INTEGRATION OF DUE DILIGENCE IN YONGO EUROPE

Sustainability must be embedded in our culture and our daily decision-making, at all levels of the company, in order to achieve the goals Yongo Europe has set for the present, and for the future.

Yongo Europe has established efficient processes, clear responsibilities and a direct reporting line to implement sustainability in the organization and along the supply chain. These are the measures to ensure the implementation of sustainability holistically and to reach every business level of the company.

Active due diligence is practised when sourcing new factories by their agents or purchase managers. A Producer Self Assesment Sheet is provided and requested for counter signature. Together with proof of compliance status (Amfori/BSCI, Sedex or other international standards) the new factory will be visited by the purchase/compliance manager during frequent travels. When sitting together and talking face-to-face with the Managing Director and compliance manager Yongo Europe judges actual performance on several areas of compliance and starts up a Corrective Action Plan CAP) on those non-compliance issues or low-rated performance areas (according Amfori/BSCI audit report).

ASSESMENT AND PRIORITIZATION OF BIGGEST RISKS IN THE SUPPLY CHAIN

Risk management

Due diligence is a process to identify risks and manage actual and potential adverse impacts in Yongo Europe’s own operations and supply chains. Through this method Yongo Europe tries to prevent, diminish and eliminate risks in the supply chain. When Yongo Europe identifies negative impacts in the supply chain on both people and planet, Yongo Europe takes responsibility to mitigate and account for them.

Due diligence not only is critical to compliance with labour or textile standards – it goes beyond the limitations of those standards. Due diligence is an on-going process that should be carried out for every order, production location, material and process. This is important because risks or harm may change over time. Due diligence is flexible and based on prioritisation, required of all enterprises, big or small, and includes looking at purchasing practices as well. Yongo Europe identifies and priorities 3 potential risks in their production countries Bangladesh, China, Vietnam and Indonesia.

1. Occupational health and safety
2. Raw materials
3. Living wage

1.Occupational health and safety
According to ILO Convention 155 a safe and hygienic working environment shall be provided, and best occupational health and safety practice shall be promoted, bearing in mind the prevailing knowledge of the industry and of any specific hazards. Appropriate attention shall be paid to occupational hazards specific to this branch of the industry and assure that a safe and hygienic work environment is provided for. Effective regulations shall be implemented to prevent accidents and minimise health risks as much as possible.
Physical abuse, threats of physical abuse, unusual punishments or discipline, sexual and other harassment, and intimidation by the employer are strictly prohibited.
Since 1973, Yongo Europe imports garments and textile products from Asian countries. From the start, management and purchasing have played an active role in the selection of and inspection of production locations. Since production has been shifted gradually to high-risk countries like Bangladesh, our purchase policy has been integrated in our general sustainability policy and, in co-operation with our major buyers, selection procedure of production locations based on social compliance has been implemented and developed.
The Rana-plaza disaster in 2013 made Yongo Europe realize that compliance processes should be intensified and an international sustainable platform was required to co-operate with partners in the chain. Membership of BSCI (today AMFORI) in 2014 was a logical follow-up of the compliance process which Yongo Europe initially practised. The next step was the membership of The Bangladesh Accord, an independent agreement designed to make all garment factories safe workplaces.

                                                    

Yongo Europe commits to the continuation of the Transition Accord in Bangladesh. In 2018 Yongo Europe signed the Bangladesh Transition Accord, with the aim to further strengthen the building and fire safety situation in Bangladesh. In the past 6 years the Bangladesh garment sector has much improved in building and fire safety, but also millions of Bangladesh workers have been trained on their rights to safe work. Yongo Europe appreciates the joint work of the signatories of the Bangladesh Accord and fully supports the aim to continue the work. Yongo Europe stands behind their new commitment under the Transition Accord to finalize the work of the first Accord, but also fully supports the Remediation Coordination Cell (RCC), a body from the Government of Bangladesh that will focus on managing the remediation process for garment factories, to be in a state to professionally take over from the Accord. Yongo Europe does not want to leave while a safe and responsible transfer to a competent national authority is not safeguarded. Yongo Europe is certainly aware of the hurdles that all parties involved have to take, as the negotiations regarding the graduate transfer of responsibilities back to the Bangladesh Government are ongoing. Yongo Europe has confidence in the work of the Accord Steering Committee, the Government of Bangladesh, the ILO and the good will of all concerned parties in their alignment, and hopes the negotiations will lead to a solution for the safety of workers. However, Yongo Europe realizes that there is still the possibility that there will be no extension and the Accord may not be allowed to further operate in the country. In the case of an discontinuation of the Transition Accord, the parties involved will have to re-consider the steps they will take. Yongo Europe would be prepared to join these efforts . As a brand, Yongo Europe hopes the hand-over of the work of the Accord to the Bengali Government will be successful. Yongo Europe confirms hereby that they continue to participate in the Transition Accord with the aim to complete the next term of 3 years.



