Sustainability audits on suppliers operating in developing countries

JAC is an association of telecom operators aiming to verify, assess and develop the CSR (Corporate Social Responsibility) implementation across the manufacturing centres of the most important ICT multinational suppliers.

JAC members share resources and best practices to develop long term CSR implementation in the different layers of the ICT Supply Chain at international level.

JAC has been set up by Deutsche Telekom, France Telecom and Telecom Italia in January 2010 with the signature of a Memorandum of Understanding. By this agreement the first members have defined the audit process and tools that have started to implement in June 2010 during the first JAC campaign.

On the 21^st of October 2011, 4 additional members have joined, enlarging the association to a total of 7 Telecom Operators (in alphabetical order): Belgacom, Deutsche Telekom, France Telecom, KPN, Swisscom, Telecom Italia and Vodafone.

Telecom operators that wish to be part of JAC, should respond to the following prerequisites. A JAC member

• Has a structured CSR sourcing department with experienced resources.
• Has signed or will sign a contract with a third party certified audit company specialized in on-site CSR audits at international level.
• Has a contract with supplier which is common at least with 2 JAC members.
• Accepts all terms of the JAC 2010 Memorandum of Understanding and related supplements.
• Accepts all Non Disclosure Agreement terms already signed between the JAC and the suppliers audited
• Will support at its own cost the on-site audits that it will carry out on behalf of JAC.

No subscription costs are required.

The JAC process is basically a coordinated on-site audit program in the area of Corporate Social Responsibility (CSR) based on a common verification, assessment and development methodology, including follow up of corrective action plans. Each member has the responsibility, on behalf of the others, to lead a complete audit process at its costs to suppliers pre-identified in equal parts among the JAC members.

The on-site audit operations follow these guidelines :

• Preparation: knowledge of the audited plant.
• Skilled auditors: the audits are conducted by international audit companies, specialized in social and environmental issues in the plant country
• Confidentiality: Non-Disclosure Agreements are signed with suppliers in order to restrict audit results to JAC members only
• Methodology: check list defined by the JAC members based on the SA 8000 and ISO 14001 standards, and on-site audit with interviews
• Report: describing the audit findings based on objective evidence
• Cooperation with the suppliers: based on the reciprocal awareness of the CSR risk management as key factor for a responsible and sustainable development. 
• Collaboration and development with the suppliers: based on the audit results, corrective action plans are defined with the suppliers to solve any gap highlighted in the audit report, which is followed up by each JAC members up to the full resolution.

The JAC members meet weekly to set the JAC audit agenda, validate audit reports and follow up on corrective action plans. These regular meetings reinforce the optimization of CSR assessments through the exchange of best practices to make the JAC initiative more effective.

Twice a year, the JAC Steering Committee, consisting of senior management representatives of the respective CSR and Sourcing departments, meet to verify the results of the audit campaign and take decisions on next steps.

JAC activities lead to cost and process optimization for both suppliers and telecom operators:

• Suppliers will only receive one CSR audit request on behalf of all telecom operators.
• Suppliers benefit from the adoption of one standard methodology during the overall audit process.
• Telecom operators optimize CSR assessments and follow up process due to the exchange of best practices.

The first JAC audit campaign was carried out by  Deutsche Telekom, France Telecom and Telecom Italia in July 2010. Up to December 2011, 33 audits have been carried out on ICT suppliers in China, Taiwan, India, Japan, South Korea, Eastern Europe and South America covering 155.000 workers in total.

4000 questions have been checked in these trials. A limited number of non-conformities were found and various types of non-compliances. The most common ones relate to working hours, health and safety and wages. A few cases of discrimination and juvenile work were discovered.

The resolution time for the incidents of non-compliance varies for each type. In particular, working hours issues (the limits relate both to regular time and overtime), need several months to be resolved due to the impact on Human Resources management.

Most of the suppliers have accepted to take part in the JAC initiative but some big ICT multinational companies have expressed reluctance to be audited. An escalation by JAC members is in course, in order to overcome such temporary criticality.

This recent enlargement from 3 to 7 telecom operators (Belgacom, KPN, Swisscom and Vodafone joined founding operators Deutsche Telekom, France Telecom and Telcom Italia) has allowed JAC to increase the scope from 30 to 64 suppliers, and will pave the way to cooperate further with the suppliers to ensure long term solutions of CSR Issues and the development of the CSR standards to other layers of the supply chains. 

Other European telecom operators are kindly invited to join this Joint Audit Cooperation.