HUMAN RIGHTS AT WORK Carrefour s commitment to respecting

HUMAN RIGHTS AT WORK Carrefour’s commitment to respecting fundamental human rights at work 1

AGENDA INTRO Carrefour's Commitments Part 1 Human Rights in the supply chain Part 2 Carrefour's Actions : auditing and more Part 3 Social compliance in the sourcing process Discussion on challenges 2

Background & Commitments For over 10 years, Carrefour has been committed to put in practice its commitment to respecting fundamental universal principles (child labour, working condition, etc. ). 15 avril 09 Social présentation

Background & Commitments Carrefour gives practical effect to this commitment in a number of ways: Cooperation with the International Federation for Human Rights (FIDH) since 1997/1998 : 10 years The setting up of a cooperative framework FIDH: the INFANS association Establishment and adoption of a supplier’s charter Implementation of a methodology to ensure the charter is respected 4

Background & Commitments Created in 1922 155 member organisations in over 100 countries www. fidh. org

Background & Commitments = the most protective standard 6

Background & Commitments INTERNATIONAL LAW 15 avril 09 Social présentation CARREFOUR CHARTER NATIONAL LAW

Why should Carrefour respect human rights? BUSINESS RISKS MEDIAS NGOS CONSUMERS 8

Why Should Suppliers be Socially Compliant? BUSINESS OPPORTUNITES 15 avril 09 Social présentation

Why Should Suppliers be Socially Compliant? . BUSINESS OPPORTUNITIES Carrefour has social compliance requirements for all suppliers, but suppliers may wonder why they should oblige Moral and Ethical Reasons Carrefour will not conduct business with critical factories. Productive, more motivated workers Lower worker turnover Higher and more consistent sales volumes 15 avril 09 Social présentation

Why should business respect human rights? ECONOMIC BENEFITS Good for global retailers Customers pay more and more attention to ethics Social Responsible Investment Funds growing Good for suppliers Productive, more motivated workers Lower worker turnover Higher and more consistent sales volume All global retailers now demand social compliance 11

Respect human rights : benefits Modifier ce slide et séparer par catégories Suppliers Carrefour • Benefits: • Higher confidence in product quality • Adherence to ethical sourcing ideals • Reduced risk of child labor, forced labor, or human rights violations within supply chain • Supply chain clarity, allowing products to be traced back to their 15 avril 09 source Social présentation • Benefits: • Moral virtue • Reduced worker turnover – higher profits • Motivated, productive workers • Higher sales volume and mores stable orders • More efficient internal systems • Happy, satisfied customers Employees • Benefit -Basic Human Rights: • No Child Labor • No Forced Labor • No Discrimination • Fair Disciplinary Practices • Freedom of Association • Reasonable Working Hours. • Adequate Remuneration • Safe and Healthy Environment

Why should suppliers respect human rights? , asks –M PPE s, Boots e Glov Limit on Working Hours Healthy Workers Time Off Comfortable Working Conditions Adequate Payment Satisfied Workers Safety Training Safe, well maintained machinery and facilities Safe Workers 13

Commitment to protect Human Rights: the supplier charter The supplier charter includes six obligations. Each obligation refers to the Universal Declaration of Human Rights and the principles of the ILO (International Labour Organization). To immediately eradicate slavery, servitude for debt and the use of forced or compulsory labour, Not to employ or make children work who are under the age of 15 To ensure workers have the right to join Trade Union and to collectively bargain, 14

Commitment to protect Human Rights To give workers remuneration which satisfies their basic needs, To guarantee safety conditions, To respect equal opportunities in terms of recruitment and remuneration working 15

Human rights issues in the supply Chain In factories producing for Carrefour we pay attention to the following issues: Child labour Forced labour Discrimination Disciplinary practices, harassment and abuse Freedom of association Working hours and overtime Remuneration Health and safety 16

Credit: Ruben Dao 15 avril 09 Social présentation

NO CHILD LABOR HOW DO YOU DEFINE CHILD LABOUR? HOW DO YOU RECOGNIZE CHILD LABOUR? 18

NO CHILD LABOR Globally: üAccording to UNICEF, one child out of every six works. ü 158 million children aged 5 -14 ü 69 per cent of child labourers work in the agricultural sector ü 22 per cent in the services sector ü 9 per cent in the industrial sector 15 avril 09 Social présentation