2.Raw Materials
The Material List of the Agreement on sustainable Garment and Textiles (AGT) gains insight of the raw materials and mainly the high percentage of cotton in the production process. It reaches over 80% in our annual report of metric tons. With the knowledge and expertise of the long tradition of importing garments Yongo Europe also realizes the big impact of cotton on the environment and on human beings. There is a big negative effect and impact of conventional cotton due to the extensive use of pesticides, water and land.
For the next 2-3 years Yongo Europe has set a goal in their Action Plan 2018-2019 to have 5% of the product range made out of organic or bio-cotton. Further investigation is required which ‘label’ is suitable for our market as many certifications like GOTS, BCI, EKO, OE-100 are usuable. The question is whether the customer/consumer is willing to pay a higher price for clothes made of non-convenantional cotton; Yongo Europe considers this a major challenge in a price-aggressive market.



3.Living wage
According to ILO Conventions 12, 26, 101, 102 and 131 wages and benefits paid for a standard working week, overtime hours and overtime differentials shall meet or exceed legal minimums and/or industry standards. Illegal, unauthorised or disciplinary deductions from wages shall not be made. Supplier companies are further encouraged to provide their employees with adequate compensation in situations in which the legal minimum wage and/or industry standards do not cover living expenses. A living wage should be earned in a standard working week (no more than 48 hours) and allow a garment worker to be able to buy food for him/herself and family, pay the rent, pay for healthcare, clothing, transportation and education and have a small amount of savings for when something unexpected happens. In this context, living wage has become a major topic over the last years and Yongo Europe has integrated this issue in her compliance strategy. Living wage is a tough subject that won’t be easy to tackle and be solved in an easy and satisfactory way at short pace. More knowledge of this issue has been collected by Yongo Europe by joining the AGT workshops as well as consultation of stakeholders in this field. An important initiative of AGT members to support the raising of the minimum wage in the Bangladeshi garment sector has (along others) resulted in an increase of 50% effective last December 2018 (from 5300 takka to 8000 takka = $95 per month). According to Asia Floor Wage the living wage standard in Bangladesh is 37661 takka per month (2017). Taken into account the complexity of the issue with political, cultural and economic factors involved Yongo Europe has set a long-term strategy on this particular goal in their Action Plan 2018-2019.

PREVENTING OR REDUCING NEGATIVE IMPACT IN THE SUPPLY CHAIN

As a buying company of garments and sourcing from high-risk countries Yongo Europe is aware of the risks in the supply chain. In order to manage the risks, moreover prevent the risks that are caused by the business, Yongo Europe needs to have insight in all potential risks. Yongo Europe therefore asks all suppliers to notify of any risk of adverse impacts relating to human rights, labour rights, animal welfare and environmental hazards during the manufacturing, transportation and distribution of our products. By addressing any potential risks in the supply chain, in collaboration Yongo Europe can decide which actions are required to reduce these risks.


Commitment

We are committed to support our suppliers to meet the required labour rights standards:
• Continuously working to improve our policies and practice to enable our suppliers to be able to meet their commitments as outlined in this code of conduct.
• Treating suppliers with respect and consideration in all our dealings and communications.
• Communicating clearly, promptly and accurately on all issues concerning orders.
• Never negotiating a price that is below the cost of production, as this will likely impact on the wages and working conditions of workers.
• Staying with our current supplier if a higher price will ensure decent wages and working conditions for workers, rather than moving our business elsewhere purely on the basis of price.
• Placing orders with lead times that do not trigger excessive working hours or sub-contracting.
• Refraining from changing orders repeatedly and with short notice. If changes are unavoidable, amending target delivery times accordingly.
• Providing material and practical support to our suppliers in striving to meet their obligations under this code of conduct.
• Sharing the cost of implementing and monitoring improvements in working conditions.
• Taking pay and working conditions of workers into consideration when reviewing our business relationship, rather than ending a business relationship purely on the grounds of price or quality

