RESPONSIBLE
SOURCING
PRINCIPLESIMPLEMENTATION GUIDANCEContents
Introduction		3
Human rights		
Forced labor and human trafficking
Child labor
Working time
Wages and benefits
Fair and equal treatment
Workplace safety
Freedom of association
Land rights
Sourcing of minerals

8
16
20
24
30
36
42
48
54

Environmental responsibility		
Environmental compliance
Environmental management
Resource consumption and waste minimization

6

60

61
66
76

Resources		822Introduction
The Responsible Sourcing Principles (RSP) set
expectations for everyone in the PMI supply chain, andreflect our commitment to the Ten Principles of theUnited Nations Global Compact1 and the United Nations
Guiding Principles on Business and Human Rights2.
The RSP are organized around three focus areas: Human Rights, Environmental
Management and Business Integrity. In each of these areas we have set out
the principles that suppliers need to take into account when running theirbusiness operations.
The purpose of this document is to help suppliers understand what is expected
and how a supplier can demonstrate alignment with the RSP.
We understand that suppliers may not all be in a position to demonstrate theiralignment with the RSP in day one. Our approach is one of continuous improvement,
and suppliers can use the guidance in this document to develop a roadmap for
their operations.
This document, although it is guidance, is based on international standards and bestpractice. As PMI’s Sustainability Program advances, we will use this document as thebasis for designing the systems that will monitor and assess suppliers’ alignment with
the RSP.
Certain fundamental beliefs about business conduct unite and guide us at PMI which
are at the heart of our Code of Conduct, known as our Guidebook for Success.
These fundamental beliefs formed the basis of the Business Integrity section of the
PMI Responsible Sourcing Principles. For further guidance on the Business Integrity
principles of the RSP, please refer to the Guidebook for Success which can be foundat www.pmi.com.

1
The UN Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of corevalues in the areas of human rights, labor standards, the environment and anti-corruption:
https://www.unglobalcompact.org/what-is-gc/mission/principles

UN Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy”
Framework: http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf
FAQ: http://www.ohchr.org/Documents/Publications/FAQ_PrinciplesBussinessHR.pdf

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What are the benefits of respecting the RSP?
Respecting the RSP and working to meet its requirements through a process ofdemonstrable continuous improvement will align you with internationally recognized
standards, and help you meet the requirements of PMI. Most importantly, it will enable
you to avoid and/or mitigate potential risks that might have an impact in yourproductivity, performance, and reputation.

A systems approach for implementing the RSP
You can best meet standards by using a systems approach, commonly known as “Plan,
Do, Check, Act” (as shown here).

PolicyCommitment
Performance
Management

Planning

Risk Controls(Procedures)

Monitoring

Roles andResponsibilities

Documentation
Capacity
Building

4This means:
1. Putting a policy commitment in place that aligns with PMI’s RSP andcommunicating the policy internally and externally (including to yourown suppliers).
2. Planning how to achieve the RSP Principles, by identifying and assessing risks
in your operations and supply chain; identifying applicable legal and otherrequirements; and establishing priorities, improvement objectives and plans
to manage the identified risks
3.	Designing and implementing the procedures and other risk controls that embed
the policy commitments into the day to day business operations, including controls
to the processes that you already use to run your business, to ensure that theprocedures are followed.
4.	Defining clear roles and responsibilities and assigning staff to ensure that policies
and procedures are carried out effectively.
5.	Building of internal capacity through awareness, training and communication.
a.	Train all employees, including new hires to the company. Regularly
refresh the training.
b.	Training programs should cover policies and procedures as well as local
legal requirements.
c.	Communicate the company’s grievance procedure and how workers
can confidentially report issues.
d.	Prominently display company policies and procedures and make themreadily available for employees in print or online.
6.	Documenting your procedures and keeping records to be able to demonstrate thatthe policies and procedures are being followed and to show how corrective action
has been taken to address gaps.
7.	Monitoring of the effectiveness of the company’s efforts to implement the policies
and procedures. Establish KPIs, perform audits of your operation and your suppliers,
and track trends and statistics to measure effectiveness and identify actual andpotential problems.
8. Managing performance by addressing gaps and risks when they are identified,with priority being given to the most serious issues first.

5

Human Rights
Forced labor and human trafficking
Child labor
Working time
Wages and benefits
Fair and equal treatment
workplace safety
FREEDOM OF ASSOCIATIONLAND RIGHTS
SOURCING OF MINERALS

6

PMI suppliers are expected to identify, avoid and address
negative impacts on all internationally-recognized human rights,
including those highlighted in this Implementation Guidance.
Depending on the sector, location, and context in which
PMI suppliers or third parties operate, suppliers may need toconsider additional human rights, namely those related to local
communities and vulnerable groups that require particularattention, and conduct due diligence to identify, prevent,mitigate and account for human rights impacts on these groups.
To achieve this, our suppliers must have policies andprocesses in place which are appropriate to their size andcircumstances, including:• A policy commitment to respect human rights;• A human rights due diligence process to identify, prevent,mitigate and account for human rights impacts; and• Processes, including grievance mechanisms where possible,
to enable the remediation of any adverse human rights
impacts they may cause or contribute towards.

7

Forced labor andhuman trafficking
Do not engage in or condone the use of forced or traffickedlabor. Be diligent to identify and address any form of modern
slavery in operations and the supply chain, including prison,indentured, bonded, enslaved or any other form of forcedlabor. Loans or salary advancements must be based on fairterms, clearly explained to the worker, mutually agreed,and do not require the worker to remain with the employer
until repayment is completed. Do not retain or confiscate
the personal papers of any worker including their passports.
Do not allow workers to pay recruitment, processing orplacement fees, and agree with all workers on the termsof their employment in writing at the point of recruitment.
What does this mean?
Forced labor is defined by the International Labour Organization (ILO) as “all work orservice which is exacted from any person under the menace of any penalty and forwhich the person has not offered himself voluntarily.” The ILO estimates that morethan 21 million people around the world are in a situation of forced labor1. It is a serious
violation of a fundamental human right.
Work is voluntary when workers give consent to work and they have the freedom toquit their job at any time without penalty, with reasonable notice.
Work is not voluntary and is considered forced labor when a person has entered intoa job against their will and cannot leave that job without facing a penalty or a threat ofpenalty of any kind.
Penalties can include actual or threats of physical violence, withholding of identity
documents or wages, threats of deportation, and imposing fees that are impossible
to repay.

http://www.ilo.org/global/topics/forced-labour/lang--en/index.htm

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There are several forms of forced labor, as defined below:•	Human trafficking is a process of bringing workers into a situation of exploitation
through a series of actions, including deceptive recruitment and coercion.
•	Debt-bondage is when workers must continue to work in order to repay a debt
to a labor broker, their employer, or another third-party.
•	Indentured labor is when workers are bound to their employer with or without
an employment agreement and are not able to leave at will. Slavery is a form ofindentured labor.
•	Slavery is a situation where an employer or a labor broker exercise (perceived) powerof ownership over a worker.
•	Forced overtime is when workers cannot refuse to work overtime without fearof penalty.
•	Limited freedom of movement means confinement or not allowing workers to leave
the facility grounds and dormitories.
•	Prison labor is when prisoners are used as part of the workforce.

A company’s policies and procedures should always allow workers to resign(after suitable notice) or leave the premises without being penalized for doing so.

9HOW to meet this principle
Procedures (practices)
Recruitment, selection, hiring, and other human resources proceduresshould include:• Ways to track and understand laws and regulations on forced labor andhuman trafficking.
• How to ensure that workers are not required to pay recruitment and placement
fees, or make deposits for their jobs as part of the recruitment, selection andhiring process.
• Job advertisements state the company’s “no fees” policy.
• Make sure that original copies of worker identity documents, such as birthcertificates, national identity cards, or passports, are not held by the company or
recruitment agents, except as needed to obtain or renew visas and work permits.
If foreign contract workers are hired, you should make sure that:•	The labor broker or recruitment agency complies with legal requirements in theworkers’ home country as well as the country where the workers will be employed.
•	The labor broker establishes and implements forced labor prevention policies andprocedures that align with the PMI RSP.
•	Workers are not required to make monetary deposits as a condition for being hired.
To safeguard against unethical recruitment practices, it is important for companies
to exercise effective due diligence in the selection of prospective labor brokers.
This will ensure that applicable requirements are in place, such as: business licenses,
certificates, and permits for all of their operations. A summary of due diligence actions
is listed in the chart below.

WHO

What

How

Receiving country agent

Legal complianceDue diligence review

Sending country agent

Business ethics

Self-assessment

Housing andtransportation providers

PMI RSP

Pre-selection andongoing audits

Service agreements with recruitment agents must state:•	Workers are not required to pay recruitment fees or make deposits.
•	Job advertisements/postings include the “no fees” policy.
•	The agency will reimburse workers for any recruitment fees paid by workers
to sub-agents or others during the recruitment process.
•	Workers are provided a full explanation of the terms of conditions of the job in theirhome country before they are asked to sign the employment agreement.

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The terms and conditions of the employment must be provided in writing and madeclear to the worker.
•	All workers are informed of their legal rights and the terms and conditionsof employment at the time of recruitment in their native language.
•	A copy of the written contract (employment agreement), in their native language,
should be provided to the worker at the time of hire. Both the verbal agreement
and the written contract should contain the following information:– Nature and type of work, including specific job function(s)– Duration of contract, including terms of resignation and termination– Regular work hours, anticipated overtime work hours, base wages andpremium paid for overtime, holiday work and shift work, pay cycle and benefits•	The employment agreement is signed by the worker at the time of hire and always
before they begin work or before they leave their home country, whicheveroccurs first.
•	The contents are clearly explained to the worker before signing.
•	Workers are provided with their own copy of the original agreement and anothercopy is kept on file in the worker’s personnel records.
Workers have freedom of movement and are never physically prevented fromleaving the workplace or housing (where provided). Procedures should include:•	Freedom of the workers to leave the workplace during work hours and worker
housing (e.g. dormitories) including non-work hours without penalty or
unreasonable restrictions.
•	Security guards may not take disciplinary action against workers.
•	Workers are not required to live in employer or recruiter-operated residences.
•	Exit doors cannot be locked or blocked to prevent workers from leaving theworkplace or dormitory.
•	Workers are provided with access to toilets and to clean drinking water at all times
and do not require permission to do so.
•	Workers are free to return to their home country during paid leave, without penalty.

Documentation and Records
You should keep the following on file:•	All worker employment agreements.
•	Agreements with security agencies, recruitment agencies and providers of worker
accommodation.
•	Worker grievance reports related to recruitment practices and records of how they
were resolved, including grievances against recruitment agents.

