Occupational safety and health in the supply chains

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Erika Ustailieva, TNO

Introduction

Current business and organisational practices have led to an increased importance of supply chains to business strategy as well as within national and global economies [1]. Nowadays, businesses increasingly rely on the outsourcing of parts of their activities and processes. Companies function and compete more and more on a supply chain level, in specific networks with their suppliers and service providers. This outsourcing trend and growing importance of supply chains has implications for the working conditions and health and safety of workers of both the supplier and the contracting companies. This article will present some general aspects of occupational safety and health (OSH) in supply chains and will examine the strategies and instruments used by companies to promote OSH practices in those networks.

Differences in supply chains in relation to OSH

There are two main supply chain networks or relationships between companies and the members of their supply chain that could be considered in terms of OSH What's OSH : the suppliers’ chain - a company and its suppliers of certain goods and materials, and the contractors’ (or contracting) chain - a company and its contractors and sub-contractors providing specific services such as maintenance, construction, cleaning or catering activities. Stakeholders, such as the government, non-governmental organisations (NGOs) and customers, affect both networks [2].The differences between those two networks and their relation to OSH risks are discussed in the sub-chapters below.

OSH in suppliers’ chain

The suppliers’ chain encompasses the flow of goods and materials. Companies are linked together through information, knowledge, materials and capital flows. A supplier is a party that supplies goods or services. A supplier may be distinguished from a contractor or subcontractor, who commonly adds specialised input to deliverables [2]. ‘The supply chain encompasses all activities associated with the flow and transformation of goods from raw materials stage (extraction), through to the end user, as well as the associated information flows. Material and information flow both up and down the supply chain. Supply chain management (SCM) is the integration of these activities through improved supply chain relationships to achieve a sustainable competitive advantage’ [3]. The supply chains (especially the global supply chains) can be quite complex and there might be multiple tiers. The OSH risks within the suppliers’ chain are often related to the lack of knowledge and good communication regarding the safe use of the products/materials and exposure to certain hazard. Also, purchasers of the companies often do not take into account the safety and health working conditions under which the respective goods or materials are produced.

OSH in contractor’s chain

While in the suppliers’ chain there is primarily a flow of goods and materials, the contractors’ chain comprises a flow of people and their services (i.e. contracting and sub-contracting). In this chain companies are linked together through information, knowledge, people and capital flows. Nowadays, companies tend to carry out only core functions, outsourcing subsidiary or specialised functions like cleaning, maintenance, construction, waste disposal or catering to other companies - the 'contractors'. Usually the definition of this kind of relationship is designated as ‘outsourcing’. Therefore, the contractors are external companies, organisations or individuals that have a contractual relationship with the client. The client (or host company) is the party that outsources the task. Not only do host companies hire contractors, these contractors can hire sub-contractors and a chain of companies emerges. Thus, a sub-contractor is a third company contracted by a contractor. The executed work takes place mostly at the premises of the host company/organisation [4] [2]. This work is most of the time of a sporadic nature, which implies that employees are only temporarily needed. Specialised companies and their employees are hired to perform the work better, faster and usually cheaper.

OSH risks in the contracting chain are well explored in a number of EU-OSHA reports [5] [6] [7] [8] [9]. The problems regarding the safety and health performance of contractors may be aggravated by a lack of skilled and experienced labour, by the low profile of the small enterprises involved and by the low frequency with which they are inspected, leading to less secure and also more likely to be illegal employment, where workers have limited access to trade unions and other forms of collective representation, organisations that can promote better health and safety and more adequate risk management systems [10]. Furthermore, since contractors perform their job in the client’s facilities, they can be exposed to unknown hazards, like biological agents, chemical products, asbestos or noise. The other way round, workers of the client company can also be exposed to hazardous situations derived from the work performed by contractors [2].