NO CHILD LABOR What does the law say? What does Carrefour Charter say? • Carrefour Charter : no worker under 15 years old • China: 16 years old • Bangladesh: 14 or 12 under certain conditions • Pakistan: 14 years old (no more than 5 hours/day) 20

NO CHILD LABOR üYoung workers deserve special attention ALERT üNo one under 18 is to do hazardous work or work at night. üA policy to prevent recruiting child labor, checking and record employee’s ID copy üNo presence of children allowed in factories üImportance of finding remediation measures 21

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NO FORCED LABOR HOW DO YOU DEFINE FORCED LABOUR ? HOW CAN WE RECOGNIZE FORCED LABOUR? 23

NO FORCED LABOR ALERT DEFINITION AND FORMS SCOPE Spain : Agricultural workers shelter in the greenhouses 24

NO FORCED LABOR No forced, no threats or involuntary labor Workers are free to come/go from work site Workers free to leave employment after giving reasonable notice Workers are not required to lodge deposits/ID Card 15 avril 09 Social présentation

NO FORCED LABOR • Retention of ID documents • Delay of wage payment ALERT • Collecting Deposit 26

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NO DISCRIMINATION WHAT DO THESE PEOPLE HAVE IN COMMON? CAN YOU THINK OF GROUPS THAT ARE MORE LIKE TO FACE DISCRIMINATION IN THE WORKPLACE? CAN YOU GIVE EXAMPLES OF DISCRIMINATION? 28

VULNERABLE GROUPS No discrimination in treatment hiring, compensation, access to training, promotion, termination or retirement based on: Age, Race, Origin; Religion; Disability; Gender; Literacy; Marital Status etc. Migrant agricultural workers in Europe are often discriminated against. Some of them suffer from forced labor. 29

VULNERABLE GROUPS No discrimination against women Workers often suffer from discrimination Women are often subject of harassement from male supervisors. Women workers have specific rights: pregnant women shall be given adequate protection. Maternity leave with pay is compulsory. 30

NO HARASSMENT AND ABUSE DISCIPLINARY PRACTICE, ABUSE MAIN RULES Workers free from: Sexual harassment Verbal or physical abuse Financial penalties. 31

WORKING HOURS According to the law in your country, what is the maximum number of hours, including overtime, that a worker can do in a week? 32

EXCESSIVE WORKING HOURS WORK HOURS AND OVERTIME MAIN RULES At least one day off in seven Overtime only voluntary Maximum 48 hours/ week. Max 60 Hours/ week including overtime! Over time Max. 48 hours/month. Overtime paid accordingly to the law 33

EMPLOYMENT PRACTICES MAIN RULES Wages meet local minimum /industry standard, Written & understandable info about wages (Pay slip), To pay social insurances when mandated by law, No deduction as a disciplinary measures, Labor contracts signed with employees 34

DECENT LIVING FOR WORKERS WHAT IS THE MINIMUM WAGE IN GARMENT SECTOR AS PER LAW? 35

DECENT LIVING FOR WORKERS Workers remuneration which satisfies their fundamental needs and those of the members of their family who are directly dependent on them, including : • Food Water Health Housing Education This remuneration must, at least, correspond to the minimum wage fixed by the legislation of the country in question. 36

WORKING CONDITIONS WHAT IS GOOD WORKING CONDITIONS FOR WORKERS ? 37

HEALTH & SAFETY AT WORK MAIN RULES Fire Safety Equipment Emergency Evacuation First Aid Equipment Safe Passage Toilet Facilities P. P. E. Hazardous Substances Electrical safety Special equipment certificate Hygiene certificate Building safety certificate 38

HEALTH & SAFETY AT WORK Chemical storage and handle NOT OK OK 39

HEALTH & SAFETY AT WORK Personal Protective Equipment NOT OK OK 40

JUST AND FAVOURABLE CONDITIONS OF WORK Harsh working conditions impact on the health and wellbeing of workers 41

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RIGHT OF WORKERS TO JOIN TRADE UNIONS AND TO COLLECTIVE BARGAINING What is the usefulness of freedom of association? Why is it important for workers? Can you give examples of mechanism on how workers communicate with the management ? 43