11•	Records of disciplinary action.
•	Records of pre-departure and arrival training for migrant workers.
•	A list of all contract workers (domestic or foreign) that includes thefollowing information:– Name of contract worker– Country of origin– Date of hire and length of contract– Recruitment agency•	A database of reputable recruitment agencies.

Monitoring
Monitor trends and statistics to identify actual and potential problems, including:•	Establish and track simple KPIs to measure program effectiveness on an ongoingbasis, such as:– The number of new migrant workers required to pay recruitment fees.
– Percentage of new hires who understand their employment agreement.
– Grievances made against recruitment agents for unethical recruitment
practices.
•	Regular review and assessment of worker grievance to determine how well yourrecruitment, selection and hiring requirements are being followed.
•	Engage workers (e.g. interviews, focus groups, surveys) to understand if ethicalrecruitment practices were followed.
•	Regular evaluations (audits) of the performance of recruitment agencies in meetingcompany and legal requirements.
•	Regular self-audits against legal requirements, company requirements, and the PMI
Responsible Sourcing Principles.
Investigate problems and analyze why they occurred. When a situation arises thatit doesn’t follow your company’s forced labor policies and PMI Responsible Sourcing
Principles, you should investigate and address the root causes of the problem to put
in place sustainable solutions to prevent a recurrence.

Best Practice: Conduct regular surveys or interviews of newly arrived migrant
workers to determine if ethical recruitment practices were followed and tomeasure workers’ awareness and understanding of their rights related to forcedlabor and freedom of movement. Results of the survey can be used both toimprove worker awareness and to address workers’ concerns.

12Frequently Asked Questions
Why are foreign contract workers more vulnerable to abuses offorced labor?
Unlike domestic workers, the threat of deportation hangs over the heads of all foreign
contract workers. Monitoring foreign contract labor issues should be handled withsensitivity to their special circumstances. Foreign contract workers tend to be lessvocal because of the high cost of losing their jobs to them and their families.

How can you make sure your company is not employing workers
who are debt-bonded?
Hire workers directly, not through a labor broker. Brokers can take advantage ofworkers. Workers who have fewer employment alternatives and are economicallydesperate might be forced to bond themselves to these brokers as their only way ofgetting a job. The interviewing and selection process can give you an idea of whether
job applicants are under any financial obligation to a third party or paying fees in orderto get a job.

How can you prevent those in charge of recruitment and hiring fromaccepting bribes or ‘under the table’ deals in exchange for a job?
•	Establish and communicate policies against such practices, including procedures toinvestigate and address reports of violations and penalties for confirmed violations.
•	Make sure workers have an effective, confidential grievance procedure for raisingsuch issues.

Can foreign contract workers join unions?
Yes. Both the ILO and the United Nations recognize freedom of association asa “core labor standard,” meaning that it is a basic right at the workplace that all
workers must be able to enjoy without interference. Freedom of association
includes workers forming or joining unions or any other representative organizationsof their choice, and negotiating their terms and conditions as a group. This is called
collective bargaining. However, the right to freedom of association for foreign migrant
workers may be limited by law in some countries. Where this is the case companies
should establish alternative worker organizations to ensure effective workermanagement communication.

13

What situations/practices could result in debt-bondage?
•	Requiring job applicants to pay excessive recruitment fees to recruitment agentsor the company.
•	Asking workers to pay a deposit for their employment and using the loss of thedeposit as a disciplinary measure or to keep workers from leaving the company.
•	Refusal to return workers’ savings or earned wages at the end of the contract, or
upon termination or resignation.
•	Where loan repayment amounts are such that a large portion of a workers’ salaryis used to repay the debt. In such cases, workers may end up working just to pay off
existing debts.

In some countries, the law requires the employer to collect savings
for foreign contract workers. What can the company do so it does not
violate standards on forced labor?
•	The amount of savings must be within the prescribed legal limits and is collectedwith the written consent of the workers.
•	Savings must be placed in individual worker’s savings accounts. Workers should be
able to monitor and access their accounts at any time. The facility must make surethat savings are returned to workers when they leave the job.

What are some examples of violations of workers’ freedomof movement?
•	Preventing workers from leaving their dormitories except when a curfew is agreed
by residents to be reasonable for personal safety.
•	Limiting access to toilets by implementing a system of toilet passes or any other formof restrictions.
•	Unreasonable delay in granting reasonable requests of workers for permission
to leave the workplace or accommodation.

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15

Child labor
Do not use child labor. Minors can be employed in limited
circumstances, provided that they are at least 15 years old,of legal minimum age for employment or of age for thecompletion of compulsory education, whichever is higher.
Workers below 18 cannot do work that may compromise theirhealth, safety or emotional development, or work that involves
the marketing and sales of tobacco products.
What does this mean?
A child is a person under the age of 18. Children are highly vulnerable to exploitation
and abuse and thus require special protection.
This problem exists in all countries and is usually invisible; with children toiling as
domestic servants, working behind the walls of factories and workshops, and hiddenfrom view on farms and plantations.
The worst forms of child labor are the most harmful, and include: slavery, trafficking,selling of a child’s services for money, and other forms of forced labor involving
children in hazardous work.
A young worker is a worker that is between the ages of 15 and 18, and is allowed towork, according to the country’s law.
Companies can employ young workers (also known as juvenile workers), but onlywith restrictions on the type of work performed and the hours of work to protect theirhealth, emotional wellbeing and development. This typically includes restrictions on
hazardous work, working at night, and overtime work.
Every company should consistently follow clearly defined and effective methods toidentify and screen out job applicants who are underage and to ensure that young
workers do not perform hazardous work.

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HOW to meet this principle
Procedures (practices)
Recruitment and other human resources procedures and practices should include:•W ays to track and understand laws and regulations on child labor and young workers.
•F ormal processes to screen out underage workers:– Job postings clearly state the minimum hiring age.
– Review and verification of official proof-of-age documents.
– Requirements for recruitment agents to follow your policies on recruitment andhiring of young workers.
• Training for those responsible for hiring, including recruitment agents, on how to verify
whether identity papers are valid and how to use interviewing and other techniques
for confirming the age of job applicants.
• Protections for young workers.
– Review all jobs in the facility for health and safety hazards and identify those
suitable for young workers.
– Provide young workers with initial and periodic health checks to make sure theirwork does not endanger their health or physical development.
– Ensure employment contracts for include job and working hours’ restrictions
and educational needs, and are signed by the worker’s parents.
– Register young workers with the local labor authority if this is a legal
requirement.
• Written procedure to resolve the discovery of child labor in the workplace in the bestinterests of the child. The procedure should include:– Removing the child from the workplace and ensuring the child is in a safe place– Contacting the parents or guardian, whenever possible, to understand why thechild was working and to agree on situation-specific remediation options, that
may include:• Facilitating the child’s completion of compulsory education• Sponsoring alternative vocational training• Providing a stipend or income replacement for the family until the childreaches legal working age• Hiring an adult family member in place of the child• Re-hiring the child when the child reaches legal working age.
– Investigating how the situation occurred and making any necessary changes
in the recruitment process to prevent a recurrence.
Effective and humane remediation of the discovery of a child in the workplacerequires understanding the specific circumstances of each child, including thefamily’s economic situation.

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Documentation and Records
You should keep the following on file:•C opies of verified proof-of-age documents in the worker’s personnel file(national identity card, birth certificate, local school records, etc.). Do not retain
original documents.
• A register of young workers currently employed.
• An inventory of departments and jobs that are approved for young workers.

Good Practice: Keep copies of the typical types of falsified proof-of-age
documents. Be sure recruitment staff members are familiar with them and use
them on-going basis as a screening tool by comparing them with the documents
submitted by applicants.
• Copies of reports of the discovery of child labor and how the incidents were resolved.

Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish and track simple KPIs to measure program effectiveness on an ongoing basis,such as:– Percentage of job applicants found to be underage;– Number of young workers found in unacceptable jobs (hazardous work, night
shift, overtime, etc.)– Number of underage workers found working in the facility.
• Regularly review recruitment procedures to determine if they are effective inpreventing the hiring of underage workers.
– Include random age verification checks– Review the practices of external recruitment agencies.
• Regularly review job assignments for young workers to verify that they do notendanger their health and safety, or emotional development.
• Periodically review complaints and grievances from workers related to theadministration of your child and young worker labor procedures.
Investigate problems and analyze them for why they occurred. When a situation arisesthat it doesn’t follow your company’s child labor policies and PMI Responsible Sourcing
Principles, you should investigate and address the root causes of the problem and put inplace sustainable solutions to prevent a recurrence.
• For example, if you discover an underage worker in the facility, after taking appropriate
action to remove the child from the workplace, investigate how this occurred. Was
there a gap in your age verification procedure? Did a labor broker not follow yourrequirements?

Good Practice: Often, more than one department might be responsible forviolations of your company’s child labor policies and PMI Responsible Sourcing
Principles. In the case of child labor, Human Resources and Production must work
together to find an appropriate solution that meets standards and is in the bestinterests of the child.

18Frequently Asked Questions
How can you avoid hiring child workers?
A common risk for child labor is when a child’s services are sold to labor brokers byparents or another family member who, very often because of extreme poverty, areunable to feed and provide for them. These agents often transport the children to
distant work sites and present them as older than they are.
You should always require job applicants to provide government authenticated proofof-age documents. If you use a recruitment agent or labor provider, require that they
have such a system in place and periodically monitor it for effectiveness.

How can I verify an applicant’s age during an interview?
An interviewer can ask questions such as, “In what year were you born?” or, “How old
are your siblings?” Then ask a follow-up question such as: “Where do you fit in the age
order of your siblings?” These kinds of techniques may help determine the accuracy of
information from young applicants who may be coached to say they are older than they
really are or are unable to verify their age with correct documentation.

What if the legal minimum working age is lower than the PMI
Responsible Sourcing Principle, or the mandatory age for schooling?
In both cases, PMI’s policy is that the higher age requirement should be followed.
Also, in most countries, the minimum working age and the mandatory age forcompletion of compulsory schooling is the same. However, there are countries where
the minimum age is lower than the age for completion of compulsory schooling. In thiscase, it is PMI’s requirement that you do not to hire workers under the mandatory age
for completion of compulsory schooling even if they are above the minimum age for
employment (except in cases where school and training are legally combined, such as
apprenticeships).

What else can a company do to help address child labor in theworkplace?
In spite of good anti-child labor policies and procedures, it may still be possible todiscover underage workers on the premises. This is because underage workers may
not want to be discovered and lose their jobs. They – and their parents – may dependon the income. In such cases you should remove the child from the workplace andencourage the child to return to school and complete his or her compulsory education.

