MFA FORUM STRATEGY IMPACTING RESPONSIBLE COMPETITIVENESS IN THE APPAREL

MFA FORUM STRATEGY 2008-2010 IMPACTING RESPONSIBLE COMPETITIVENESS IN THE APPAREL AND TEXTILE INDUSTRY EXECUTIVE SUMMARY SEPTEMBER 2008 MFA FORUM C/O ACCOUNTABILITY · 250-252 GOSWELL ROAD, CLERKENWELL EC1V 7EB, UK TEL. +44 (020) 7549 0400 · FAX +44 (020) 7253 7440 · EMAIL MFAFORUM@ACCOUNTABILITY21.NET August 26, 2008 MFA FORUM STRATEGY: IMPACTING RESPONSIBLE COMPETITIVENESS IN THE APPAREL AND TEXTILES SECTOR The Executive Committee of the MFA Forum is pleased to present the proposed strategy for the Forum. It has been developed over the last three months, based on a review of progress, a reappraisal of the context of the Forum’s work, and an assessment of our strengths and weaknesses. It draws in particular from the second ‘Participant Voices’ exercise, the full results of which are submitted as a separate report, and extensive discussions by members of the Executive Committee, who are drawn from the Forum’s key constituencies. The Strategy has been prepared for submission to the Forum’s participants at the international Convening on 8-10th September 2008 in New York. Once agreed in its final form, it is intended to serve for the period up to 2010, subject to an annual review of progress and updated proposals presented at our annual Convenings. The Strategy document is extensive, providing considerable contextual and evaluative material, as well as a summary of the rationale for the Forum’s approach. With this detail, it is intended to be informative and helpful to those with less in-depth knowledge of the Forum, as well as those most directly involved in its work. For those wishing to focus on the core of the Strategy’s proposals, a short, stand-alone Executive Summary has been provided, which also provides signposts to the relevant sections within the full Strategy paper. The Forum exists to advance responsible business practices in the apparel and textiles sector; specifically improved conditions for workers in across its global supply chains. Its potential for success lies in its participants, which include many of the most important public and private, commercial and non-profit institutions that will shape the sector’s future. These participants work together through the Forum because of their belief that a collaborative approach, embodied in the Forum’s Collaborative Framework, can mobilize the necessary mixture of public policy interventions and changes in business behavior needed to provide decent work in a viable and vibrant garment and textiles sector. But the Forum’s success is in no way automatic or guaranteed. MFA FORUM 2 STRATEGY - SUMMARY The success of its efforts is challenged by the profound changes sweeping the sector. Some are sector specific, including those associated with the end of the Multi-Fiber Arrangement. Others arise because of broader changes to the global economy impacted for example by rising energy costs, the growing importance of Asian markets and businesses, and now also the emerging global recession. Faced with this increased complexity, the Strategy’s core proposal is to consolidate its work in the countries in which it is already engaged, and focus on delivering demonstrable impacts on workers’ lives. The need is not to develop new programs and initiatives, but to improve our effectiveness on the ground; by streamlining how we working, by being more focused on outcome delivery, and by strengthening the Forum’s governance to ensure that these changes are made in a timely and effective fashion. The Executive Committee recommends that the Forum adopt the proposals put forward, both formerly at the forthcoming Convening in New York, but more importantly in the practice of our collective work going forward. Sincerely, Dr. Simon Zadek Forum Convenor, Chair of Executive Committee Chief Executive, AccountAbility MFA FORUM 3 STRATEGY - SUMMARY 1: The MFA Forum: Towards Consolidation Pages 14-23 The MFA Forum exists to advance responsible business practices in the apparel and textiles sector; specifically improved conditions for workers in across its global supply chains. Its potential for success lies in its participants, which include many of the most important public and private, commercial and non-profit institutions that will shape the sector’s future. These participants work together through the Forum because of their belief that a collaborative approach, embodied in the Forum’s Collaborative Framework, can mobilize the necessary mixture of public policy interventions and changes in business behavior needed to provide decent work in a viable and vibrant garment and textiles sector. MFA Forum: Current operating structure and activities MFA Forum Participants; Set strategy and policies, appoint ExCo Implement strategy through working groups. Executive Committee Responsible Transitions Chair: C. Morris (Nike) Bangladesh Chair: P. Dearman (Tesco), Buyers’ Group, Chair: P.Dearman (Tesco) and M.Lorentzon (H&M) Multi-stakeholder Forum Bangladesh (MFB) – local MSI Purchasing Practises Chair: Gap Inc. Lesotho Chair: Neil Kearney (ITGLWF) Lesotho Govt led Inter-ministerial