In-depth interview with Lea Rankinen of S Group: "If suppliers think they can sue human rights defenders who will audit or investigate them, this will jeopardize our responsible sourcing"
Ana Zbona, Business & Human Rights Resource Centre, Jan 2017
Migrant workers from Myanmar and Laos make up about 80 per cent of the workforce in Thailand's key export industries, like seafood and fruit processing. In Cheap has a High Price report by NGO Finnwatch, Natural Fruit, a Thai pineapple company, was found to have used forced labour. When Natural Fruit filed a court case against Andy Hall, international affairs advisor for Thai-based Migrant Workers Rights Network, who did the research for Finnwatch, S Group went a step further than most businesses do: not only did the company go to Thailand after the report was published to meet with Andy, the migrant workers, and their suppliers, where they first tried to convince Natural Fruit to cooperate with external auditors and stopped working with them when they refused - in 2016, in a ground-breaking show of support, S Group went to Thailand again, this time to testify in support of Andy Hall. Since Andy was convicted nonetheless, they raised his case at the European Parliament and at the UN. We interviewed Lea Rankinen, Senior Vice President, Sustainability and Corporate Responsibility at S Group.
BHRRC: Could you describe the process of your engagement with Andy Hall and the internal changes this brought to your company?
Lea: It was, really, a 4 years long journey. After Ruggie principles was launched in 2011it has changed many things for our company: in 2012 we launched a new Corporate Social Responsibility (CSR) strategy – transparency became the cornerstone of it and we decided we needed to have more leverage on the monitoring of our supply chain, know exactly where our raw materials were coming from. We adhered to strict ethical principles in our purchasing before, as well, we had CSR requirements in our contracts, and since 2005, we have been members of Business Social Compliance Initiative and using an external auditing system - but we knew we still had to go further down the supply chain. And then the 2013 Finnwatch report came out, and that pushed us to look further down, it made us think: “How do we mitigate adverse impacts in our whole supply chain?” Afterwards, we implemented changes on operational, strategic, and partnership level.
"If we really want to implement Corporate Social Responsibility, supply chains have to be shorter and more transparent."
On the operational level, we started regular surveys with our tier 1 suppliers, to check how they implement and monitor our corporate responsibility principles in their supply chains with sub-suppliers: we are now asking question further down the supply chain, monitoring if our suppliers are moving into the right direction. We also clarified corporate social responsibility requirements regarding the purchasing of raw materials in our purchasing contracts.
On the strategic level, we decided to turn towards the shortening of our supply chain and a further increase in transparency. With shorter supply chains, it’s easier to evaluate risks, monitoring is easier, more direct, there are less intermediaries. Usually, there could be many different players, there are 4-5 steps, agents, etc. Our question now is: “How can we make our supply chain shorter?” If we really want to implement CSR, supply chains have to be shorter and more transparent.
On the partnership level, we have defined in our sustainability plan to create special model in very high-risk areasto promote human rights in addition with audits. including partnering with NGOs into it.
BHRRC: We said in a recent blog that Andy Hall’s case shows the best and worst of corporate behaviour on civic freedoms. By ‘the worst’, we meant Natural Fruit’s aggressive stance and legal action against Andy after the release of the report Cheap Has a High Price, which linked them to abuses of migrant workers. With ‘the best’, we were referring to Thai Frozen Foods Association (TFFA) and Thai Tuna Industry Association (TTIA) provision of bail for Andy and of course S Group’s public support and testimony in favour of Andy. How would you comment on that?
Lea: Yes, I see it that way, too. It’s interesting to view the situation through “the worst and the best” lens: the situation in Thailand with suppliers was never perfect, there was always something to improve: but after Finnwatch report, we’ve seen very good, best case reactions to it and the worst case ones: after the report, some of the suppliers have improved a lot, for example Thai union – they made huge steps and have been really open to dialogue, they want to be leaders and try to solve the issues together. But Natural Fruit, who were down in our supply chain, not our direct supplier, chose other way to react When we first met with Natural Fruit representatives 3 years ago, we first tried to convince them to have an open dialogue with stakeholders, , we reassured them we won’t go anywhere, but we told them that they had to let external auditors in. We explained to them that it was necessary because we needed to reassure Finnish customers whose trust we depend on… But they didn’t want to do any of that, so we had to stop working with them.
"It was unprecedented for a company to testify in support of a defender and we hope other companies do that, too."
Andy’s trial has now been going on for many years – and with the trial, too, the best and the worst has been happening. For us, it led to increased stakeholder dialogue, and to a lot of new actions in support of Andy. Our testimony was one of the biggest changes, it was unprecedented for a company to testify in support of a defender and we hope other companies do that, too – we decided to do it, because Andy asked us and we thought we had valuable informantion . But the result was not what we expected, Andy was still found guilty under the Computer crime act. We are worried that this result will give strength to those suppliers that think the same as Natural Fruit: it will jeopardize our CSR work and our responsible sourcing, if suppliers are not willing to cooperate and if they always think that they can sue anyone who will audit or investigate them. If more and more react like this, that is a risk. Decisions like that narrow down the space for free speech of defenders and associations. If this is putting freedom of speech at risk even for associations and international defenders, how can factory workers feel they can bring things up? How can we trust that workers in factories speak up in audits?