Together, we should:
• Carry out risk-based due diligence to identify, prevent and mitigate actual and potential adverse impacts and account for how these impacts are addressed.
• Avoid causing or contributing to adverse impacts on matters covered by the OECD Guidelines, through our own activities, and address such impacts when they occur.
• Seek to prevent or mitigate an adverse impact where we have not contributed to that impact, when the impact is nevertheless directly linked to our operations, products or services by a business relationship.
• Strive for best-practice performance throughout all activities involving our operations, products and services

GRIEVANCE MECHANISM

A grievance can be defined as any concern, unhappiness or discontent that a worker might have in the workplace. Grievances can be related to:
• Infrastructure (e.g. the working room does not have sufficient lighting or ventilation; the space assigned to the worker is not sufficient to safely conduct the work)
• Personal relations (e.g. a supervisor has used physical or verbal harassment; there is a conflict between co-workers)
• Contractual rights (e.g. payment is systematically delayed; there are illegal deductions; overtime is not paid in premium rate or it is paid in a lower amount than initially agreed)
• Human and labour rights (e.g. a worker has suffered discrimination based on gender; religion; place of origin; a worker has been punished because of attending a trade union meeting; the water available during working time is not drinkable)
• Others: customary rights (e.g. requesting time to pray or to participate in community activities)

Yongo Europe commits to follow the UN Guiding Principles on Business and Human Rights. In order to meet the responsibility to respect the human rights Yongo Europe institutes a clear policy commitment as stated above.

The implementation and effectiveness of the grievance mechanism is part of the Amfori/BSCI audit scope. Yongo Europe has recently introduced a Producer Self Assesment sheet where, among others, producers register how workers and their representatives are involved in workplace issues and how information will be exchanged among management and workers.

Agents and business partners of Yongo Europe have obligation to notify and address all kind of abusive situations; they are the eyes and ears in the field.

INVOLVEMENT OF STAKEHOLDERS

Stakeholder consultation is one of the major instruments to bring due diligence into practise; Yongo Europe acknowledges the importance of the stakeholders’ contribution in signalizing risks (at local production side) besides the audit reports or feedback from agents/local partners.

Yongo Europe has actively approached specialists and taken consultancy of CNV-International in a non-compliance issue with one of their RMG-producers. As reported in Action Plan 2018-2019, the social dialogue has been started up and step by step factory management tries to make improvements by training, participating in workshops and creating facilities for workers. Due diligence, an on-going process.

DUE DILIGENCE IN PRACTISE

Yongo Europe enters the fourth year of AGT process and in the past 3 years Yongo Europe has been working hard to implement the goals and level up the compliance strategy. What did Yongo Europe achieve so far:

• Compliance has become a topic of conversation during our meetings with agents and producers and is not a forbidden word anymore
• Signatory of the Bangladesh Accord and active support of the continuation of the Accord, see link.
• Participation in workshops Due Diligence, Transparancy Risk Management, Living Wage among others
• Publication of Producers Location List
• Nomination of one of our China dying mills to join the “Dye House Improvement Program”
• Addressing a non-compliance issue of one of our RMG producers consulting with our stakeholders
• Active monitoring of auditing processes, taking RSP, analyses of scores in BSCI/Amfori reports on single Performance Area (PA) and discussing with agents/compliance managers how to realize improvements
• Procedure of selection/nomination of new suppliers has been sharpened and is judged on state of compliance/certification as well as outcome of Producer Assessment Sheet
• First mapping/evaluation of Tier-2/3 suppliers
• Inventory of organic cotton, BCI, GOTS and Oekotex suppliers
• Updated our website on CSR policy.
• Introduction of Clevercare logo in our care labels
• Reduction of packing materials, mainly plastics
• Renewal of our Supplier Manual

In conclusion, Yongo Europe recognizes the importance to communicate about their stance on Corporate Social Responsibility in a clear and transparent way. In case you would like to support us by giving your suggestions and advice, or even in case you have complaints or questions, feel free to contact Mrs S.Y. Hwang or Mr F. Bruin at info@yongo.com.