What if there are young workers doing hazardous work?
Those young workers should be reallocated to other non-hazardous work in thecompany and there should be some sort of verification to determine whether there
were any negative consequences from the workers having done that hazardous work.

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Working time
Allow workers rest time. Regular working hours are incompliance with the country’s laws and do not exceed 48
hours per week on a regular basis. Give workers one day off,
at least 24 consecutive hours, every seven days. Give workers
holidays and leave. Including overtime, limit the working
week to 60 hours, and get voluntary consent from workers
for overtime.
What does this mean?
Limiting working hours helps ensure that workers have adequate rest. Working too
many hours in a day or for too many days in a row without a break can result in fatigue
and inattention, increase the risk of accidents, lower productivity, and cause damage toworkers’ physical and mental health.
Laws that limit overtime and require that workers are given at least one rest
day a week and other time off (like public holidays and vacation) recognize
the importance of rest and providing time for other aspects of a worker’s life
— family, leisure, educational and vocational pursuits. This contributes to theworker’s safety and productivity on the job, and overall well-being.

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HOW to meet this principle
Procedures (practices)
Working time and other human resources procedures should include:•A n accurate time recording system in which all workers record their own work hours(‘clocking in and out’).
•M aking sure that supervisors and security guards do not record hours worked for
employees, to ensure accuracy and transparency.
•A payroll system that provides workers with payslips indicating the number of regularand overtime hours worked for the pay period.
•A n overtime scheduling and approval process that makes sure that workers are free
to refuse overtime (unless prescribed in employment contracts and collective
bargaining agreements).
• A work scheduling process that makes sure all workers are given a least one dayof rest (24 consecutive hours) per seven days worked.

Documentation and Records
You should keep the following on file:•A ccurate records of hours worked for each employee, such as worker payslips andsummary reports generated from the timekeeping and payroll systems.
•R ecords of any complaints related to inaccurate recording of working hours, or
inaccurate wage payments based on recorded hours.
•E mployee agreements that show what regular and overtime hours are expected andwhat rates will be paid.
•A ny documented worker-management agreements on overtime hours, such as in aCollective Bargaining Agreement (CBA).

Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish and track simple KPIs to measure program effectiveness on an ongoing basis,such as:– Total number of overtime hours worked per week/month/year– Percentage of workers receiving at least one 24-hour rest day per week
– Time lost due to absenteeism or lateness relative to the total hours worked– Time lost due to sickness/injury/accident relative to total hours worked.
• Monitor and evaluate trends in hiring, production capacity planning, working hours
and other functions and data to help you meet requirements on regular andovertime hours.
• Perform random checks of the working hours listed on worker payslips against
timekeeping system records to make sure that hours are being recorded properly.

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Investigate problems and analyze why they occurred. When a situation arises that it
doesn’t follow your company’s working time policies and PMI Responsible Sourcing
Principles, you should investigate and address the root causes of the problem to put
in place sustainable solutions to prevent a recurrence.
•F or example, if you find that some workers did not get a day off every week, or worked
more than the legal limit for overtime, find out the root cause(s) of why this happened.
Was it because of unexpected circumstances like a rush order or broken equipment,or due to a larger problem, like high worker turnover?
•W ork with other departments to identify reasonable solutions. Take care to develop
solutions so that the problem does not recur and the solution itself does not create
other problems. For example:– Respond quickly to problems you can fix immediately, like repairing broken
machines or bringing workers from another line or area to help meet an orderwith limited lead time.
– Use your analysis of why problems occur to plan longer-term solutions withother departments or functions. This might mean hiring more workers to meetincreased demand, or rearranging shifts and production schedules.

Frequently Asked Questions
How can a company evaluate and address the problem of excessive
overtime?
Excessive overtime is a very common problem. You can ask the following questions
to investigate and identify both the causes and the effects:• When does excessive overtime happen? What days of the week, months,
part of the production process? What departments are involved?
• How many workers are usually involved? What jobs do they do?
• What are the common causes of overtime? Is it changes in orders, late orpoor quality materials or supplies, or machine breakdowns?
• What are the common impacts? You should check:– attendance/time records for increased lateness, absenteeism during and
immediately after periods of excessive overtime;– medical records for any increase in injuries, accidents and/or otherphysical complaints during and after periods of excessive overtime;– production departments for trends in production quality problems during
peak seasons or during periods of excessive overtime or night work.
Answers to these questions will give you an idea of how to approach the problem.
Solutions can take the form of any or a combination of the following:• Improving workers’ skills through training, mentoring or coaching so that
mistakes and rework does not contribute to overtime.

22• Improving production flow and processes so that delays do not resultin overtime.
• Improving capacity planning so that enough workers are available
to manage demands.
• Hiring additional workers or adding another shift.
• Reviewing the reliability of, and possibly replacing, suppliers.
Companies usually make decisions based on cost-benefit analysis. You should makesure that all costs are factored into your analysis on overtime, including, for example:
the cost of medical expenses, time lost due to illness, injuries, and accidents, andrework could all be caused by workers’ tiredness due to long working hours.

How can I minimize excessive overtime?
Overbooking, poor capacity planning, unanticipated client demands, production
mistakes, high absenteeism, and a lack of flexibility in workers’ skills are typicalcontributors to the need to work excessive overtime.
Suggestions from production managers to reduce the need for overtime include:• Set reasonable production targets and schedules based on realistic labor
efficiency rates. Measures of worker productivity form the basis for setting
targets and schedules. If the efficiency rate is unreasonably set, the timetableis naturally affected and workers will have to work overtime to complete theirtargets. Make sure that labor efficiency rates consider set-up time, and allow
sufficient time for workers to eat, rest, stretch, and go to the toilet.
• Closely coordinate Human Resource plans and production targets. Production
planning should consider past client demands, the complexity of the production
process and workers’ skills.
• Continually upgrade workers’ skills through training, mentoring
and coaching. Having workers with skills that match their jobs reduces theamount of rework, which often leads to the need for overtime. Having multiskilled workers who are competent in more than one operation allows more
flexibility and efficiency in the production process, which in turn increases
productivity.
• Improve communication with supervisors and line managers, and between line
managers and workers. Make sure work instructions are clear and easy to follow.
Reduce errors that could cause costly delays by holding work team meetingsand giving clear instructions. Listen to worker feedback on how to improve
processes.
• Establish and maintain a sense of teamwork and high worker morale.
Workers who work under conditions of fear and intimidation, who are dissatisfied
due to low wages and long hours, who are exposed to unsafe or unhealthy
conditions, are not the most productive workers. On the other hand, workers
who take pride in the organization they work for and are treated well by theirsupervisors and co-workers are in a better position to meet delivery deadlines.

23

Wages and benefits
Pay workers appropriately. Compensation must be enoughto meet workers and their families’ basic needs and generate
discretionary income. Wages meet at least the minimum legal
standards or the appropriate industry benchmarks, where
there are no legal wage requirements. Pay wages regularly
and in full, and allow workers the benefits and leave that they
are entitled to by law. Do not use wage deductions
as a disciplinary measure.
What does this mean?
Workers’ wages should be enough to meet basic living needs and leave somediscretionary income. Where the legal minimum wage or local industry benchmark is
not enough to cover workers basic needs, the employer should strive towards paying aliving wage.
A base wage is what is paid for regular work hours. This is usually a legal minimum
wage set by law. If there is no legal minimum wage, workers must receive the local
industry benchmark wage.
Overtime wages are paid for any work beyond normal work hours, and must be at thepremium rate required by country law or by the local industry benchmark.
A living wage means wages are enough to meet workers’ basic needs for food, shelter,and education for their children, with some money left over after basic needs havebeen met.
Some countries may not set a legal minimum wage. In such cases, companies
must follow the local industry benchmark on base wages. This means making
sure that wages paid by the supplier are comparable to those paid by similarbusinesses in the area.
Where the law does not stipulate the rate for overtime wages, workers should
receive at least 125% of their base wage1.

1
ILO, Hours of Work Convention (C001), Article 6, Paragraph 2: “These regulations shall fix the maximum of additional
hours in each instance, and the rate of pay for overtime shall not be less than one and one-quarter times the regular rate.”

24

HOW to meet this principle
Procedures (practices)Your wages and benefits and other Human Resources procedures should include:• Ways to track and understand laws and regulations on wages and benefits.
•E mployment agreements that clearly state the wage rates workers will earn forregular and overtime work, the pay period and frequency of payments, and any legallyallowed deductions.
•A ccurate and transparent recording of working hours and calculation of wages.
•P roviding payslips to workers every pay period.
•W ays to regularly monitor the practices of a third party or labor provider who holds
workers’ contracts or is responsible for paying their wages and benefits.
•S trict limits on the length of time workers can be kept in trainee/probationary orapprentice positions before they are paid the wages and benefits of regular workers.
•A process that makes sure that workers are paid on time – no more than two weeks
after the end of the pay period.
• Payment methods that include cash, check, or by direct transfer into the worker’s bankaccount. If bank accounts are set up by the company for workers, only the workers
may access and control the accounts.
•W ays to ensure provision of all legally required social security, insurance or medical
benefits.
•D isciplinary procedures that ensure punitive wage deductions or fines are not used.

Best Practice: The Payslip or Paystub
The payslip provides the workers with a record of payment for the work they
perform – both regular and overtime work. It allows workers to determine
whether they were paid the correct amount for all the hours they worked. Even
if the company pays workers using direct deposit into workers’ individual bankaccounts, pay slips are still provided to workers.
• Ways to ensure that piece rate workers are paid at least the legal minimum wage,
whether or not production quotas are met.
• Process to ensure that the wages are properly calculated for:– Regular and overtime wages– Work performed on a rest day and/or legal holiday)– Shift differential (e.g. higher wage rate for night shift).

25

Documentation and Records
You should keep the following on file:•P ayroll registers (preferably computer-generated) based on an accurate recordingof hours worked for all workers who are paid on an hourly or piecework basis and/or are eligible for overtime pay. This typically includes all production workers inmanufacturing agriculture, and those who work for on-site services providers,such as cleaners and cafeteria staff.
• Payslips showing timely wage payment provided to workers that detail regularand overtime hours, regular and overtime wages, benefits, and deductions.
• Payroll registers containing, at a minimum, the following information:– Pay period– Regular hours worked– Overtime hours worked– Regular wages– Overtime wages– Shift differential– Benefits– Bonuses– Gross earnings– Deductions– Net wage
• Specify the base wage and overtime rates, as well as the schedule of wage paymentsin the employment agreement for all workers.
An electronic payroll register that automatically calculates payroll entries basedon hours of work is preferred over manual or handwritten payroll registers,
because it:• Minimizes the possibility for errors in wage and benefits calculation and reduces
the time spent addressing worker complaints and correcting errors.
• Helps to make your pay practices more credible to workers. Calculation errors
create suspicion and dissatisfaction among workers, even if errors were notintentional.
• Eliminates human involvement and increases impartiality and transparency
in the calculation of wages and benefits.
• Keep a record of all changes in workers’ employment status and corresponding
changes in wages and benefits in workers’ individual files.
• Copies of payslips containing the following basic information:– Regular hours and wages (including any shift differential)– Overtime hours and wages– Benefits and deductions (e.g. social insurance, retirement, etc.)– Bonuses

26Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish and track simple KPIs to measure program effectiveness on an ongoing basis,such as:– Frequency and nature of worker complaints related to errors in the calculationof wages, benefits and deductions.
– Turnover rate (high turnover may indicate low worker satisfaction with wage
rates).
• Regularly review the local cost of living and adjust your wages as needed to ensure
you are paying workers a living wage.