RIGHT OF WORKERS TO JOIN TRADE UNIONS AND TO COLLECTIVE BARGAINING MAIN RULES Recognition of the right of workers to join Trade Union and to collectively bargain; Support independent workers representation where trade unions not allowed by law 44

CARREFOUR'S ACTIONS FOR THE RESPECT OF HUMAN RIGHTS IN THE SUPPLY CHAIN 15 avril 09 Social présentation

2. CARREFOUR'S ACTIONS FOR THE RESPECT OF HUMAN RIGHTS IN THE SUPPLY CHAIN WHAT IS CARREFOUR DOING TO SUPPORT RESPECT OF HUMAN RIGHTS IN THE SUPPLY CHAIN? 1) Supplier charter in the contract with the supplier 2) Social audits and corrective actions 2) Sharing audit results with other retailers: ICS 3) Overcoming shortcomings of individual companies audits: GSCP 4) Experience in training suppliers on human rights at work 5) Question governments on respect of human rights 46

CARREFOUR SUPPLIERS’ OBLIGATIONS Every supplier has to SIGN THIS CHARTER before beginning any cooperation with Carrefour. 47

CARREFOUR SUPPLIERS’ OBLIGATIONS Carrefour supplier’s obligation contained in the Charter, Supplier Operation Procedure, Commercial Contract : To allow all kinds of visits from Carrefour or agency on behalf of Carrefour , to get a view of production conditions, including visits of INFANS representatives. To display the charter in the local language and in a visible place To distribute it to all its employees and to the unions present in the company, To ensure these commitments are respected by all factories used for Carrefour production 48

Social audits Deployment Policy in Carrefour 1. Priority on suppliers Brand name/ First price/ no name Non Food and Food Product 1. Geographical risk defined through INFANS : China, India, Pakistan, Bangladesh, Vietnam, Laos, Cambodia, Indonesia, Thailand, Taiwan, 49

Results of Social audits 50

2008 campaign 2008 of social audits In 2008, 472 social audits: 362 Initial Audits 110 follow-up audits Since beginning of social audits: some improvements in factories A fin 2008, 2541 Audits Sociaux réalisés : 478 Re audits et 2063 Audits Initiaux 51

2008 Results : Not conform CHINA Wages and benefits Working Hours and Overtime INDIA BANGLADESH PAKISTAN VIETNAM Respect of the Charter principles : Child labor (Young Workers) <5% Forced labor 5 à 30 % Général Working Conditions 30 à 70% Freedom of Association > 70% Discrimination Disciplinary Practice 52

Indicateurs RAPPORT dd AUDITS SOCIAUX 15 avril 09 Social présentation

Beyond Social audits 54

The Situation today Shared Supply Base All consumer goods Sourcing Companies Carrefour/ICS Wal-Mart Gap/SAI Tesco/ETI Migros/BSCI Soc ial A udi t Social Au dit Social Audit Supplier A Result Today - Audit Fatigue - Confusion - Inefficiency - High Cost Company X Social Audit ial Au Soc dit Au l cia So - Focus on audits not on remediation 55

BEYOND AUDITS Audits are not enough to ensure improvement in social working conditions in the factories Support and participation in Social Compliance Programme: harmonizing and mutualising social audits Questioning governments on respect for human rights at work An example of training of our suppliers with a local NGO : Karmojibi Nari 56

TOWARDS CONVERGENCE OF STANDARDS AND MECHANISMS Supporting standards convergence with reference to an international model: Initiative Clause Sociale (Fédération du Commerce et de la Distribution FCD) A enlever 57

ICS : Social Clause Initiative 14 members of the French trade and distribution federation (FCD) use the Carrefour methodology and share audit results 58

GSCP Objectives A global forum To build consensus on best practices To develop a clear and consistent message for suppliers globally A platform To drive convergence by building comparability and transparency To reduce audit fatigue and duplication To develop collaborative efforts for building capacity and training 59

Task Force : Members 60

BEYOND AUDITS An example of training of our suppliers with a local NGO : Karmojibi Nari 61

ENGAGE WITH GOVERNMENTS As the second retailer in the world, Carrefour is in a position to influence positively States where it sources. Multistakeholder forum Bangladesh Demand raise of minimum wage 62