BHRRC: You said you first tried to convince Natural Fruit to cooperate and to reassure them. Did Natural Fruit give any reasons why it opposed external audits or give any other explanation for its behaviour?
Lea: Yes, we tried to reassure them, we thought it was important to let them know that no matter what the findings of the external auditors would be, that we were not just going to go away, that we knew that they could not be fully compliant right away, that what was important was to have a common goal to improve… But no, they didn’t tell us their reasons.
BHRRC: Generally speaking, can external auditing systems be improved to account for the closing of the civic space? In your opinion, what can be done to ensure workers speak up? Why are human rights defenders – activists, journalists and others - important in that?
Lea: We use global auditing systems – that’s the most effective tool we have so far. Finnwatch's report showed the need for us to be better aware of what’s going on with sub-suppliers, so we implemented changes and as I said, we now, on a regular basis, send out comprehensive surveys to our suppliers, to check how they implement and monitor our corporate responsibility principles in their supply chains with sub-suppliers.
"If these kind of developments are happening on a country level - it narrows down the space for free expression in society in general and it will silence workers even more, which will make us even less able to get the real picture of what’s going on in the factories."
We ask for information from further down in the supply chain to try to get a clearer picture. As I mentioned, that is pushing some suppliers to try much harder than before to be transparent and show leadership. But still, if these kind of developments are happening on a country level – that an organization is doing an investigation, and they bring up outstanding issues, then there is court case, and they lose the battle – it narrows down the space for free expression in society in general and it will silence workers even more – which will make us even less able to get the real picture of what’s going on in the factories.
BHRRC: After the report was published, what was the process of your engagement with Andy, with the migrant workers, with the Thai government and with the suppliers like? What worked well?
Lea: The report came out in 2013 – with the Finnish supplier that bought raw materials, we immediately decided to go to Thailand together, to see Andy Hall, the migrant workers, and the raw materials suppliers, including Natural Fruit. Before going there, we contacted the Thai ambassador in Finland and the Finnish ambassador in Thailand. Once we arrived to Thailand, we first met with Andy and the migrant workers, before seeing suppliers or government officials. I’ve been in touch with Andy before that, through Finnwatch, but that was the first time we met in person. We checked with him beforehand if it was OK for us to meet the migrant workers in general. They agreed, so we met with the Migrant Workers Network Union. That was very important, because normally business people would first go see the suppliers – they may see it as a business negotiation primarily. But we went to the workers first to find out what was going on, we had the possibility to talk to them directly, we wanted to know the challenges they were facing when they come to Thailand.
"We went to the workers first to find out what was going on, we had the possibility to talk to them directly."
Another important thing was that it was a group of us going, and that our commercial people, those that are in charge, were there.
Afterwards, we met with the representatives from different Thai ministries, including commercial and labour – we told them what we found in discussion with migrant workers and suppliers and tried to summarize their role. We then had a general discussion about why these issues are so important, since they affect consumer trust.
BHRRC: What was the dialogue like with the Thai government at that point?
Lea: Dialogue was good at that time: they were summarizing the projects that they were putting in place, said they were aware of the situation, that they wanted to work on the challenges of fees and protocols for migrant workers. But they were also talking about the Thai labour law, and our point of view was that we wanted our suppliers to follow international standards and external monitoring. Once the process against Andy started, we didn’t have direct dialogue with the Thai government anymore.
BHRRC: How did you get to the point of testifying in court in support of Andy?
Lea: In 2014, we added new requirements in our contracts and in 2015, we were part of a round table in Finland to create the Finnish joint vision to implement Ruggie principles across business supply chains. In 2015, together with the Ministry of foreign affairs and employment – and with some leading companies and Finnish NGOs - we defined what was the necessary level of due diligence to implement the Ruggie principles.
"For us, human rights are a high priority, so [our sourcing vice-president Jari Simolin] understood our and his role and the importance of this case."
We took those commitments very seriously - if we put our name onto this kind of a document, it has to be a high level issue in our company – these documents were then circulated in our company, which increased awareness. In 2016, Andy asked if we would testify, and we decided we would because we felt we had all the necessary information to do so. The sourcing vice president, Jari Simolin, was willing to do that. For us, human rights are a high priority, so he understood our and his role and the importance of this case.
BHRRC: What do you think of the latest court’s decision in Andy Hall's case?
Lea: I was in the court, but it’s too much to say – I’m not a lawyer and not an expert on Thai court system. I can’t judge, but we told the court what really happened, so for me it is difficult to understand the result… But I don’t want to speculate.
BHRRC: Did the EU level and the Finnish level intervene with the Thai government after that?
Lea: The Finnish embassy in Thailand was very active during the trial, we were always in contact with them, when trial was in different phases, they were giving us follow-ups. In 2016, we were in Bangkok in July - myself, Jauri and our lawyer. When we were there in the summer, the Finnish ambassador was at the trial the whole day, the cooperation was very good.