Task Force Americas Chair: A. Walker (Levi Strauss), Mexico sub-group, Chair Morocco Engagement currently led by Secretariat, Morocco buyers’ group ILO Bi-Partite Committee Romania Engagement currently led by Secretariat Supports, facilitates Secretariat MFA FORUM 4 STRATEGY - SUMMARY The MFA Forum has entered its Consolidation Phase (2008-2010). This is the Forum’s third phase, following on from its early Innovation Phase (2005-6) and the second its Scaling-Up Phase (2006-2007). It will now concentrate on the systematizing its activities in order to deliver impacts and learnings that can be incorporated into its own activities and those of other initiatives and institutions. An effective strategy for the Consolidation Phase is needed to ensure mission-aligned focus, efficiency and accountability in achieving well-defined goals to the satisfaction of participants and broader stakeholders. This does not mean a fundamental shift in the Forum’s approach. What is required is a hard-nosed look at what is needed, what should be jettisoned or changed in the light of learnings and changing context, and how best to strengthen the Forum’s impact in its core mission of promoting responsible competitiveness in the apparel and textiles industry. 2: Reality testing our assumptions Pages 24-31 The proposed strategy is based on learnings from our work to date, and informed by Executive Committee discussions, the results of the most recent ‘Participant Voices’ Survey, and informal feedback from Working Groups and individual participants. Four key propositions have underpinned the Forum’s design and activities to date: (a) That the end of the MFA posed a major risk to the livelihoods of millions of people and the future of the businesses, sectors and economies and communities in which they were employed and lived. (b) That collaboration, based on an appreciation of the inter-dependencies of interests and competencies between business, public institution and civil and labor organizations, is required to improve workers’ conditions. (c) That sustained improvements in workers’ conditions requires a viable and vibrant apparel and textiles sector, and that such improvements should in turn be a driver of enhanced competitiveness at both company and national levels. (d) That the disruption caused by the end of the MFA that has created risks to workers and the businesses in which they worked could be both mitigated, and possibly taken advantage of in establishing a basis for more responsible competitiveness in the sector. These four propositions have been tested in practice over the Forum’s three years of work to date, and a review of this practice reveals the following about them that should inform the Forum going forward. (a) Our core, activating concern has proved correct that many nations and communities supplying MFA FORUM 5 STRATEGY - SUMMARY garments and textiles are under threat following the end of the Multi-Fiber Arrangement. However, the predicted ‘meltdown’ has for many supplying countries not happened, partly because of ‘China safeguards’, rising labor costs and domestic demand in China, and the supply diversification strategies of buyers China has not happened, many nations and communities supplying garments and textiles have suffered, or remain precarious following the end of the Multi-Fiber Arrangement. Price pressure in both ‘winner’ and ‘loser’ countries and downward pressure on labor standards and wages are both reported to have intensified. (b) Our experience suggests that enhancing competitiveness through more responsible business practices can be achieved, illustrated by the case of Lesotho in the immediate aftermath of the end of the MFA, and also we hope in our work in Morocco and other countries. Unfortunately, however, we also see cases of improved competitiveness based on irresponsible business practices, notably reduced real wages and restrictions in trade union activities. Whilst ‘brand buyers’ have considerable influence over the characteristics of their supply chains, this is not providing sufficient leverage to advance responsible competitiveness across the sector, partly because of buyers’ fears of inadequate supplies in an intensely competitive environment, and partly because of the increased importance of ‘value’ buyers and national and regional brands less concerned with demonstrating responsible practices. (c) Our experience suggests that collaboration can be effective in advancing improved workers conditions as part of a competitive strategy when it supports ‘home grown-home owned’ activities based on open and entrepreneurial participation. Participating buyers, civil and labor organizations and public institutions report many cases of improved engagement, understanding and joint activities arising through the Forum’s in-country, collaborative approach. However, the Forum has encountered significant constraints to the effectiveness of its approach, and in some instances negative unintended, consequences, notably: Inability to offer any credible threat where the ‘carrot’ of the Forum’s engagement does not deliver adequate results (see (b) above). Uneven