Role of the focal companies in promoting and applying good OSH practice in suppliers’ and contractors’ chains

Suppliers’ or contractors’ chain is most often ruled or governed by one company or organisation, the so-called ‘focal’ company. The focal company forms the centre of the supply chain and is provided with goods/materials from suppliers and concludes contracts with contractors who act as service or production providers. Within the suppliers’ chain the focal companies, according to Seuring and Müller [11], are those companies that usually [1] rule or govern the supply chain, [2] provide the direct contact to the customer, and [3] design the product or service offered. Focal companies of supply chains might be held responsible for the environmental and social performance of their suppliers. This is especially the case for brand-owning companies [12]. For example, some fashion department stores were held responsible for occupational health issues at their suppliers in India [13], a NGO’s research has disclosed, some major problems in the production of mobile phones [14] and one of the electronics giants has revealed labour and safety abuses at companies that supply components for its products.[15] As a result, focal companies are taking proactive actions to promote better environmental and social, including OSH performance at their suppliers. Hence, the suppliers’ chain can have a positive effect on the working conditions, safety and health of workers by promoting OSH improvements within the suppliers’ organisations. Walters and James have reviewed a number of studies where the economic relations involved in the supply chain support improvements in health and safety arrangements [10].This results from the ability of focal companies (as powerful supply chain actors) to make their suppliers adopt specified policies and practices [1] [10]. Such initiatives are in principle voluntary by their character and may emerge from companies’ sustainability and corporate social responsibility (CSR) agendas Occupational safety and health management and corporate social responsibility or out of market based business considerations The economic dimension of occupational safety and health management, but most often through a process in which such approaches are influenced and shaped by external pressures such as legal demands and demands by stakeholders, consumer groups and other social pressure groups [10].

Within the contractors’ chain the focal company is basically the host company or the client that outsources the task. Whereas the promotion of OSH improvements in the suppliers’ chain is mainly voluntary by nature and driven by external pressure, business advantages and sustainability agendas, companies are for the major part driven to pay attention to OSH in their contractors’ chain, by requirements set in the national and relevant EU legislation (in particular by the Framework Directive, Construct Sites Directive, and Procurement Directives (for public bodies)) Legislation [16] [17] [18] [19] [20]. Apart from the legislative motivations, reputational risk is - also according to ESENER - another driver for OSH in the contracting chain [16]. This appears to be especially the case for focal companies and projects with a high visibility (such as big construction projects). Focal companies operating in traditional high risk sectors, such as the petrochemical industry, pay evidently more attention towards OSH matters in their contracting chain as unsafe practices can have serious consequences - for the concerned contractors but also for their own staff and surrounding environment. Some focal companies are realising the importance of working with contractors and sub-contractors to pursue better OSH conditions and are putting in practice their own non-mandatory initiatives.

Strategies and instruments used by companies to promote OSH practices in supply chains

Strategies and instruments applied in the suppliers’ chain

Companies apply different strategies and instruments to impose OSH requirements to their suppliers. These actions are often part of a broader sustainable supply chain management (SSCM) approach, where OSH are promoted as an element of the people dimension of sustainability. Such actions focus amongst others on selection, monitoring and auditing, training and development of partnerships with the concerned suppliers. There is lack of research evidence on any formal comprehensive evaluation of the used instruments, especially in terms of OSH promotion and improvements, in order to check how successful these are. Nevertheless, the research indicates that the most successful initiatives comprise a combination of approaches, with commitment strategies and consequent interventions that communicate clear rewards for engaging in environmental and social responsible behaviour. The literature also suggests that a common feature in the positive examples of approaches of focal companies in improving OSH in the supply chain, is that they incorporate clear and fairly extensive arrangements relating to the auditing and monitoring of suppliers [10].

Examples of particular instruments are specific procurement strategies applying OSH standards "Standardisation and certification" for selecting suppliers, management standards (such as SA 8000, OSHAS 18001 or ISO 26000), and related third party certification, codes of conduct (either individual or joint codes of conducts), International Framework Agreements and other industry collaborations and partnerships. A more detailed explanation of those strategies and instruments follow.

