The Gradient Index

In an attempt to provide investors and consumers with information concerning how well companies are performing in social and environmental activities, the Institute for Social and Ethical AccountAbility has also launched the Gradient Index, which uses four areas for rating and ranking organizations. These criteria and standards are expected to be endorsed by the NGO community in the near future. The four areas are:

• Corporate Understanding. ˜Understanding focuses on indications that a company truly understands the broad area of supply chain labor standards. Such indicators will include: corporate commitments to International Labour Organisation Core Conventions; membership of multi-stakeholder initiatives that contribute to organizational understanding (e.g., ETI, FLA, SAI); and the existence of senior representatives at an executive and nonexecutive level responsible for ensuring the organization s awareness of supply chain labor issues.

• Policy. ˜Policy examines companies explicit commitment to upholding rights identified by ILO Core Conventions. These conventions form the internationally accepted boundaries for corporate responsibility in this area and should guide corporate activity.

• Management Systems. ˜Management Systems assesses the processes and structures at operating levels that help to ensure labor policies are implemented and that labor standards are likely to be upheld. These will include: the existence of performance incentives that support good labor practice within buying teams ; the existence of performance incentives that support good labor practices for supply factory managers; the provision of funds or specialist advice to assist current or prospective suppliers with improving employment conditions; the communication of policies to sub-contractors and buying teams. Over time, further indicators will deepen understanding in areas such as: job-specific training to relevant business units (e.g. QA, buying etc); the inclusion of supply chain labor considerations in risk assessments; the inclusion of labor considerations in stock management and the inclusion of labor considerations in sales forecasting procedures.

• Performance and Monitoring. Lastly ˜Performance and Monitoring seeks evidence on the existence and quality of monitoring mechanisms for evaluating the impact of policies and management systems on supply chain labor standards. These indicators will include: the provision of a whistle -blowing mechanism for contracted workers; the extent of monitoring using internal, independent and trade union/NGO expertise; the existence/extent of monitoring beyond immediate suppliers. Projected future Performance and Monitoring indicators include: the quality of remediation procedures for compliance failures; the quality of monitoring; the quality of mechanisms for identifying high-risk facilities. ^{[18 ]}

^{[18 ]} Moving Up the Learning Curve ” Corporate Management of Supply Chain Labour Standards, Sustainability at www.sustainability.com/news/articles/core-team-andnetwork/John-Sabapathy-gradient-index-mar-02.asp.