availability and quality of leadership with resulting weaknesses in delivery, often because of historical patterns of antagonism, vested interests that prevent effective collaboration, weak public institutions or excluded civil and labor organizations These obstacles to action have left the Forum’s participants and stakeholders frustrated and disappointed including, importantly, in-country stakeholders. (d) Much has been achieved through international participation based on the voluntary energies that has driven a collective vision of what was possible, individual and collective leadership, and enthusiasm and perceived self-interest. Furthermore, institutions have been catalyzed by MFA FORUM 6 STRATEGY - SUMMARY the ground-breaking decision to have open participation rather than membership and involvement based on a broad commitment to collaborate rather than any binding or monitored agreement to a code. Over time, however, this organizing approach has generated unintended consequences that now need to be overcome, notably: Slow progress, accentuated by a lack of clear in-country outcome objectives, has combined with the above design features to fuel distrust between some participants of inadequate commitment in practice. Entrepreneurial leadership is hard to sustain over extended time periods, resulting in instances of a loss of energy, drive and focus, which has in turn not been substituted for by drive from the Forum’s governing group or Secretariat, who are by design only empowered to facilitate rather than lead. 3: Strategic orientation Pages 32-36 Achieving demonstrable results at the country level is the Forum’s bottom line in order both to achieve positive development outcomes, and demonstrate that responsible business practices, underpinned by proactive public policy and an engaged civil society, can be aligned to the demands of competitiveness in global markets. Our review of progress and context, summarized above, shows that this is possible, but challenging in the face of complex political and economic pressures, fiercely price-competitive markets and unstable and uneven brand benefits from demonstrably responsible practices. For the Forum to have the best possible chance to deliver against the promise requires it to function more effectively in the face of such challenges. With this in mind, the core proposed strategic orientations for the Forum are: Consolidate: to strengthen the Forum’s in-country program around its existing commitments to work in Bangladesh, Morocco and Lesotho, as well as some level of engagement in Romania and a multi-country engagement in the Americas. No additional country programs will be initiated, except in circumstances where one or more existing country programs are discontinued, or where specific resources are mobilized to engage in additional countries. Outcomes: to focus in-country activities on achieving tangible and sustainable gains to workers, enabled by applying cross-cutting activities to in-country engagements, so maximizing focus and gaining synergies, and aligning improved responsible business practices to demonstrable enhancements in competitiveness. Learning: to systematize the Forum’s learning and its communication, both across its own MFA FORUM 7 STRATEGY - SUMMARY activities, especially between in-country programs, and to other initiatives and interested parties wishing to advance comparable collaborative approaches in the apparel and textile or other sectors. The proposed strategy does not represent a major departure of the Forum’s philosophy or aims or scope of engagement, however specific strategic proposals are outlined below: MFA FORUM 8 STRATEGY - SUMMARY Strategy: Key Proposals 1) Stabilise in-country activities at their current levels, in terms of their volume, and where appropriate the specific country engagements. The specific country engagements may change however, where: Existing In-country programs have completed what they set out to do, or Working Groups and/or Executive Committee conclude that conditions render the Forum unable to progress against pre-defined outcomes that benefit workers. ii. New country engagements recommended to the Executive Committee are accompanied by additional resources ensuring that on-going programs do not suffer as a result. 2) Maintain focus on improving worker conditions, whilst allowing for linkages to other issues where these would be mutually reinforcing in terms of ‘responsibility’ outcomes and business needs. This would be especially focused on activities of corporate participants related to: i. Productivity-growth linked to improved working condition. ii. Efficiency-related activities, for example linked to integrated supply chain management practices. 