With regard to procurement activities and a related focus on OSH, an important role is put aside for public authorities, as they are major consumers in Europe. By procuring in a social responsible and sustainable way, public bodies are in a pivotal position to give OSH-related incentives to companies. This is in general regulated by the Procurement Directives, which are transposed in national policies. Research shows however that within the EU there are significant differences in the application of sustainable procurement practices [21]. In this regard the European Commission published recently a Guide to take into account social considerations in public procurement [22].

Management systems can be related to the minimum performance required and can play an important role in the suppliers’ evaluation. Examples of management systems are: Social Accountability 8000 (SA 8000) for working conditions and human rights, Occupational Health and Safety Assessment Series (OHSAS) 18001 for health and safety and ISO 26000 for social responsibility Management systems. The standards are voluntary and compliance is granted by certification by an independent third party. The certification requires a public description of behaviour and management systems. Once certified, firms are monitored to ensure that they operate up to the stated norms. Only the latter (ISO 26000) is not intended or appropriate for certification purposes or regulatory or contractual use. Zwetsloot et al. address some advantages of 'third party certification' within the supply chain, for both suppliers and purchasers [23]. When suppliers are audited and certified by an independent certification body, they do not have to be audited separately by each of their customers, reducing the number of inspections and related costs. A certificate also expresses 'justified confidence' by the certification body in the supplier, and is in this regard commercially/marketing-wise important. Customers on their side can, by purchasing certified products or services, demonstrate they fulfil ‘their duties of care’, protecting themselves against possible liability in case of incidents or accidents [23].


Codes of conduct are voluntary instruments that offer guidelines, goals and objectives. Most codes require ‘safe and healthy working environments’, but they also increasingly provide more detailed health and safety standards [24]. Codes of conduct are critical to establishing and managing expectations for both customers and suppliers. The codes are not legally binding and often have neither enforcement mechanisms nor recognised bodies that control, mediate and/or evaluate fulfilment of the objectives [25]. However, companies increasingly develop the compliance and monitoring schemes used to implement and enforce those codes once they have been established [24]. Codes on corporate level of Multinational enterprises (MNEs) are initiated in order to fill the regulatory and legislative gap that exists between countries in which they operate. Companies develop codes of conduct individually or make use of partnering by so-called ‘joint codes of conduct’ [3] [11]. The latter are designed to minimise the burden on suppliers by reducing the number of standards with which they must demonstrate compliance. However, there is a risk that joint codes do not meet specific sustainability including OSH concerns of the company [26]. Typical examples of ‘joint codes of conduct’ are the Electronic Industry Citizenship Coalition (EICC) Code of Conduct and the Global Social Compliance Programme.

International Framework Agreements (IFAs), also called Global Framework Agreements (GFAs), are transnational agreements negotiated between multinational companies and global union federations ref>Robinson, P.K., 'Do Voluntary Labour Initiatives Make a Difference for the Conditions of Workers in Global Supply Chains?', Journal of Industrial Relations, No 52, 5, 2010, pp. 561-573</ref> [27]. Although IFAs are not very concrete in comparison to national collective agreements, they are much more detailed than codes of conduct with regard to working hours, working conditions, OSH, etc. [28]. Whereas codes of conduct focus at defining, monitoring and enforcing internal rules of behaviour related to CSR, IFAs aim more at regulating labour relations in MNEs [29].

Industry collaboration and multi-stakeholder partnerships are instruments used by MNEs to address supply chain sustainability objectives, particularly for issues that are too challenging and complex to tackle alone. In addition, collaboration can increase the impact and overall efficiency of company’s supply chain sustainability including OSH efforts by extending resources, reducing duplication and avoiding conflicting messages. Examples of industry collaborations are Apparel, Mills and Sundries Working Group, Business Social Compliance Initiative (BSCI), BSR's Beyond Monitoring Working Group, Electronics Industry Citizenship Coalition (EICC), Global Social Compliance Programme (GSCP), Social Accountability International (SAI) and etc. [26].