Best Practice: Regularly survey workers to find out if they have enough moneyfor basic needs, like food and housing, and if they are able to save a little money
after each pay period. This will help you understand if the company is paying aliving wage.

Investigate problems and analyze why they occurred. When a situation arises thatit doesn’t follow your company’s wages and benefits policies and PMI Responsible
Sourcing Principles, you should investigate and address the root causes of the problem
to put in place sustainable solutions to prevent a recurrence.
Problems related to wages and benefits generally fall under three categories:• Wages and benefits administration, including errors in documentation, records
keeping, or calculation on the part of the payroll clerk or payroll department staff.
	Solutions can include improving payroll systems, pay practices, and/or improving
the skills of administrative staff.
• Low worker awareness or lack of knowledge on wage and benefits policies andprocedures.
	Solutions may take the form of worker training to improve worker knowledgeof policies and procedures, and worker skills in calculating their wages andunderstanding their payslips.
• Worker dissatisfaction with wages and benefits, including that wages are not enoughto meet their basic needs.
	Solutions can include reviewing the wage and benefits package according to job
function, skill level, tenure, etc.

27

Frequently Asked Questions
Is it acceptable to pay certain workers at rates below the legal
minimum wage?
In some countries, there might be a different minimum wage for apprentices,
casual workers and trainees.
The company must make sure that all conditions required by law regarding theemployment of apprentices or trainees are met. You should avoid the following
practices for these workers:• Delaying promoting trainees to permanent status beyond the timeprescribed under local law.
• Regularly dismissing temporary workers to avoid promoting them,
then hiring new ones to meet production requirements.
• Hiring casual/temporary workers on short-term contracts and not
upgrading them to permanent status, even if they have been employedbeyond the period prescribed by law for casual/temporary workers.
• Keeping workers on a temporary or apprenticeship status to avoid paying
legally required benefits that they would be entitled to if they werepermanent employees.
It is important to note that even if the law allows certain workers to be paid less,all workers should still earn a living wage with some discretionary income.

Is it legal to pay foreign workers at less than the minimum, living wage?
Migrant workers are entitled to the legal minimum wage rate of the country in which
they work. Paying foreign workers less for the same work as local employees isdiscrimination on the basis of nationality. Migrant workers should also be paid a living
wage, the same as other workers.

How often should workers be paid?
Wages should be paid at regular intervals and as often as required by law. Usually thismeans paying workers at least once per month. Workers must receive their pay no morethan two weeks after the end of the pay period.

Can workers be paid by other methods rather than money (forexample, in products, food or clothing)?
No. Workers must be paid by cash or check, or by direct deposit to the workers’ bankaccounts. The company may not pay workers with promises of future payment, The
company may not pay workers with promises of future payment, vouchers, coupons,
gift checks, or in goods., vouchers, coupons, gift checks, or in goods.

28Can workers be paid through a third party such as a labor broker orlabor provider?
Companies may use third parties to recruit workers. Once the worker is hired and signs
an employment agreement directly with the company, the worker should receive wages
directly from the company.
Although it is PMI’s preference that all workers be paid directly by you, subcontracted
workers who work for a labor provider may be paid by the labor provider. In thosecases, you should regularly review the labor provider’s wages and benefits records
to ensure that workers are properly compensated.

Can the business make deductions from workers’ wages for meals,
housing, and clothing?
Deductions can be made subject to certain conditions – that the goods or services
that the workers are paying for are adequate, of good quality, and that the cash valueof the goods or services is not inflated. The company must properly account for thesedeductions and must explain them to workers, who must provide full written consent
to such deductions in advance and understand how they will impact income earned.

How can the company know if it is paying a living wage?
Living wages vary from country to country and even region to region. Informationfrom sources like the government, NGOs, and community organizations might help
a company better understand what a living wage should be in its community. Whilemoney and savings are a problem for many, the situation is different when a person
cannot afford to eat. Ask workers (maybe as part of a confidential survey) and listen towhat they say about their day-to-day challenges of meeting the needs of themselves
and their families.

How can the company know if workers are earning discretionary
income?
Talking with or surveying workers is a good way to understand if workers have alittle money left over after each wage payment. Workers should be able to save forunexpected situations (like illness) after basic costs for food and housing are met.
Survey workers and gather and maintain data on the actual cost of living in thelocal community.

Can the business make deductions from workers’ wages for payment ofcash advances/loans?
Some companies offer workers cash advances or loans that are then charged against
future wages. When this occurs, the business should make sure that the maximum
amount allowed for advances is within the ability of the worker to pay back. Cashadvances should not be of amounts that might keep workers from leaving the company
when they wish to, which can create a condition of debt bondage.

29

Fair and equal
treatment
Maintain working practices and a working environment that isinclusive and professional. Do not tolerate offensive, demeaningor abusive behavior, or discrimination of any kind. Provide equal
hiring and employment opportunities and do not discriminate
based on personal characteristics. Make employment related
decisions objectively based on merits.
What does this mean?
Fair and Equal treatment means that there is no distinction, exclusion or preference
based on a personal or physical characteristic which deprives a person access to equal
opportunity or treatment in any area of employment.
Discrimination occurs when a person is treated either favorably or unfavorably due
to their religion, age, disability, gender, race, sexual orientation, caste, marital status,
or union or political membership or affiliation. Discrimination can be deeply rooted
in some countries or cultures, and can lead to an underclass of workers who lack
opportunities to develop and improve.
PMI expects its suppliers to not discriminate against any individual or group ofindividuals in any process or in any area of workplace operations. This includes hiring,
the assignment of wages and benefits, promotion, discipline and termination, and/or
retirement practices.
All workers should be given the same wages for the same work and be given
equal opportunities for training, promotions, wage increases, and benefits.
Discrimination might occur in the recruitment, selection and hiring process, whether
knowingly or unintentionally. It is important to make sure that a job applicant is only
evaluated on his or her ability to do the job.
Disciplinary actions may also be discriminatory if not applied equally to all workers.
Because of this, make sure that there is a clearly defined discipline procedure that is
applied consistently and fairly.

30

Finally, there should be a confidential grievance process in place that allows workers
to voice their concerns and complaints about workplace fairness and discrimination
to management without fear of retaliation.
An effective and confidential grievance procedure provides the company with abuilt-in method to monitor problems related to the implementation of company
policies and procedures.

HOW to meet this principle
Procedures (practices)
Recruitment, selection, hiring, and all other human resources procedures should
include:•W ays to track and understand laws and regulations on discrimination, discipline andgrievance.
•O bjective recruitment, selection and hiring criteria to ensure that workers are selected
solely on their ability to perform the job, including:– Job postings and advertisements include only objective job performancerequirements– Objective selection criteria – knowledge and skills testing, objective interview
questions, etc.
– No medical testing unless part of an objective job requirement (e.g. “ability to lift
xx kilos”) or where legally required.
– Prohibiting asking women applicants about their pregnancy status andconducting pregnancy tests to determine the hiring or continued employmentof female workers.
• Basing wage increases, bonuses and promotions only on clearly defined, objective
performance criteria.

Best Practice: Use objective criteria to determine the value of a job, and evaluate
worker performance as the basis for merit increases, promotion, bonuses, and job
security.
• Documented discipline and termination procedures that are applied equallyto all workers.
• Disciplinary procedures that prohibit the use of verbal or physical abuse or otherinhumane practices.
• Confidential process for workers to report a workplace grievance without fearof retaliation.
• Process to investigate and resolve all reported grievances.

31

Best Practice: Basic Principles of Grievance Handling• Consider employee discipline and grievance handling as two ‘pillars’ for workermanager relations• Recognize the right of employees to express legitimate grievances and seek
solutions• Understand that a result of resolving grievances is building worker trust• Appeal process for workers to contest a disciplinary action or resolution ofa grievance.

Documentation and Records
You should keep the following on file:•E mployment applications, interview forms, job applicant skills tests.
•D ocumentation of decisions to hire (or not hire), transfer, promote or dismiss
an employee.
• Copies of employment documents such as performance evaluations, disciplinary
actions, transfers, promotions, annual leave applications or pregnancy benefits in
employee files.
• Records of disciplinary actions taken.
• Records of worker grievances, and how they were investigated and resolved, whichshould include the following:– Time and date grievance was filed– Name of supervisor/person who first received the grievance or complaint– Analysis of the facts in the grievance– Affirmation or denial of the allegation(s)– Identification of the remedies or adjustments, if any, to be made• A summary of issues gathered from the grievance process, as well as management’s
response(s) to the issues raised, should be posted in areas accessible to the workers,
such as on notice boards and in the cafeteria

Monitoring
Monitor trends and statistics to identify actual and potential problems•E stablish and track simple KPIs to measure program effectiveness on an ongoing basis,such as:– Percentage of grievances addressed within two weeks– Percentage of grievances filed for the same issue– Percentage of disciplinary actions appealed by workers– Comparison of workforce demographics to local community demographics

32•R egularly review worker feedback related to the administration of your company’sfair and equal treatment policies.
• Regularly review and revise policies and procedures to keep them relevant andup-to-date.
• Determine if workers are comfortable using the existing grievance reporting methods.
• Periodic review and analysis of disciplinary actions taken to make sure that discipline
is applied in a fair, consistent and non-discriminatory manner.

Best Practice: Provide guidance for supervisors and managers to take disciplinary
actions in private and in such a way to preserve the worker’s dignity.
• Review the results of exit interviews to determine if employees left the company
because of unfair or unequal treatment.
Investigate problems and analyze why they occurred. When a situation arises that it
doesn’t follow your company’s fair and equal treatment policies and PMI Responsible
Sourcing Principles, you should investigate and address the root causes of the problem
to put in place sustainable solutions to prevent a recurrence.
• Make sure there is a procedure for investigating all grievances, and for taking action
within a certain time frame after it is determined the grievance is justified.
• Review and analyze common violations of disciplinary rules to identify why they arebeing broken, and address them, for example, with worker awareness training orchanges to the rules.
• Do grievance reports show the same issues being reported over and over again?
How long does it take to resolve a grievance?

