Human Rights Report (Non Food) 2021

Building long-term partnerships with suppliers, producers and civil society

Continuously developing and refining responsible business practices

Introducing measures to improve working (and environmental) conditions at the manufacturing and raw-material levels

Developing innovative approaches and industry-wide alliances to tackle systemic challenges together

During the COVID-19 pandemic, we have adjusted our audit processes. If the incidence of infection in the respective countries is high, travel is restricted or other national restrictions apply, we cannot carry out regular social and environmental audits. In order not to endanger the auditors, not to increase the risk for employees and to relieve the suppliers in what are already difficult times organisationally, we are postponing the audit dates in consultation with the companies. We are therefore deviating from our standard processes and, if necessary, ordering goods without available audit results or accepting already completed audit certificates that we do not otherwise recognise, for example BSCI in Bangladesh or SMETA 2-pillar.

In 2021, we continued the trial runs started in 2020 (one in Bangladesh and three in China). Two of the factories have successfully completed the test run, and two others will be given more time to make the necessary improvements. The experiences and feedback from those involved were so positive that we are planning further tests for 2022 with some process changes in order to then fully integrate and scale the participatory audit into our audit programme. At the same time, expanding the tool is currently proving to be more difficult than expected, partly because we have not yet found a suitable audit service provider who has sufficient experience to work in a participatory way, directly with employees.

Our goal is to firmly integrate the tool into our human rights programme. The focus is currently on China, since that is where we have by far the most production partners that we are currently not integrating into the WE programme.

Facilitated dialogue between all stakeholders – workers, employees, managers, factory management and Tchibo buyers – is possible and delivers improvements.

Exchange of ideas and peer learning between factories promotes change – including by creating positive competition.

In many areas of work, this dialogue-based approach achieves better results than repeated factory audits.

Trade union membership and living wages are issues that cannot be solved at the factory level – even with the dialogue-based approach – since they are systemic in nature. Tchibo therefore launches additional projects to address these issues.

Our dialogue-based approach can be used universally and in a variety of ways.

With dedication and investment, it is possible to introduce an alternative to the factory auditing that is customary in the industry.

In many countries, we continue to provide ongoing support to factories as they work to address violations of workers’ rights.

We discontinue the programmes that are active in Thailand and Laos because these two countries have become less important to our in-house purchasing operations due to global purchasing trends.

We put human rights issues and WE values (dialogue, empowerment and co-creation) firmly centre-stage once more.

We place greater emphasis on the facilitation side of the dialogue process; our local WE experts and teams are required to have both expertise in the issues at hand and the skills required to guide transformation processes.

We streamline processes and strip back unnecessary administrative barriers to allow us to respond with greater flexibility to challenges and needs.

Tchibo employees are once again on site more frequently to assist with the change processes taking place in the factories.

Local WE teams (facilitators) are given a great deal of flexibility to adapt the programme to the country and factory in question. Tchibo works closely with them on this.

New ideas are trialled – in some cases only in individual countries or factories. Lessons learnt are continuously fed back to inform the further development of the programme.

Local WE teams work in close cooperation with each other: they learn from one another and complement each other’s skills and experience, both through online forums and in collaborative activities involving multiple countries.

The WE programme is run by our local staff in the Hong Kong and Dhaka purchasing offices to ensure that they also link up with purchasing activities in these locations.

Depending on the pandemic situation, the WE facilitators carry out activities with workers and managers online, in hybrid form between online and on site or in person, in strict compliance with national hygiene requirements. In order to keep in touch with the WE factories and WE programme participants in the rapidly changing situations, the WE facilitators are increasingly using the social media means of communication that are customary in the respective countries.

As we have given more and more responsibility to the country teams over the years, the WE facilitators react well and quickly to the respective circumstances of the countries and the changing needs in the factories and adapt activities not only according to the local hygiene regulations, but also methodically and in terms of content.

