We are delighted to feature a guest post from Jennifer Lovell. A PhD-level chemist by training, she worked for Shell in senior strategy and procurement roles, and was deeply involved in that organisation’s supply chain “worker welfare” programme. She is now a consultant in procurement and strategy.
How can businesses most effectively respect and promote the rights and welfare of workers employed in the supply chain? That is a big and challenging question for procurement with purpose.
Worker Welfare comprises three elements: labour rights, working conditions and living conditions. Unfortunately, some questionable behaviours and practices have been adopted across industry sectors over many years and have become deeply embedded. Even though these practices may fall within the law and are considered by some to be culturally acceptable, they may still lead to poor worker welfare outcomes. These include fatigue, social isolation, poor nutrition, mental health problems, compromised workplace safety, the erosion of labour rights through poor employment practices, as well as crowded, unsanitary living conditions.
In the oil and gas supply chain, there are particular challenges when managing worker welfare. For a start, there’s the scale, with tens of thousands of workers at any one time, employed by a broad range of companies, at workplaces often located in remote areas. The industry is mature and supply chains need to stay cost competitive. Past initiatives to address issues have resulted in inconsistent improvements, and individual company improvements can lead to inequalities between workers at nearby sites. And crucially, what can companies do that will make a lasting impact? To help answer this question, two components that support sustained improvement are shared approaches through collaboration between organisations, and embedding change into company systems.
Back in 2017, a group of leading engineering and construction companies began working together to raise the bar in promoting the rights and welfare of workers across the industry, forming the organisation Building Responsibly. Now with 16 member companies, which encompass 1 million workers across 100 countries, the group champions the creation and adoption of common principles and practices, designed by the industry for the industry. This includes developing tools, engaging workers, clients, governments, civil society and international organisations with the mission to drive innovation and continuous improvement in worker welfare.
An example of the kind of change we are talking about is preventing bonded labour, the situation where migrant workers rely on recruitment agencies operating in their home countries. The process run by the agency involves significant costs, from identifying and recruiting workers on behalf of the client, to training and relocation. Common practice placed the responsibility for these fees on the workers themselves, often resulting in them working for months with de facto zero pay until they pay back the recruitment costs.
There is a growing consensus these costs should be borne by the employer, but changing the situation is tough to sustain by an individual employer on a project by project basis. Long term improvement requires realignment of the recruitment operating model, close collaboration between multiple parties and engagement of newly-recruited workers to ensure the new policy is implemented. A move towards lasting change is demonstrated by a successful pilot coordinated by the International Labour Organisation with construction group Vinci, in collaboration with the Qatar authorities, that focused on creating a migration corridor between Qatar and Bangladesh with no recruitment fees for workers. The program resulted in an “immediate and profound” improvement of placement agency practices. (More detail via this link).
A second component for achieving lasting change is deeply embedding principles and practices into the ways of working of client companies. Shell is a supporter of Building Responsibly (BR), and has integrated the four key elements of the BR methodology into its HSSE compliance framework, and operationalised the requirements into its procurement systems, including supplier qualification, with auditing to strengthen monitoring of progress (more here).
The elements are:
1. to conduct a risk assessment based on local circumstances, such as the country’s position in an independent labour rights risk index, type of work and so on;
2. to assess suppliers’ capabilities to manage worker welfare;
3. where worker welfare risk is high, to require suppliers in the contract to create their own worker welfare management plan; and
4. to require suppliers to monitor the implementation of their plan, including gaining worker feedback.
Implementation was driven through a dedicated change management plan including training. This approach, defined through principles and implemented on a risk basis, has the advantage of being adaptable to many different situations, at all tiers of the value chain. Shell is now working with ipieca, IOGP and BR towards good and consistent standards of worker welfare that are normalised in the industry.