Frequently Asked Questions
When does discrimination occur in hiring?
Discrimination occurs when a decision to hire or not to hire an applicant is basedon qualities that are not relevant to the job being applied for. In order to ensure nondiscriminatory hiring practices, selection criteria should be based solely on job functions
and competencies outlined in the job description. Objective selection and hiring
policies help assure the employer that it hires employees most suited to do the job,
and avoids hiring workers who lack the competencies required for the job.

What if pregnancy testing is legal under the local law?
Regardless of whether the law allows pregnancy testing or not, the company
should ensure that results of that test are not used to prejudice the decision to hire
an applicant.

33

How can an employer make sure that it avoids discriminationon the basis of pregnancy and maternity?
Examples of positive actions include:• Establish and communicate policies against such practices that
include penalties.
• Ensure that all legal protections meant for pregnant women are
implemented.
• Ensure that workers returning from maternity leave get their former jobs
back or an equivalent position at the same rate of pay.
• Transfer pregnant women working in jobs that present health hazards toother less-hazardous or light work. Transfer should be agreed by bothparties with no reduction in pay.
• Make sure workers have an effective grievance procedure for raising
issues regarding discrimination in the workplace.

How can a company guarantee that worker grievances are kept
confidential?
It is important that workers feel safe from reprisal or punishment when they reporta grievance.
Make sure that all records of grievance proceedings are kept confidential.
The company should appoint someone to keep such records and control access.
Make sure that those responsible for investigating grievance reports respect theconfidentiality of the proceedings, including disciplining anyone who violates worker
confidentiality.
Provide a variety of ways to report so that everyone will feel free to come forward(especially those who do not want to be identified). You can set up suggestion boxes
located in areas that workers are comfortable approaching. The company can also postcontact information of designated staff or worker representatives who workers cancontact confidentially to put forward a grievance.

How can a workplace guarantee the objectivity of its performance
evaluation tools?
A company can guarantee the objectivity of its performance evaluation tools
by ensuring that tools:• have both qualitative and numerical ratings.
• actively use a two-way feedback process where workers have theopportunity to explain reasons for any possible negative results of anevaluation to an impartial Human Resources officer before an evaluation
is made final.

34

How does the company make sure that disciplinary actions arereasonable and that procedures are fair?
The company should establish specific penalties for all areas covered in the rulesof discipline. It should be clear to all employees what type of behavior will be subject
to disciplinary action and what kind of disciplinary action will be taken.
Involve workers when establishing rules and standards. For disciplinary rules andprocedures to be effective, they should be accepted as reasonable to both workers
and managers. Involve your workers and all levels of management when formulatingor revising rules and procedures.
Make sure that, except for gross misconduct, no worker is dismissed for a first offense.
Disciplinary actions should be progressive, increasing in severity over time (verbal
warning, written warning). Start if possible (for minor misconduct or poor performance)with informal advice, coaching and counselling rather than through a formal disciplinary
procedure.
Make sure your employees understand what needs to be done, how their performanceand behavior will be reviewed and over what period, and what will happen if they failto improve. These informal actions should not be recorded in the employee’s
personnel records.
Make sure that disciplinary action is not taken until the case has been carefully
investigated. Employees must have the chance to state their case and to respond toallegations that have been made. If the facts of the case call for formal disciplinary
action, formal procedures should be followed.

Why do companies need to document disciplinary actions?
Disciplinary actions form part of an employee’s record of performance in the company.
When these disciplinary actions are properly documented, the company eliminates therisk of being accused of illegal or improper discipline, up to and including dismissal.
Some companies rely on having dismissed workers sign a resignation letter to avoid
legal challenge of the dismissal. However, when a company has properly documented
a worker’s performance, there might not be a need to do this.

35

Workplace safety
Provide a safe and healthy work environment to prevent
accident and injury. Identify, evaluate and control
occupational health and safety hazards. Where hazards
cannot be controlled effectively at source, ensure workers
have and use appropriate personal protective equipment.
Train workers regularly on health and safety and keep
appropriate records. Accommodation, where provided
either directly or through a third-party, is clean,safe and meet the basic needs of the workers.
What does this mean?
Protecting the health and safety of workers is an essential management responsibility
and a regulatory requirement in most countries.
A workplace Health and Safety Management System is how a company routinely
identifies and controls health and safety hazards to protect workers from workrelated injury and illness, monitors the effectiveness of its procedures, and takes
corrective and preventive action whenever necessary.

36

HOW to meet this principle
Procedures (practices)
Human resources, production and facilities procedures should include:•W ays to track and understand health and safety laws, regulations, and customer
requirements.
•A process to regularly screen your operations and work practices to identify, evaluate
and control health and safety hazards.
•P re-start up hazard evaluation for all new and modified processes and equipment.
•D ocumented safe work procedures for all jobs with identified health and safety
hazards.
•T he design, installation, and maintenance of engineering controls such as ventilation,
barrier guards, and interlocks to minimize the risk of injury and illness.
•P rocedure for the use, maintenance and replacement of personal protective
equipment where hazards cannot be adequately controlled by other means.
A system is ‘self- correcting’. It will enable to you make sure that all requirements
are being consistently met.
• A formal way to identify training needs and deliver appropriate safety and healthtraining, based on legal requirements, customer requirements and job-specificassessments of safety and health hazards.
• Process and procedure to investigate all work-related accidents, injuries, illnesses,
incidents, and “near misses,” and to take corrective and preventive action based on
the investigation findings.
• Emergency preparedness and response procedures for fire, medical emergency, andother types of possible emergency situations (e.g. flood, storm, earthquake, chemical
spill, etc.)• Inspection and maintenance procedures for fire suppression and alarm systems,
fire extinguishers, and exit facilities.
• A formal process for workers to report safety and health concerns without fearof intimidation or reprisal.

Documentation and Records
You should keep the following on file:•R egister of all laws, regulations and customer requirements for health and safety.
•R ecords of health and safety hazard assessments.
•H ealth and safety procedures, such as emergency evacuation, electrical safety,
use of personal protective equipment, industrial hygiene, and others as needed
based on regulations and the company hazard assessment.

37

•H
 ealth and safety committee meeting minutes, action items, and attendance records.
•L og of work-related accidents, injuries and illnesses.
•R ecords of emergency evacuation drills, chemical spill cleanup drills, and other testsof emergency preparedness.
• Internal and third party audit reports, workplace inspections, accident investigation
reports, and compliance inspection reports by regulatory agencies.
•H ealth and safety corrective action plans and reports, including documented evidenceof hazard control improvements made.
•R ecords of training attendance and assessment of knowledge and/or skills (quizzes,
tests, skills demonstrations).
• Inspection and maintenance records for machinery, machine safeguards, local exhaust
ventilation, and other health and safety hazard control systems.

Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish and track key performance indicators (KPIs) to measure program
effectiveness on an ongoing basis, such as:– Accident and injury rates– % of workers trained on specific safety topics– % of audit/inspection issues corrected on time– % of jobs with written safety procedures• Regularly survey workers to measure their satisfaction with workplace policies
and practices.
• If there is a worker-management health and safety committee, use regular meetingsand minutes to gather evidence of problems discussed and to inform the developmentof action plans.
• Measure training effectiveness and learning retention by testing workers immediately
after training, and using follow-up worker questionnaires three to six months after
training.
• Perform regular workplace inspections to verify that all health and safety hazards
are properly controlled, personal protective equipment is used where required, andexhaust ventilation systems are working properly.
• Evaluate every emergency evacuation drill to verify that alarms and notification
systems worked properly and all employees were able to leave the facility in thedesignated time.

38•A
 udit your processes and procedures on a regular basis. Audits should be performedby trained and qualified internal staff or by external auditors.
– Self-audits should be performed annually to determine if you are meeting legal
and customer requirements and that all hazards are effectively controlled.
– Any identified issues should be evaluated to determine their underlying cause(s)and action plans established to put in place corrective and preventive actions.

Best Practice: Worker-Management Health and Safety Committee
Even if it is not a legal requirement, forming a worker-management health andsafety committee is another good way to identify and control safety hazards.
This involves workers in development and implementation of safe work
procedures and other controls, which is important since workers are youreyes and ears in the work area and might spot safety risks before you do. The
Committee, through regular meetings and listening to other workers’ feedback,can help the business achieve its health and safety objectives
Investigate problems and analyze why they occurred. When an audit, inspection orcomplaint indicates the existence of an uncontrolled hazard or non-compliance withcompany health and safety procedures, you should investigate the causes, and put inplace sustainable solutions to prevent a recurrence.
• Every accident and “near miss” is an opportunity to improve your procedures
and other controls. Accidents should be investigated to find the underlying causes
and develop action plans to make improvements that will prevent a recurrence ofthe same incident. Actions should also aim to prevent similar incidents throughout
the business.
• If your internal audit finds the same or similar health and safety issues repeatedly,
it could mean that your process to identify and assign responsibility for putting
in place corrective and preventive actions is not working.
• Similarly, if you have taken action but are still not meeting standards, it could
mean that the corrective actions (controls) themselves are not effective and need
to be improved.

Frequently Asked Questions
How can I best identify and evaluate job-specific health and safety
hazards?
A Job Hazard Analysis (JHA) is a simple approach that breaks a job down into individualtasks as a way to identify hazards before they occur.
It focuses on the relationship between the worker, the task, the tools, and theworkplace. Using this process, after you identify uncontrolled health and safety hazards,
you then take steps to eliminate or reduce them to an acceptable level.

39

Every job can be broken down into job tasks or steps. To begin a job hazard analysis,
watch the employee perform the job and list each step as the worker does it. You
may find it valuable to get input from other workers who have performed the samejob. Later, review the job steps with the employee to make sure you have not omitted
something. Point out that you are evaluating the job itself, not the employee’s job
performance. Include the employee in all phases of the analysis— from reviewing
the job steps and procedures to discussing uncontrolled hazards and recommended
solutions.
Once you have broken the job into specific tasks, the rest of the analysis is answering
the following questions in a consistent manner.
• What can go wrong?
• What would be the consequences (injury or illness)?
• How could it happen?
• How likely is it that it will happen?
• How can it be prevented or controlled?
There are many online resources available to you that include simply forms andtemplates for performing a JSA and developing easy to implement solutions.

Do I need a separate management system for health and safety?
No. The most efficient way to apply a management system approach to meeting healthand safety standards is to use your current business management system, which canbe easily adapted to help your company meet health and safety standards. You should
evaluate your current processes for production, maintenance, and training to make sure
you have the right controls in place.
Of course, once you have put the necessary controls in place, you will need to doregular checking (monitoring) to be sure they are effective.