There are also instruments for imposing of product-related safety and health requirements on suppliers. Typical example are the social requirements for ‘sustainable products’ – a term which is used to comprehend all kinds of products that have or aim at an improved environmental and social quality, which can be related back to the implementation of environmental and social standards [30]. The ultimate aim is to satisfy customers and gain a competitive advantage in the market. Walters and James provide a number of examples where individual companies or industry bodies have undertaken product related initiatives to support better management of OSH [10] [31]. Specifying product-related requirements usually demands the application of life cycle assessment methods. In recent years decision-makers from several areas have shown increasing interest for the inclusion of social aspects into the environmental life cycle assessment of products and systems, the so called Social Life Cycle Assessment (SLCA). Jorgensen et al. argue that the application of SLCA may only be possible for companies in a very limited life cycle perspective [32]. A full analysis of the life cycle may be out of reach for most companies, as the data collection is very time and resource consuming. The Responsible Care and Product Stewardship programme are examples of industry product-related initiatives, which concern the sound management of safety, health and environmental effects of products [10] [31].

Strategies and instruments applied in the contractors’ chain

The literature discusses several approaches oriented to provide an adequate OSH in the contracting chain, through a comprehensive combination of the efforts of all parties involved, which can lead to better solutions that ensure reliable and safe outsourced tasks. Some of these approaches, either instruments or strategies, are presented below.

A purchaser-procurement strategy, where OSH requirements are used as a basis for selecting ‘safe contractors’ is a common approach. The engagement of skilled, competent and knowledgeable contractors contributes to ensure that high OSH performance occurs [33] [31] [34] [35]. Maintaining records of the contract activity, and deciding if the contractors should go on an approved list for future contracts can help this goal [36]. In order to assess whether a contractor is competent different following criteria can be used: [1] evidence of experience in the same type of work, [37] references from previous clients which are checkable, [3] accident/ill health statistics, [4]evidence of qualifications, [5] skills and ongoing training, evidence of health and safety training, [38] risk assessments and method statements for the work to be carried out and a statement of their criteria for selecting sub-contractors. The same should be done to select ‘safe sub-contractors’[39]. The importance of applying a sound procurement strategy is addressed in the Construction Sites Directive 92/57/EEC [40]. The Directive and relating Guidance stress the fact that clients (purchasers) can have a significant influence on OSH when selecting the contractors [18]. By using ‘best value for money’ rather than ‘lowest price’, clients can for example set a budget for OSH related to the cost of the project [41].

Safety certification schemes have become important instruments with regard to the promotion of OSH in the contracting chain. They are applied by companies to ensure the performance and competencies of contractors with regard to OSH and environmental issues, and thereby enable them to provide an answer to the legislative requirements about contracting and sub-contracting. In many European countries (amongst others The Netherlands, Belgium, France, Germany, Austria, UK) and particularly in high-risk sectors, such voluntary contractor safety certification schemes have gained substantial commercial value, as they give access to a certain market. The national governing bodies of the different national schemes are currently examining how a more common, European Union (EU) approach could be taken. This is necessary as companies within the EU are increasingly confronted with contractors and sub-contractors from abroad, often certified to another scheme than the one(s) recognised in the client's country.

Some of the safety certification schemes are:

  • Schemes for organisations

The VCA system ('Veiligheid (Gezondheid Milieu) Checklist Aannemers') or in English SCC or 'Safety (Health Environment) Checklist (or Certificate) Contractors'), was developed in the Dutch (petro)chemical industry in 1994. A detailed description of this SCC/VCA scheme and its role in OSH procurement is given in two EU-OSHA reports [5] [42]. The SCC scheme consists of a list of questions (checklist) that must be answered, in order to investigate contractors’ critical points for safety, health and environmentally friendly working practices. If the contractor company meets the required standards, an SCC certificate may be obtained. There are 34 certification bodies on the Dutch market, all accredited by the Dutch Accreditation Board, and more than 9000 companies in the Netherlands are SCC certified [23]. Since its development in the Netherlands in 1994, the SCC scheme has been introduced in other Member States such as Belgium, Germany, Austria and Switzerland.