3) In-country programs only to be continued if outcome-focused plans are developed and accepted by the Executive Committee within three months of the September Convening. These plans will be: i. ii. iii. iv. v. vi. Outcome-focused with specific observable and measurable targets, using our Impact Framework. Based-on a budgeted work plan, with clear responsibilities, for the planning period to 2010. Resourced with local funding through development agencies and business support, after the resource needs of the crucial first two years’ work (mapping, scoping and first convening) have been met by the MFA Forum. Informed, where relevant, by the Forum’s cross-cutting work and resources, especially the ‘responsible transition guidelines’. Owned by the Working Group and agreed by the Executive Committee. The basis of regular reporting to the Executive Committee and the annual Convening. i. 4) Apply cross-cutting activities to existing in-country engagements, so maximising focus and gaining synergies. This would in particular be applied over the period to the Responsible transition guidelines and Purchasing practices work. 5) Strengthen learning within the Forum, and between the Forum and other relevant organizations and collaborations by: i. Strengthening ongoing learning and communication processes such as international convening, inter-group communication and research clearinghouse function. ii. Developing a participants web space as a platform for ongoing collaboration and accessing common resources, and information. iii. Commission an end of period learning and evaluation process, to draw out generally applicable learning from the forum, and evidence of its application elsewhere. iv. Broader dissemination beyond the apparel and textile sector to be taken forward separately by individual organizations within the Forum that have a wider policy interest. MFA FORUM 9 STRATEGY - SUMMARY 4: Mobilizing for success Pages 37-42 Achieving this three-part strategic orientation means a shift, above all, from an underlying approach where the energies of participants are effectively facilitated by the Forum an approach that is more outcome-defined, leadership directed, and rigorous in its scrutiny of participants’ performance. In order to achieve this the following enablers must be put in place: - Collaboration: the Collaborative Framework must be made to be more central in programs, with participating organizations’ specific roles and responsibilities more clearly defined, and shared expectations of outcomes worked through. Just getting players to the table is not enough as a plan or an outcome. - Success. Working Groups have to define success in ways that are realistic, understood and accepted within the Group, and to which they can be held to account. Outcomes have to be defined in terms of impacts on workers’ situation. - Resources. Building on the success in this sphere, participant contributions to complement the funds from DfID and SIDA need to be secured for the two year period 2009-2010, amounting to a minimum of US$750,000, assuming success in securing an extension of the USAID grant extension of circa US$200,000. - Leadership: making all this possible requires stronger leadership mandated to insist on outcomes being defined and pursued. This requires strengthened governance and greater leadership on the part of the Chair’s of the Working Groups, and a stepwise shift in the role in the Secretariat. Again, specific enabling proposals are outlined below: MFA FORUM 10 STRATEGY - SUMMARY Enablers: Key Proposals 6) Collaborative Framework will remain our core principle, and to this end the following will apply or be developed: i. Wider dissemination of Framework to participants and other stakeholders. ii. Activities to increase engagement of specifically civil society organisations, but also more international and country-level businesses. iii. Allowing specific in-country variations depending on context, as determined by relevant Working Groups. 7) Improve planning and accountability for success by: Adopting the ‘impact framework’, already developed by the Forum, as a basis for activity planning, and reporting to the Executive Committee and the Convening. ii. Provide annual performance, participant voice, and financial report to the Convening, which is subsequently published. 8) Secure the Forum’s core resourcing to the end of the planning period, end-2010, by reaching the following agreements: i. Corporate contributions for the two-year period 2009-2010 totalling £300,000. ii. USAID grant extension of circa $200,000. 9) Strengthen working groups ability to consistently focus on outcomes in their design, activities and self-assessment and reporting by empowering Chairs through: i. Membership of Executive Committee. ii. Enhanced support from Secretariat. iii. Resourcing to seed in-country work and support core functions, as available through the core budget. 10) Strengthen overall governance by: i. ii. iii. iv. v. vi. Expanding the Executive Committee to include all Chairs of Working Groups, so extending its knowledge and reach. Extending the term of office of sector representatives on the ExCo to two-years, to allow for greater continuity. Mandating the current Convener to remain in place for a further two years. Creating a sub-committee of working-group chairs and a sub-committee on finance. Subjecting the ExCo to an annual review during the Convening. Publishing all ExCo papers and minutes through password protected website, available to all members. i. MFA FORUM 11 STRATEGY - SUMMARY