Will a management system require a lot of documentation and othercomplexity?
This is a very common concern, but a health and safety management system does
not need to be any more formal or complex than the system you use to manage yourbusiness. For example, a procedure can be as simple as a short list of what is to bedone, by whom, and how often. Health and safety regulations themselves can getquite complicated, so your system must be at least detailed enough to meet thoserequirements.
As for records, you only need to maintain items that are needed to verify that you
are meeting standards, such as inspection and maintenance records, training records,
audit reports, and permits.

40

My company has an accredited Quality Management System.
Can we use this system for health and safety?
Yes. In fact, any company that has a formal management system, like ISO 9000 or
ISO 14001, should also use it to manage compliance to health and safety standards
rather than creating a separate health and safety management system. The risk
assessment, regulatory tracking, training, communication, auditing, corrective action,and other elements of these systems can very easily be adapted for health and safety
management.

Is training the best way to control health and safety hazards?
No. Effective training is only part of the solution. Eliminating a hazard completely,
rather than training workers to take special precautions, works better.
Even if you have the most effective training program possible, getting rid of a hazard
entirely (for example, by replacing dangerous outdated equipment or switching to analternative non-toxic chemical) is the best way to guarantee the risk is controlled.

Because workers’ learning styles vary, how can I make sure that thetraining they receive is adequate and effective?
You should use a variety of learning measurement methods to assess whether yourtrainings are adequate for training workers about the health and safety aspects of
their jobs.
Methods include verbal and written testing, on-the-job skills demonstration, and asking
workers to ‘teach’ methods themselves. Remember that not all methods are effective
for every worker, so use a variety of learning measurement methods to ensure thatworkers understand.

What are some other ways I can identify training needs?
Use a combination of methods to determine training needs, such as:• Conduct job hazard analyses for each position in the company.
• Review engineering data for machinery, equipment, and site vehicles.
•	Always review material safety data sheets for chemicals and hazardous
materials.
•	Look at the tools, materials, and equipment workers use in their jobs,
then list the hazards associated with each.
•	Review training programs provided by other businesses in the sameor similar industry.

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FREEDOM OF
ASSOCIATION
Adopt an open attitude towards the activities of trade unions andother worker organizations. Respect and do not interfere with theright of workers to form or join a trade union or representative
organization of their own choosing. Recognize workers’ right tobargain collectively. Recognize workers representatives’ accessto carry out their representative functions in the workplace andto openly communicate regarding working conditions without
fear of discrimination, reprisal, intimidation or harassment.
What does this mean?
Worker freedom to join unions or worker organizations and collective bargaining arebasic building blocks for healthy employer-worker relations. Suppliers should adopt an
open attitude towards the activities of trade unions and their organizational activities.
Freedom of Association means allowing workers to form and join trade unions, worker
associations and worker councils or committees of their own choosing. The purpose
is to have good two-way communication between management and workers.
Collective Bargaining is the way employers and trade union representatives
reach agreements on working conditions, wages, overtime, grievanceprocedures and worker involvement in workplace affairs.
Where the right to freedom of association and collective bargaining is restrictedunder law, the supplier should facilitate, and not hinder, the developmentof parallel means for independent and free association and bargaining.

42

HOW to meet this principle
Procedures (practices)
Human resources procedures and practices should include:•W ays to track and understand laws and regulations on freedom of association andcollective bargaining.
•M ake sure that job applicants are not asked if they have ever been a union memberor representative.
• Process to ensure workers are not discriminated against in salary, benefits,or promotion because they belong to a union.
• Provide a clear and safe way for workers to report discrimination, harassment or abuseof union organizers or members.
• A way to make sure that unions and other worker organizations can conduct theiractivities without interference, including providing paid time off for union/worker
representatives to carry out their duties.

Best Practice: Allow workers to participate in creating or revising workplace rules
and procedures to help ensure broad acceptance and effectiveness.
• A process to limit company support of a labor union or worker organization to theprovision of meeting facilities and basic materials, with no funding provided directly
to the organization or its representatives.
• A procedure describing how workers can peacefully assembly for the purposeof discussing workplace related issues.
• If there is no union, putting in place a formal process for two-way workermanagement communication.
• Ensuring that worker representatives are nominated and elected by the workers.
• A formal collective bargaining process for unionized facilities.
• Procedures to make sure that workers, supervisors and managers are awareof the company’s policies and procedures on freedom of association.

43

Documentation and Records
You should keep the following on file:•A ccurate minutes of union-management meetings or of worker-management
meetings (where no union exists) that cover issues discussed and solutions orsuggestions agreed upon.
Note: minutes should be reviewed and approved by both management and a union/
worker representative.
•T he collective bargaining agreement, if any, with the union.
•L ogs of any complaints or grievances, including how they were resolved. How issues
were addressed should be posted for workers to see.
•F inancial records showing that the union or worker organization is not fundedby the company.

Best Practice: Distribute an employee handbook to all workers that describes
both the legal requirements and the company’s policies and procedures on
freedom of association.

• Records of training provided to workers, supervisors and managers on freedomof association.

Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish and track simple KPIs to measure program effectiveness on an ongoing basis,such as:– % of workers surveyed that understand their rights of freedom of associationand collective bargaining;– % of workers who state that the company respects their rights of freedomof association and collective bargaining.
– Workers who state that they resigned because of discrimination based on theirstatus as a union member or worker representative.
• Regularly review recruitment, selection and hiring procedures to verify that they
do not discriminate against job applicants with union affiliation.
• Periodically review complaints and grievances from workers related to theadministration of your freedom of association and collective bargaining procedures.
• Regularly review records of disciplinary action to verify that workers were notdisciplined because of their union membership or position as a worker representative.

44

Investigate problems and analyze them for why they occurred. When a situationarises that it doesn’t follow your company’s freedom of association policies and PMI
Responsible Sourcing Principles, you should investigate and address the root causesof the problem and put in place sustainable solutions to prevent a recurrence.
•F or example, if you discover that recruitment agencies have discriminated against
job applicants because of union membership, investigate how this occurred. Was
your policy clearly communicated to the agencies? Did an agency not follow yourrequirements? Was a secondary or sub-agent involved?

Best Practice: When talking to workers to gain their perspective on freedomof association, individual face-to-face interviews are preferable to focus groupsof several workers at a time, as workers are often reluctant to speak frankly or
confidentially in groups.
• In some countries workers may perceive the union as not independent frommanagement and the union grievance process to be ineffective and untrustworthy.
If this is the case, the company should act to strengthen the credibility of the union.
Make sure that workers understand the provisions of the collective bargaining
agreement and that they each have a copy; ensure workers are able to choose theirrepresentatives in a democratic election with no company involvement.

45

Frequently Asked Questions
What if the country’s laws limit freedom of association rights?
Where country law prohibits or limits workers’ rights to freedom of association andto bargain collectively, your company must make sure that its practices do not prevent
or workers from forming or joining legally acceptable worker organizations.
For example, you must not pressure workers to join a company-controlled organizationin place of an organization created by and controlled by workers.

Can labor-management councils be a substitute for a union?
Such councils are a good way to promote worker participation and workermanagement dialogue where unions are not permitted by law or if workers havechosen not to have a union.

How can employing workers on short-term recurring contracts violate
freedom of association standards?
In many parts of the world, workers on short-term contracts are not legally permitted
to join or form unions. Companies have avoided unions and violated freedom of
association standards by keeping workers on short-term, temporary contracts. Suchcontracts can also deny workers important benefits, such as sick leave, annual leave andsocial insurance afforded to permanent workers.
Companies should use short-term/temporary labor contracts only when such
employment arrangements are allowed by law and when the permanent workforce
is not sufficient to meet unanticipated order volumes or seasonal demands.

Can foreign contract workers join unions?
Yes. The ILO Convention on Migrant Workers (ILO Convention 97) provides for this right.

What practices would be considered examples of anti-union
discrimination or rights violations?
•D ismissal or threatened dismissal of union members or of workers who communicate
or come in contact with union organizers.
•R equiring workers to sign a resignation letter as a condition of being employed,
and using such letters to dismiss workers if they engage in union activity.

46

•A
 sking applicants and workers whether they are members of a union or asking
their views on unions during the application process or during employment.
• Threatening workers with penalties if they choose to unionize.
• Not allowing workers to speak with other workers during break time.
• Noting an employee’s union affiliation in personnel records, or participating in efforts
to ‘blacklist’ an employee, or hindering the worker’s future work opportunities.
• Refusing to negotiate with a union.
• Prohibiting workers from attending union meetings (for example, assigning overtime
during scheduled union meetings).

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Land rights
Respect the rights and title of individuals and local
communities, including indigenous communities, to theirland and natural resources. Engage in fair negotiations withlocal land holders over land use and transfer. Do not engage
in contentious acquisition of large-scale land rights, or in
any land acquisition that results in involuntary displacementsof people. Suppliers are expected to be transparent in alldecision-making about land use or transfer, and in accordancewith the principles of free, prior and informed consent.
What does this mean?
The United Nations estimates that there are more than over 370 million indigenous
peoples living around the world, in over 90 countries1. They possess unique cultural
ties to ancestral lands, essentially making them custodians of natural resources andecological knowledge. This relationship with land makes them vulnerable to potential
negative impacts of commercial development and business activities.
Indigenous peoples can be harmed when they unknowingly enter into an agreement
without full and informed understanding of the impact(s) it will have on them, theircommunities and their way of life. Additionally, indigenous peoples may not holdformal title to their land and may lack the full legal protections afforded to othercitizens by country and local governments. As a result, there have been manycases where business activities, such as land acquisition and siting of production
operations, have caused or contributed to adverse impacts on indigenous peoples.

1
United Nations Permanent Forum on Indigenous Issues:
http://www.un.org/esa/socdev/unpfii/documents/5session_factsheet1.pdf

48

HOW to meet this principle
Procedures (practices)
Land use and acquisition procedures should include:•W ays to track and understand land rights laws, regulations, international best practice,and customer requirements•A ssessment of the environmental, social and human rights impacts of the projectthat includes:– Identification of all Indigenous peoples who may be affected by the project– Process to jointly assess the project’s impact on cultural heritage, with theaffected communities and Peoples.
– Assessment and understanding of the structure and decision-making processesof the affected communities and Indigenous peoples.
– Evaluation of the direct and indirect impacts for significance and likelihood.
• A way to respect local land rights norms, and customary rights of individuals andcommunities, regardless of legal requirements.
• An engagement process that will ensure full disclosure of project information andimpacts and sufficient time for Indigenous peoples to decide on the project.