The need to work primarily digitally has further strengthened international networking. In addition to cross-border professional and strategic exchange, the WE facilitators work together in the factories by digitally connecting WE facilitators from other countries in hybrid form.

During the crisis, the WE facilitators were able to build or strengthen trust because factory management appreciated their support during these unprecedented times.

In terms of content, we have included the topics of financial literacy in India and mental well-being in India and Bangladesh, personal and organisational resilience training in Vietnam and diversity and inclusion in Turkey in the programme work.

In India, we continued qualification of the committees established in 13 factories in 2020. In 2021, new grievance committees were set up in two more factories; this is planned for four more factories in 2022.

Internal factory grievance mechanisms have also been strengthened in Pakistan and Bangladesh.

So-called Fair Price Shops have been set up in three factories in Bangladesh, in which employees can buy basic foodstuffs at a purchase price that is below the usual retail price, and thus have low overall expenses.

We have strategically revised the topic of freedom of association and trained the WE facilitators. For more information, see progress in the chapter: social dialogue.

In the wake of a freedom of association crisis involving a number of complaints at a major and long-standing producer in Turkey, the WE team was able to successfully implement a development plan tailored to the root causes of these conflicts. The plan aims to involve the union in communication and decision-making processes in the factory and resulted in the creation of a committee of union representatives and factory managers with constant monitoring from the WE programme. In 2022, we will determine the potential of this approach as a model for similar conflicts in other factories and countries.

In Vietnam, where the later waves of COVID-19 were particularly felt, we organised a workshop on COVID-19 prevention together with the Ministry of Health, which was attended by managers and workers from seven factories, as well as a factory activity explicitly dedicated to the topic.

Driven by the need to collaborate digitally, we have strengthened cross-border collaboration. In addition to the existing cross-border professional and strategic exchange, WE facilitators from other countries have joined digitally at hybrid factory events; for example, Indian and Cambodian WE facilitators participated in factory activities in Pakistan. Cambodian facilitators supported a meeting of Chinese factory managers who manage factories in Cambodia in addition to the sites in China.

As a result of the positive experiences in India, where the employees of our purchasing agency now regularly take part in the WE programme, we have also integrated the purchasing agency into the work of the WE programme in Pakistan.

In 2021, we also held so-called "international team conferences" – completely digitally due to the COVID-19 pandemic – and focused on further training in methodological skills as well as on further development of the programme: In April, the WE facilitators worked together on the topic of "Good Factories" to identify and learn from good examples in the programme. Under the title "Dancing with Powers", they trained in methods of improvisation in October and reflected together on how they can increase their own influence and that of the programme. In addition, numerous activities took place in the summer months under the motto "Summer of Art and Love", in which the WE facilitators could further educate themselves methodologically and work creatively together; even in the times of the pandemic, we have kept an enriching and motivating exchange alive.

With unions under even greater pressure in times of crisis, we have been working even more closely with them since the start of the COVID-19 pandemic. In Turkey, Bangladesh and Myanmar, we specifically sought dialogue with trade union representatives to discuss the challenges arising from the crisis, the demands placed on purchasing companies and the measures Tchibo has taken in these times of crisis. The results have been incorporated into our audits, procurement practices and grievance resolutions.

In 2021, we began revising our strategy to promote trade union rights in our non-food supply chains. The focus of the process in 2021 was to enable the WE programme to take an even more structured approach to its field of action “freedom of association and employee representation”. The strategy process will be completed in 2022. It includes, among other things, our engagement in ACT on Living Wages for social dialogue in the focus countries as well as purchasing practices and grievance mechanisms.

As part of this strategy process, we intensively trained the WE programme facilitators in 2021 on the subject of trade union rights. To do this, we worked with representatives from IndustriALL Global Union, the Awaj Foundation and the Ethical Trading Initiative (ETI).

