Inclusive Compliance: The New Playing Field for Inclusive Business Innovations

Most people agree that the poor want to and should take ownership for their own development. Companies sourcing from less developed regions play a role for personal and economic development in origin countries, and should also consider these fundamental factors in their monitoring activities. But this is the exception, not the rule, when it comes to multinational companies that are sourcing from low-income populations and economies.

Not all supply chains are the same, and not all of them are limited to structured factories or facilities. Consider for a moment the difficulties that arise when monitoring labour standards in informal sectors, such as evaluating environmental or social standards across thousands of small farms, or checking standards in thousands of households where women do their work at home for a nearby company.

These informal work settings pose specific challenges for comprehensive monitoring, which includes risk assessments, definition of priorities, training and sensitisation, remediation, and impact assessments. It is impossible for a company to monitor every single actor in the supply chain. Therefore, measures should be taken to make monitoring systems as efficient and effective as possible. Because standards often leave quite some room for interpretation by local communities, standards should be approached from their perspectives. In fact, the target groups of workers should be empowered to define their own standards.

This was the driving force behind the Fair Labor Association’s Sustainable Compliance methodology (SCI). This new approach to monitoring and remediation includes and targeting the root causes of labour code violations. It also can be extended and complement the concept of inclusive compliance, where the target group, (in this case workers, farmers and small informal businesses), plays a bigger role.

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