Best Practice: Give priority to avoid the impacts on the aspects of cultural
heritage that are essential to the identity of Indigenous peoples lives.
• A process to prevent adverse impacts to the degree possible.
– Where impacts are unavoidable, the impacts on indigenous peoples areminimized, restored, or remedied in an appropriate manner, and to thesatisfaction of the peoples impacted.
• Process to minimize the amount of land required for the project.

Best Practice: Enable indigenous communities to engage in informed decisionmaking by providing them with full project information, including its likely
economic, social, cultural and environmental impacts.
• Process to obtain free, prior and fully informed consent of all affected individuals,
communities, and/or indigenous peoples• A documented and agreed negotiation process.
• Process to provide individuals, communities and indigenous peoples with appropriate
remedy and due process for the development of their land and resources.
• Formal engagement process to last throughout the lifecycle of the project.

49

Documentation and Records
You should keep the following on file:•C ompany land rights policy signed by senior management.
•R egister of all laws, regulations and customer requirements regarding land rights.
•L and rights procedures, including, but not limited to: environmental, social, culturaland human rights impact assessment process, full, prior, informed consent (FPIC)
process, community engagement process, and the land rights grievance process.
•M inutes of meetings and other outreach sessions with individuals, communities
and indigenous peoples.
• Records of grievance reports, including their investigation, resolution and, where
provided, remediation.
• Records of impact remediation provided to affected individuals and communities.
• Attendance records for informational meetings and training.

Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish, track and report simple KPIs to measure program effectivenesson an ongoing basis, such as:– % of project impacts mitigated to satisfaction of the community,– % of community grievances addressed on time
• Regularly survey community members to measure their satisfaction with thecompany’s handling of any project impacts on the community.
• Use regular community meetings to learn about potential problems and how they
can be avoided or remediated.
• Formally evaluate your processes, procedures and outcomes on a regular basis.
Assessments should be performed by trained and qualified internal staff or by external
third parties.
• Self-assessments should be performed annually to determine if you are meeting legal
and customer requirements and that land rights risks are effectively controlled and/or
mitigated.
• Action plans should be developed to address issues identified by assessments
or grievance reports that are mutually agreed by the affected individuals andcommunities.
Effective monitoring and reporting on the impacts of business activities on land
rights are crucial to enable a business to fulfill its responsibility to respect such rights.
Tracking performance helps the business identify trends, including problem areas,
which may require systemic changes in business processes, or best practices tofurther reduce risk and improve performance to meet its responsibility to respectindigenous peoples’ rights

50

Investigate problems and analyze them for why they occurred. When a situation arisesthat it doesn’t follow your company’s land rights policies and PMI Responsible Sourcing
Principles, you should investigate and address the root causes of the problem and put inplace sustainable solutions to prevent a recurrence. For example:•E very identified problem is an opportunity to improve your procedures and othercontrols, and should be investigated to find the underlying causes and develop actionplans to make improvements that will prevent a recurrence.
• If your internal audit finds the same or similar land rights issues repeatedly, it could
mean that your process to identify and assign responsibility for putting in placecorrective and preventive actions is not working.
•S imilarly, if you have taken action but are still not meeting legal standards or the PMI
RSP, it could mean that the corrective actions (controls) themselves are not effective
and need to be improved.

Frequently Asked Questions
Who are indigenous peoples?
There is no single definition of indigenous peoples and a combination of subjective
and objective criteria may be used in identifying indigenous peoples.
One criterion that underpins most definitions is self-identification. If a group of people
defines themselves as indigenous, then, unless obviously illegitimate, such designation
should be respected. According to the ILO Convention 169, “self-identification as
indigenous or tribal shall be regarded as a fundamental criterion for determining thegroups to which the provisions of this Convention apply”.
In addition to self-identification, there are other criteria set out in international
standards, such as ILO Convention 169, which identifies indigenous and tribal peoples
as follows:a)	tribal peoples whose social, cultural and economic conditions distinguish them fromother sections of the country, and whose status is regulated wholly or partially by
their own customs or traditions, or by special laws or regulations;b)	those who descended from the populations which inhabited a country at the timeof conquest or colonization or formation of the current state borders, and who
retain some or all of their own social, economic, cultural and political institutions.

What is a company’s responsibility to respect indigenous peoples’ rights?
Guiding Principle 12 of the UN Guiding Principles on Business and Human Rights(UNGP) states that business has the responsibility to respect the rights of individuals
belonging to groups that require special attention, such as indigenous peoples.
This means:• Where a group self-identifies as indigenous, companies should obtain
Free, Prior, and Informed Consent (FPIC), even if this is not requiredby any government processes.

51

• Consider engaging with the local government to explore the possibilityof recognition and protection of rights. Ensure, though, that this will not
worsen the indigenous peoples’ position or create additional risks to themor their rights; and• Be cautious about entering into agreements with governments that do
not respect the rights of indigenous peoples. Consider ways to encourage
governments to fulfill their human rights obligations, and incorporate
expectations for the protection of and respect for indigenous peoples’
rights into agreements with governments where possible. Having apreviously stated public policy can help.
It is important to note that a business’ responsibility to respect human rights is a global
standard of expected conduct wherever it operates, and exists independently of agovernment’s abilities and/or willingness to fulfill their own human rights obligations.
This means that corporate responsibility exists over and above compliance with nationallaws and regulations.

What are the key elements of any land rights protection program?
1)	Adopt and implement a formal policy (whether on a stand-alone basis or within abroader human rights policy) addressing indigenous peoples’ rights and committing
the business to respect indigenous peoples’ rights.
2)	Conduct land rights due diligence to assess actual or potential adverse impacts
on indigenous peoples’ rights, integrate findings and take action, track andcommunicate externally on performance.
3)	Consult in good faith with indigenous peoples in relation to all matters that may
affect them or their rights.
4)	Commit to obtain (and maintain) the free, prior and informed consent of indigenous
peoples for projects that affect their rights, in line with the spirit of the UN
Declaration on the Rights of Indigenous Peoples.
5)	Establish or cooperate through legitimate processes to remediate any adverse
impacts on indigenous peoples’ rights.
6)	Establish or cooperate with an effective and culturally appropriate grievancemechanism.

What needs to be included in my company’s land rights due diligenceprocess?
Your due diligence process should include:• assessing actual and potential impacts on indigenous peoples’ rights(environmental, economic, social and cultural);• integrating and acting upon the findings;• tracking responses; and• communicating externally how impacts are addressed.

52

How can my company ensure that we are providing indigenous
peoples with free, prior and informed consent (FPIC)?
FREE means no coercion, intimidation, manipulation, or undue influence or pressure.
Indigenous peoples’ consent must be obtained without physical or psychological, direct
or indirect, tactics meant to coerce, manipulate or otherwise pressure the indigenous
decision makers, including written, audio or any other method of communication.
PRIOR implies that consent is to be sought sufficiently in advance of any authorizationor commencement of activities, respecting the length of time it will take to consult withindigenous communities, and for them to reach a consensus decision.
Companies should, as early as possible, seek to agree with indigenous peoples on how
to reach consensus at every stage of a project (e.g., exploration, construction/operation,and closure). This means that FPIC should be obtained prior to the issuance of licenses,
permits or concessions that may impact indigenous peoples’ rights.
It is important to understand that FPIC is not a mere formality to be obtained. FPIC
should be obtained before the proposed activity starts, even if the timeline for obtaining
FPIC interferes with government timelines for issuing licenses and approvals, and is
only valid if obtained after all relevant risk and impact information has been provided toindigenous peoples.
INFORMED means that information is provided that covers the nature, scope andreversibility of the proposed project or activity; the purpose of the project as well as
its duration; areas affected; an assessment of the likely economic, social, cultural andenvironmental impacts; personnel and organizations to be involved in the execution of
the project; and project procedures. Information should also include related mitigation
measures to avoid, minimize or mitigate the identified impacts.
The information must be provided in a way that the indigenous peoples understand(e.g., available in their language), and access (e.g., hard copies should be available inaddition to electronic-only). And sufficient time must be provided for the community toconsider the information.
CONSENT means agreement to a business activity after a company has engaged ingood faith consultation with the affected indigenous peoples. Consent is a formal,
documented “social license to operate.” Indigenous peoples have the right to giveor withhold consent, and may revoke consent previously given if a business does notmeet its obligations under an agreement, or it where consent was given without allnecessary information.
In order to formally obtain and document consent, a company should:• Consult with Indigenous peoples’ representative bodies to negotiate
a process for obtaining consent, which includes identifying the stagesof the project for which consent is to be obtained;• Document the agreed-upon consultation and negotiation process; and• Document the outcomes of the process.

53sourcing of minerals
Have a policy in place to reasonably assure that tantalum,tin, tungsten and gold in the manufactured materials do notfinance or benefit armed groups in the Democratic Republicof the Congo or an adjoining country, or such countries as are
identified in conflict minerals regulations from time to time.
Exercise due diligence on the source and chain of custody ofthese minerals and make due diligence measures available to
PMI upon request.
What does this mean?
Conflict minerals, as defined by US legislation, include the metals tantalum, tin,tungsten and gold, which are the derivatives of the minerals cassiterite, columbite,tantalite and wolframite, respectively. Manufacturing companies often refer to thederivatives of these minerals as 3TG.
The European Union passed a new regulation in May 2017 to stop conflict minerals
and metals from being exported to the EU, global and EU smelters and refiners
from using conflict minerals, and mine workers from being abused. It requires
EU companies to ensure they import these minerals and metals from responsible
sources only. It will start on 1 January 2021 so companies have time to adapt to it.
Mining and sale of these minerals from the Democratic Republic of the Congo (DRC),
help ﬁnance violent conﬂict by militia groups in the DRC and surrounding countries.
Although mining activity is crucial to the DRC economy, mines controlled by militantgroups cause serious social and environmental issues in the region, such as:• Serious human rights abuses, theft, extortion• Violence over control and taxation of resources• Forced and child labor• Wildlife habitat impacts, deforestation, etc.
Suppliers must make sure that its procurement practices, or those of its suppliers,
do not financially support armed groups from the DRC or surrounding countries.