In Bangladesh, a strategy meeting took place between representatives of IndustriALL, five local affiliated unions, Tchibo and the WE programme to discuss our Global Framework Agreement and its implementation at eight Tchibo producers and to align it with the WE programme where appropriate. Here, too, we will determine in 2022 whether we can use this format as a model for other countries in a meaningful way.

For the first time, our WE team in Bangladesh led a specialist workshop for representatives of IndustriALL and 16 affiliated unions on the subject of gender-based discrimination.

National and local trade unions must be able to negotiate wages for the entire industry in their country and represent a certain proportion of all workers. IndustriALL Global Union supports its affiliated unions with this through the ACT Partnership.

Employers also need to be in a position to negotiate wages across the industry. To do this, they need employer organisations and the right legal framework. ACT member companies support their suppliers with this under the ACT Partnership.

At the same time, a legal and institutional framework is also required: which is why ACT is in dialogue with national governments and organisations.

As a company, we are working to adapt our procurement practices to provide manufacturers with long-term planning and financial security. This enables them to pay higher wages. Fair payment terms and the responsible, scheduled termination of business relationships, if necessary, are also part of this. A core part of our ACT obligations is that we work with our producers to ensure that wage and labour costs are a fixed part of price calculations and are therefore excluded from any negotiations on price. Our voluntary commitments: ACT Purchasing Practices Commitments

Once an industry-wide collective wage agreement has been negotiated in a country, ACT companies commit as a group to keep our purchasing volumes in that country at the same level or above for several years. This fosters long-term change and gives the social partners the time and power to negotiate wages on a regular basis. Our voluntary commitments: ACT Country Commitments

Individual responsibility: The framework for this is provided by the OECD Recommendations on Corporate Due Diligence in the Garment and Footwear Sector. Each member submits an annual roadmap for the coming year, which defines improvement targets in specific priority areas, such as more effective grievance mechanisms. Compliance and progress must be reported annually. All roadmaps and progress reports from this review process are made publicly available.

A shared commitment: In order to solve systemic problems within our industry, individual members – companies and civil society – join forces to work on specific problem areas in Partnership initiatives. These initiatives take the form of concrete projects in producing countries.

Mutual support: The Partnership is also a forum for learning, which is especially valuable for us. Not only do we discuss problems on an ongoing basis, but we also work together to develop suitable solutions, learn good practices and examples from other companies and organisations, and support each other when we cannot make progress on our own.

Tamil Nadu Partnership Initiative

Expert group on climate protection

Expert group on natural fibres

The Bangladesh Accord swiftly implemented and monitored universal COVID-19 safety measures for manufacturing plants as soon as the pandemic began in the country. These include safe transport for workers travelling to the workplace, adapted (streamlined) production processes, social distancing, the provision of masks and protective equipment for all factory workers, hygiene measures such as continuous disinfection and ventilation, and paid time off for at-risk groups and people in quarantine. Bangladesh is one of our most important textile-producing countries. Every single one of our supplier companies there is a member of the Accord and is therefore subject to these safety measures.

We have seen 94% of our producers’ safety deficiencies remediated. This figure exceeds the average for overall performance across all 1,500 Accord factories. This is particularly true in the areas of building structure and electrics. The value is lower compared to the previous year (2020: 98%), because we added a number of factories to our portfolio that still need to address their safety deficiencies.

All Tchibo manufacturers in Bangladesh have been integrated into Accord programmes, which set up and train safety committees in the factories. So far, 74% of our 46 factories have successfully gone through the programme.

After an extension of the Bangladesh Accord in 2018, it was merged into the newly founded International Accord for Health and Safety in the Textile and Garment Industry in September 2021. The signatory companies undertake to continue the work of the Accord in Bangladesh. This will continue to be implemented by the independent Ready-Made Garments Sustainability Council (RSC). In addition, the International Accord aims to apply the programme with its core components in other countries too. There is also the option to extend the agreement to human rights due diligence.

