.
The ACT accountability and monitoring framework offers a tool for brands to meet international due diligence requirements and become industry leaders on responsible purchasing practices. At the same time, it is the basis for building trust and effectively cooperating with manufacturers, trade unions and governments at country level to support the social and economic upgrading of the national textile, garment and footwear industry in ACT priority countries.