BHRRC: It’s a good example of how different protection systems can work together. What about other businesses, governments or NGOs? What’s the scope for corporations, NGOs and governments to work together to protect defenders?
Lea: The verdict came out in September and soon after it, Andy came to Helsinki – and immediately after, we organized a roundtable discussion together with Andy and Finnwatch. It was good timing. We invited Finnish politicians and NGOs to discuss: “What kind of influence can we have? What can we do next?” One of our Members of the European Parliament, a cabinet worker, was there, she was very keen – she asked how the European Parliament (EP) could help.
"The verdict came out in September and soon after it, Andy came to Helsinki – we organized a roundtable discussion together with Andy and Finnwatch. It was good timing. We invited Finnish politicians and NGOs to discuss: “What kind of influence can we have? What can we do next?”
And then everything happened very fast: then we were invited to the EP to raise this – we had a lot of meetings, interviews, EP made the resolution about Andy’s case, the European trade commissioner Cecilia Malmström made a big statement to the Thai that they shouldn’t underestimate European consumers, which won’t want to buy products which are implicated in human rights violations, then in November I went to Geneva to speak at the UN Forum on Business and Human Rights on what corporations can do to protect civic freedoms and human rights defenders…
BHRRC: Are you and Andy planning any steps forward?
Lea: Andy is not in Thailand, so now we need to define if and how to continue to cooperate with MWRN organization in Thailand. With The Business Social Compliance Initiative, we are thinking about what kind of joint projects we can have in Thailand to increase the level of recruitment policies. There are good, leading Thai companies, such as Thai union, so there are internal changes at ground level taking place, but we need to continue the work and the dialogue with suppliers, in possible partnership with other companies.
BHRRC: Did the actions you took to support Andy also help you as a business? Did it make business sense? For your business model, Finnish consumers’ trust is very important, so this probably contributed to your motivation to act. In times of economic stress, though, consumers often turn to less expensive items and may not care as much - so what would happen if consumers didn’t care as much? Would you still act the way you did? For companies that are not consumer-facing, what could motivate them to act?
Lea: Yes, for us it’s important that our customers see that we are working responsibly, that we are looking at the bigger picture. We are measuring consumers trust, and it’s been increasing because they see us as working responsibly. For Finnish public, this was a big issue: many people know Andy Hall’s case. This whole situation turned out positive for us because of our actions and our open and honest communication.
"We live in a fast, transparent world - businesses need to have processes in place, so there are no surprises."
But in general, for businesses, this is good risk management anyway, even if they are not consumer-facing. I don’t think anyone is happy with these kind of findings, and everything comes out at some point. We live in a fast, transparent world; so businesses need to have processes in place, so there are no surprises.
But beyond that, it’s also a question for each business to answer: “Are you just trying to manage risks or do you put your ambition level higher?” These are not easy or fast wins, it’s long-term work, we need to drive human rights “with long lights on”. If one’s ambition level is higher, then that means: plan proactive steps and “drive with long lights on”. Then things also won’t come as surprises.
BHRRC: The case for business leaders to promote open civil society space is not always immediately apparent, because shrinking civil society space may not directly impact their core business in the short term. Is human rights defence and promotion strategically important for your company?
Lea: For us, it’s clear now, on the strategic level: we want to promote human rights in global supply chains, it’s in our public sustainability program: we want to not only respect, but promote rights, take actions. What we did last year - these were real actions.
"External monitoring is basic – but we and the auditors are not there all the time - but Civil Society Organizations are, they might have more information, and they see the deterioration or the progress happening. It’s good to start thinking of them as partners."
Human Rights Defenders are the ones doing this work on the ground level, they are the ones giving the valuable information about the current situation, of course we have monitoring systems, but we need other systems, they are the ones working there – so it comes back to where I started: if they can’t raise questions, then how can anyone in the society? That’s how I build the link. External monitoring is basic – but we are not there all the time, the auditors are not there all the time - but CSOs are, they might have more information, and they see the deterioration or the progress happening. It’s good to start thinking of them as partners, working together – to ask ourselves: “How can CSOs be a part of the monitoring system?” That is our vision, learning from our experience in Thailand: we are trying to define a concept for similar challenges in other high-risk areas. We are asking ourselves: “Can we find local players to do ongoing monitoring?”
BHRRC: What high-risk areas would you highlight right now?
Lea: We have high risk country lists but we are also building more specific risk profiles / indicators. Higher migrant flows seem to signal higher risks: so right now, I would say Turkey, Thailand. Also, where the space for civil society is narrowing down, that is increasing the risk.
BHRRC: On a broader, more political level – is the world going towards less globalization, more nationalism? What will that mean for business?
Lea: I try to personally stay out of the political, but from my point of view, it doesn’t matter if we call it globalization or de-globalization: people are moving and will be moving anyway, because of climate issues and other issues, the flow is going around - people are moving, and these are human rights issues. In Europe we have more and more migrants, we need to look at their situation, and we need to define risks in terms of human rights in European countries too. I believe there is a place for those who try to keep human rights on the agenda in the business world, because we want to keep the trust, and the business case is always linked to trust.