Tchibo had clearly spoken out in favour of an extension and expansion together with the global unions and was one of the first companies to sign the new agreement. The new Accord is also legally binding for the signatories and continues the equal partnership with the global union federations UNI Global Union and IndustriALL Global Union, which we placed special emphasis on during the negotiations. More than 160 companies have joined the new international Accord. 

Strategic questions

Country groups: Bangladesh, Myanmar, Turkey

Bangladesh:
The ACT working group on Bangladesh – which was formed in late 2019 and is made up of ACT member companies, IndustriALL, the national trade union federation and the national garment industry employers’ association, continued its work in 2021. ACT 2021 commissioned a technical assessment to consider further steps towards collective bargaining between national employers and unions. With regard to the results and further steps, ACT members are intensifying discussions with the national stakeholders. As a result of the COVID-19 pandemic in 2021, the transitional dispute settlement mechanism established in 2020 for complaints about freedom of association and wages primarily processed complaints about redundancy payments. The experiences gained from the transition mechanism are now to be evaluated in order to establish a permanent mechanism. 

Myanmar:
The military coup in Myanmar in February 2021 had a significant impact on our local engagement with ACT on Living Wages. Up until June 2021, we therefore worked with the relevant members of ACT to develop and implement a framework for companies to responsibly stop orders, instructions on how to deal fairly with producers in the event of delivery difficulties and a framework on the safety and dismissal of workers in Myanmar, and further developed the existing grievance and dispute resolution mechanism of the Myanmar Freedom of Association Guideline into a fast-track procedure that applies to all labour rights. For more information, see the announcement in the Tchibo blog of 12 July 2021 and the ACT website.

• Myanmar has been an ACT priority country since 2018. In December 2021, ACT members decided to end ACT's work in Myanmar. This is a consequence of the withdrawal of local IndustriALL affiliate IWFM from ACT activities, as they are no longer able to work freely under the prevailing circumstances. ACT will review its future commitment as soon as the situation in the country changes.

Cambodia:
In 2019, negotiations concerning the implementation of the ACT standards stalled because the government and the national industry association feared competitive disadvantages and the withdrawal of preferential EU tariffs. Faced with the COVID-19 crisis, the two sides came together once again. Building on this, the national working group, which includes ACT companies, IndustriALL, national employer representatives and national unions, has resumed work and intensified talks aimed at leading to collective bargaining between national employers and unions.

Turkey:
The work carried out under ACT continues to be difficult in Turkey, as there is no national employers’ association or industry association to negotiate an industry-wide collective agreement. As a result, ACT companies are increasingly entering into direct dialogue with their suppliers and continuing the conversation with national trade unions. This and the joint work on a new standard for trade union rights will continue in 2022.

The COVID-19 crisis has also presented ACT brand companies with unprecedented challenges. At a time when everyone involved lacks the certainty needed to plan ahead, ACT members are sticking to their voluntary commitments to adopt fair procurement practices.

In 2021, the ACT member companies caught up on the survey on their purchasing practices in their own companies and conducted it for the first time with their suppliers, who remained anonymous. With 1,832 responses from ACT member companies and 1,338 responses from suppliers, it is the largest survey of purchasing practices, covering all major garment industry countries. For Tchibo, 51 colleagues from the purchasing department and 42 suppliers took part. The overall results confirm that the five themes of the ACT voluntary commitments (including setting and negotiating prices, payment terms, job scheduling and training) are particularly important, both in enabling the payment of higher wages and in implementation at ACT member companies. To measure progress, the surveys will be repeated in 2023; until then, the member companies – including Tchibo – will push ahead with implementation in their own companies and plan training measures both within the companies and with suppliers.

At Tchibo, we have anchored implementation of the ACT voluntary commitments in strategic purchasing and are working hard on implementation, which also includes the results of the surveys mentioned above. We are focusing on integrating labour costs into our purchasing contracts; for this, we will use the so-called labour cost share method. In 2021, we tested a simple survey adapted to our processes and will roll it out in 2022.