In Belgium, beside the SCC scheme, the Belgian Safety Criteria for Contractors (BeSaCC) is a second safety certification scheme that is applied to contractors and the scheme was initiated by the Federation of Belgium Enterprises ('Féderation des Entreprises de Belgique'/'Verbond van Belgische Ondernemingen', FEB/VBO) to extend the SCC certification to more sectors.

In France, a scheme similar to SCC is used. It is called MASE, which stands for 'Manuel d'Amélioration Sécurité des Entreprises' (corporate safety improvement manual). MASE is a reference system for safety, health and environmental (SHE) management. An example of the MASE certification process by a French waste processing centre of SITA France, in La Penne sur Huveaune (near Marseille), is presented in one of the EU-OSHA reports [43]

A wide range of contractor certification schemes exists in the UK construction industry [10] [31]. Some of them, such as the Safe Contractor and CHAS, are applied in other sectors as well [44].

  • Schemes for individuals

Apart from certification schemes for contracting companies, there exist as well individual certification schemes - so called safety passport schemes. These are simple schemes of controlling access to work sites, ensuring that only workers with sufficient competence in OSH are allowed to work. Therefore, passport schemes help promote good practices and can help reduce accidents and ill health caused by work. This system is especially useful for workers and contractors who work in more than one industry or firm. It is a progressively important system for employers and companies who hire contractors, to establish OSH competence among their workforce [45] [46].

  • Other certification schemes related to SCC/VCA: SCT/VCU and SCP/VCO

The SCC checklist has been supplemented by a 'Safety and Health Checklist Temporary Employment Agencies and Intermediaries' (SCT) (in Dutch: Veiligheid en Gezondheid Checklist Uitzendorganisaties or VCU). The SCT procedure, designed for the certification of the safety management systems of temporary employment agencies and intermediaries, is intended for the secondment of personnel to clients stipulating an SCC certification and companies with and SCC certification.

Another checklist was recently introduced: the 'Safety Checklist Principals' (SCP) (in Dutch: 'Veiligheid Checklist Opdrachtgevers', VCO). This scheme, which originates from the Netherlands and is also applied in Belgium, allows the better management and coordination of SCC certified contractors.

Apart from purchaser procurement strategies and safety certification schemes the literature addresses several other approaches that can be used to obtain safer and healthier workplaces in outsourcing, thus contributing to diminish work accidents and work related diseases. These approaches focus on issues such as contractual clarification of responsibilities and planning; communication, cooperation and training; joint control procedures; and contractor evaluation.