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3. INTEGRATING SOCIAL ISSUES INTO SOURCING PRACTICES Internal process The role of Carrefour employees in promoting human rights within the supply chain 64

Social In the Sourcing process - Social Charter Signed - Supplier Form - Factory Form - Pre Audit SUPPLIER SOURCING S O U R C I N G P R O C E S S SUPPLIER SELECTION - Technical Audits - Social audits SUPPLIER VALIDATION SOURCING PRODUCT COLLECTION - Follow up Social audits PRODUCTION 65 15 avril Fev 09 09 Social présentation

SUPPLIER MONITORING… SUPPLIER MONITORING METHODOLOGY INTERNAL MONITORING PROCEDURES AS PART OF THE COMMERCIAL PROCESS: : Commercial pre-selection of supplier, exchange of information and commercial visit. Technical audit performed by the Quality Department: “Factory Audit”: First initial social Investigation. 66

Social commitment included during the Sourcing Process 67

Social commitment included during the Sourcing Process 1. EXTERNAL AUDIT BY DIFFERENT LOCAL PLAYERS : • External auditors mandated and paid by Carrefour. • Social audits are performed at the FIRST STAGE of the SOURCING PROCESS • Initial Audit performed by SGS ITS STR ( CSCC) BV • Following the ICS Code of Conduct • D result = failure: PSS prevent sourcing from D factory (major incompliance) 2. Corrective action plan shows non-compliances and suggests improvements, and a completion deadlines. 3. Follow up Audit: to verify the implementation of the Corrective action Plan. 4. Possibility of unannounced visit by the FIDH 15 avril 09 Social présentation

Mettre slide document Pre audit / audit Technique 15 avril 09 Social présentation

Mettre slide sur PSS 15 avril 09 Social présentation

A TYPICAL AUDIT THE AUDIT ITINERARY COVERS FOLLOWING STEPS: OPENING MEETING with the factory management. SITE TOUR OBSERVATIONS to assess actual working environment physical conditions and working practices. WORKERS AND STAFF INTERVIEWS, in focus groups and individually CHECKING OF DOCUMENTS AND RECORDS to provide objective evidence of compliance or non-conformity with requirements. CLOSING MEETING with the factory management to discuss and agree upon a Corrective Action Plan. 71

SUPPLIER QUALIFICATION PROCESS / AUDIT A written ALERT NOTIFICATION is sent within 24 hours, when Critical Situations are found : CHILDREN physical presence in the factory. Proved FORCED LABOUR Proved NON-EXISTENT REMUNERATION. Proved EXCESSIVE CRITICAL WORKING HOURS. Proved PHYSICAL ILL-TREATMENT or proved EXCESSIVE DISCIPLINARY MEASURES. DANGEROUS WORK ENVIRONMENT which implies an CORRUPTION immediate risk for workers’ health and/or security. 72

WHAT CAN YOU DO? 1) Pay attention to working conditions in the factories: read audit results and corrective action plans. Alert the person in charge in your office (add names) if you suspect unconformities as mentionned in the first part of the training. Asia team : vay yi Chen and Jason DCNAG : Virginie Bangladesh : Bibek etc 73

WHAT CAN YOU DO? 2) Pay attention to subcontracting: make sure you know where the production is really taking place. 3) Check if factory has set up the charter in local language. Explain to supplier importance for Carrefour of Human rights at work. Discuss results of audits with suppliers. 15 avril 09 Social présentation

WHAT CAN YOU DO? 4) Raise issues with suppliers, ask questions on implementation of corrective action plan. 5) Do not impose unfeasible conditions on suppliers: last minute changes, short lead time, etc. . . 6) Consider social performance alongside quality and price for future sourcing decisions 15 avril 09 Social présentation

DISCUSSION 1. What is your opinion of working conditions in the factories? - What are the main problems you witness - Do you see improvements in the factories? - To you, what is a good supplier? 15 avril 09 Social présentation

DISCUSSION 2. What is your role to support respect for human rights? How do you think you can be influential? Do you have any successful examples of how you have used your influence to improve working conditions of a supplier? Do you see the usefulness of social audits? 3. What are the obstacles / challenges that you face? What obstacles are you facing when discussing results of audits with suppliers? What are the solutions for these problems? How can global retailers help to promote social rights? How could purchasing practices be changed to improve the situation? 77