References

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  14. Wilde, J. & de Haan, E., ‘The High Cost of Calling: Critical Issues in the Mobile Phone Industry’, SOMO – Centre for research on Multinational Corporations, Sneak Preview, December 2006. Available at: http://somo.nl/publications-en/Publication_1516/?searchterm=The High Cost of Calling
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  21. Brammer, S. & Walker, H., 'Sustainable procurement in the public sector: an international comparative study', International Journal of Operations & Production Management, No 31, 4, 2011, pp. 452-476
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  30. Seuring, S., Müller, M., ‘From a literature review to a conceptual framework for sustainable supply chain management’, Journal of Cleaner Production, No16, 2008, pp.1699-1710
  31. 31.0 31.1 31.2 31.3 Walters, D. & James, P., 'What motivates employers to establish preventive management arrangements within supply chains?' Safety Science, No 49, 7, 2011, pp. 974-987
  32. Jorgensen, A., Hauschild, M.Z., Jorgensen, M., Wangel, A., ‘Relevance and feasibility of social life cycle assessment from a company perspective', International Journal of Life Cycle Assessment, No 14, 2009, pp. 204-214
  33. Zwanikken, A.L.J., Drupsteen, L., Beek, F.A., Kampen, J.N., Jongen, M.J.M., 'Improving chain management of contractor safety', 4th International Conference Working on Safety, Crete, Greece, 2008
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  38. EU-OSHA - European Agency for Safety and Health at Work, Recognition schemes in occupational safety and health, 2002. Available in English at: http://osha.europa.eu/en/publications/reports/308
  39. NHS - National Health Service, Working with Contractors, Scottish Centre for Healthy Working Lives, 2011. Available at: http://www.healthyworkinglives.com/advice/employee-issues/working-with-contractors.aspx
  40. EU - European Union, Council Directive 92/57/EEC of 24 June 1992 on the implementation of minimum requirements at temporary or mobile constructions sites (eight individual Directive within the meaning of Article 16 (1) of Directive 89/391/EEC), Official Journal of the European Communities, 24 June 1992, No. L 245/6
  41. COM - Commission of the European Communities, Buying Social - A Guide to Taking Account of Social Considerations in Public Procurement, Luxembourg, Publications Office of the European Union, 2011, 49 pp. Available at: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/105&format=PDF&aged=1&language=EN&guiLanguage=nl
  42. EU-OSHA - European Agency for Safety and Health at Work, Recognition schemes in occupational safety and health, 2002. Available in English at: http://osha.europa.eu/en/publications/reports/308
  43. EU-OSHA - European Agency for Safety and Health at Work, Mainstreaming OSH into business, 2010. Available at: http://osha.europa.eu/en/publications/ reports/mainstreaming_osh_business
  44. EU-OSHA - European Agency for Safety and Health at Work, Recognition schemes in occupational safety and health, 2002. Available in English at: http://osha.europa.eu/en/publications/reports/308
  45. HSE - Health and Safety Executive, Passport Schemes for health, safety and the environment: a good practice guide, HSE, INDG 381, 2003. Available at http://www.hse.gov.uk/pubns/indg381.pdf
  46. HSE - Health and Safety Executive, Developing guidelines for the selection of designers and contractors under the Construction (Design and Management) Regulations 1994, Sudbury, HSE Books, Research Report 422, 2006. Available in English at: http://www.hse.gov.uk/research/rrpdf/rr422.pdf


Links for further reading

EU-OSHA- European Agency for Safety and Health and Work, Promoting occupational safety and health through the supply chain, forthcoming 2013, Available at: http://osha.europa.eu/en/publications/reports

EU-OSHA – European Agency for Safety and Health at Work, Corporate social responsibility and safety and health at work, 2004. Available at: http://osha.europa.eu/en/publications/reports/210

EU-OSHA - European Agency for Safety and Health and Work, Preventing harm to cleaning workers, 2009, 225 pp. Available at: http://osha.europa.eu/en/publications/reports/TEWE09006ENC

EU-OSHA - European Agency for Safety and Health at Work, Building in Safety - Prevention of risks in construction - In practice, 2004, 64 pp. Available in English at: http://osha.europa.eu/en/publications/reports/108

EU-OSHA - European Agency for Safety and Health at Work, Safe maintenance in practice, 2010. Available at: http://osha.europa.eu/en/publications/reports/safe-maintenance-TEWE10003ENC.

ISO website. Available at: http://www.iso.org/iso/iso_catalogue/management_and_leadership_standards/ social_responsibility/ sr_discovering_iso26000.htm

VCA website. Available at: http://www.vca.nl/

vzw BeSaCC-VCA website. Available at: http://www.besacc-vca.be/

MASE website. Available at: http://www.mase.com.fr.

EU-OSHA- European Agency for Safety and Health at Work website. Available at: http://osha.europa.eu/data/case-studies/the-safety-management-system-in-a-waste-management-centre-at-sita-sud/sita-sud.pdf.

CHAS - Contractors’ Health and Safety Assessment Scheme website. Available at: http://www.chas.gov.uk.

SSVV website. Available at: http://www.ssvv.nl