54

HOW to meet this principle
Procedures (practices)
Responsible sourcing of minerals procedures should include:•W ays to track and understand minerals sourcing laws, regulations, international bestpractice, and customer requirements.
•A process to include your responsible minerals sourcing requirements in all suppliercontracts.
• A due diligence process to ensure that minerals in your supply chain are fromconflict-free sources. This should include:– A procedure to review all products that you manufacture (or that others
manufacture on your behalf) to determine if they:• Contain gold, tantalum, tin or tungsten (3TG), and• Those metals are necessary to the function or use of the product

Good Practice: Review the bill of materials for all products to determine
if any of the four conflict minerals are present in the products’ components
or sub-assemblies.
– A way to determine the reasonable country of origin (RCOI) of the materials,
to include:• Obtaining representations from suppliers on whether the materials camefrom the covered countries1 or from scrap sources. A supplier’s RCOI
declaration should state the name and of for each of the smelters thatprovide the minerals used by the supplier, and the countries of originof those minerals.
– Due diligence procedures for any minerals identified to originate in the covered
countries, including:• Requiring suppliers to list the specific source smelter/refiner,• A determination if the smelter/refiner used by the supplier is considered“compliant” by a recognized smelter audit program, such as the Conflict
Free Smelter Program2• Establishing the expectation that the supplier either works with any
non-compliant smelter/refiner to meet standards, or that it changes
to a compliant one.

Good Practice: The Conflict-Free Smelter Program (CFSP) offers companies andtheir suppliers an independent, third-party audit of chain of custody and sourcing
practices to validate compliance with global minerals sourcing standards.
1
Democratic Republic of the Congo (DRC), Angola, Burundi, Central African Republic, the Republic of the Congo,
Rwanda, South Sudan, Tanzania, Uganda and Zambia.

Conflict Free Smelter Program (CFSP) of the Conflict-Free Sourcing Initiative (CFSI):
http://www.conflictfreesourcing.org/conflict-free-smelter-program/

2

55

•A
 process to report annually on the materials the company sources from conflictareas.
•A
 process to disengage from suppliers that do not meet your due diligencerequirements.

Documentation and Records
You should keep the following on file:•C ompany minerals sourcing policy signed by senior management.
•R egister of all laws, regulations and customer requirements regarding minerals
sourcing.
•C opies of communication materials and supplier contracts showing the company’s
minerals sourcing requirements.
•C onflict mineral due diligence procedures, including, but not limited to: procedurefor determining which products and components contain 3TG metals, procedure to
determine country of origin, and for verifying that smelters and refiners in the listed
countries have successfully completed a recognized audit.
•R ecords of supplier representations of the sources of 3TG materials and conformancewith due diligence standards3.
•C opies of conflict minerals reports (CMRs), detailing the mineral origin and smelters
used in the company’s supply chain (the CFSI Conflict Minerals Reporting Template isa free, standardized reporting template available for this purpose).
•A ttendance records for internal and supplier training on conflict minerals.

Monitoring
Monitor trends and statistics to identify actual and potential problems.
•E stablish, track and report simple KPIs to measure program effectiveness on an
ongoing basis, such as:– % of suppliers that have not submitted validated conflict minerals reports– % of 3TG materials sourced from compliant smelters/refiners– % of suppliers with 100%-compliant sources of 3TG minerals• Regularly audit the due diligence process of suppliers that utilize 3TG minerals toensure they are adhering to international standards.
• Periodically participate in a recognized due diligence audit of a smelter/refiner in yoursupply chain.

3OECD Due Diligence for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, 3rd Edition– http://www.oecd-ilibrary.org/docserver/download/2016021e.pdf?expires=1491516952&id=
id&accname=guest&checksum=1230027E0980595D9B897C3C75100A03

56

•F ormally evaluate your processes, procedures and outcomes on a regular basis.
Assessments should be performed by trained and qualified internal staff or by external
third parties.
•S elf-assessments should be performed annually to determine if you are meeting legal
and customer requirements and that conflict minerals risks are effectively controlled
and/or mitigated.
•A ction plans should be developed with your suppliers to improve the performance ofany non-compliant refiners/smelters in their supply chains.
More than 90 percent companies exclusively rely on the Conflict Minerals
Reporting Template (CMRT), a standardized reporting template developed by the
Conflict Free Sourcing Initiative (CFSI), to monitor and report on minerals in their
supply chain sourced from conflict areas.
Investigate problems and analyze them for why they occurred. When a situation arisesthat it doesn’t follow your company’s minerals sourcing policies and PMI Responsible
Sourcing Principles, you should investigate and address the root causes of the problem
and put in place sustainable solutions to prevent a recurrence. For example:• Every identified problem is an opportunity to improve your procedures and othercontrols, and should be investigated to find the underlying causes and develop actionplans to make improvements that will prevent a recurrence.
• If your internal audit finds the same or similar minerals sourcing issues repeatedly,such as the continued use of non-compliant smelters/refiners, it could mean thatyour process to monitor and manager corrective and preventive actions taken by yoursuppliers is not working.
• Similarly, if a supplier reports to you that it has taken action but you learn in a
subsequent audit that the smelters it uses is still no meeting legal standards or the PMI
RSP, it could mean that the supplier is not providing accurate conflict minerals reports
or that the corrective actions taken are not effective and need to be improved.

57

Frequently Asked Questions
How should my company approach the “Reasonable Country of Origin”
determination?
The scope of the process depends on each company’s particular facts andcircumstances and may vary based on a company’s size, products, leverage with
suppliers, and other factors. For most companies, an acceptable reasonable country oforigin determination is one that follows the “supplier engagement” approach outlined in
the OECD Due Diligence Guidance.
As its name suggests, this approach contemplates that a company will engage withthe companies in its supply chain to make inquiries about the source of the conflictminerals and the smelters/refiners used to process the minerals.
You may find that it is difficult to work with suppliers lower in your supply chain thanwith your direct (first tier) suppliers. In these situations you should cooperate with othercompanies in your industry with which you share suppliers to identify the smelters/
refiners in the supply chain. An example of this is the “Conflict Free Sourcing Initiative“(CFSI), which is an electronics industry effort involving well over 100 companies.

What are the key elements of a minerals sourcing program?
Every company should review its choice of suppliers and sourcing decisions andintegrate into its management systems a five-step framework for risk-based due
diligence for responsible supply chains of minerals from conflict-affected andhigh-risk areas:1)	Strengthen your due diligence skills, internal systems and record keeping,including thorough chain of custody tracking and/or traceability systems.
2)	Undertake individually, or in cooperation with your peer companies ortrade association, a risk assessment of mines, transportation routes,
points where minerals are traded and suppliers3)	Implement a process to systematically mitigate risks and regularly
monitor risks in your supply chain4)	Support and participate in independent third-party audit programs(e.g. CFSI) of smelters/refiners5)	Describe annually your due diligence efforts and make the reportavailable at your offices, on your website, and to PMI upon request.

58

What should my company do if we find that there are minerals fromconflict areas in our supply chain?
First, report what you have learned to senior management. What your company does
next is a business decision.
Enhance engagement with suppliers and internal systems of transparency, informationcollection and control over the supply chain, and implement a risk management planwith stakeholders, that includes:– continuing trade throughout the course of measurable risk mitigation
efforts– temporarily suspending trade while pursuing ongoing measurable risk
mitigation– disengaging with a supplier in cases where mitigation appears not
feasible or unacceptable
Once you have addressed the risk, continue to monitor your supply chain with support
from stakeholder networks and peer companies.

59

Environmental
responsibility
Environmental compliance
Environmental Management
Resource consumption and waste minimization

60

Environmental
complianceObtain all necessary environmental permits, licenses andregistrations, and document them appropriately for youroperations. Provide training to relevant personnel to ensureknowledge of and compliance with the permits and otherenvironmental legal requirements.
What does this mean?
Complying with all environmental laws and regulations is a fundamental requirement
for all PMI suppliers. In order to achieve this principle, a supplier should determine theenvironmental laws and regulations that apply to its operations; establish procedures
and controls needed to achieve compliance with the requirement; and periodicallyevaluating its compliance status.
More detail on how compliance should be managed can be found in the“Environmental Management” chapter.

Best Practice: Effective environmental compliance programs will resultin emission reductions, waste handling costs and improved worker healthand safety.

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Practices to meet this principle
Procedures (practices)
Environmental compliance procedures should include:• A formal way to track and understand environmental laws, regulations, and customer
requirements covering:– Permits and licenses to operate– Storage and use of hazardous materials– Emissions to air and water– Spill prevention– Solid and liquid waste– Emergency preparedness, and– any other applicable environmental compliance requirements• Creating an inventory of facility operations and equipment to determine which
compliance requirements apply.
Note: if you have implemented an environmental Management System, this stepwould be part of your assessment of environmental aspects.
• Determining your current compliance status with each of the applicable
environmental compliance requirements This may include reviewing current permits,
operating procedures and records, physically inspecting environmental control
equipment, and reviewing emissions monitoring data.
• Development and implementation of operational procedures, physical controls,and employee training to comply with regulatory requirements.

Best Practice: Incorporate environmental compliance responsibilities into
the job descriptions and performance evaluations of employees whose job
responsibilities can impact environmental compliance.
• Programs for the design, installation, inspection and maintenance of environmental
controls, such as air emissions control equipment and wastewater treatment systems.
• Documented programs for segregation and disposal of solid and liquid waste
products, especially hazardous waste.
• A way to track the expiry dates of all licenses and permits and renew them as required.
• Process to report environmental compliance data and other information required by
local regulatory authorities.

Documentation and Records
You should keep on file the following:• Continuously updated copies of all environmental laws and regulations applicableto the facility62• Copies of key environmental procedures, such as:– Hazardous material storage, handling and use,
– Waste handling, storage and disposal,– Operation of processes and equipment with regulatory impact,– Maintenance and monitoring of emissions control equipment, and– Others that address the facility’s compliance with regulatory requirements.
• Copies of environmental licenses and permits.
• Environmental committee meeting minutes, action items, and attendance records.
• Environmental corrective and preventive action plans and reports, including
documented evidence of risk control improvements made.
• Records of regular monitoring of emissions for regulated air and water contaminants.
• Inspection and maintenance records of emissions control equipment to show thatthe required controls are in place and functional.
• Written records of maintenance for emissions sources (boilers, generators, andproduction equipment) to show that legal regulations are checked and consistently
achieved.
• Copies of internal and third party audit reports and inspection reports by regulatory
agencies and accreditation bodies.
• Written records for workers’ general environmental orientation training andcompliance training for specific jobs (including any special certification), as required.

Monitoring
Monitor trends and statistics to identify actual and potential compliance problems.
• Establish and track simple KPIs to measure compliance with regulatory requirements
on an ongoing basis, such as:– Number of emissions exceedances per month– Number of workers trained on the compliance impact of their job activities– % of identified regulatory non-compliances corrected on time.
• Regularly evaluate your environmental compliance programs and procedures to
identify actual and potential non-compliance issues. Compliance evaluations consistof physical inspections, reviews of documents and records, and interviews withresponsible employees and managers.
• Monitor trends to identify and/or anticipate non-compliance issues and develop
solutions that correct them and prevent them from recurring.
• If there is a worker-management environmental committee, use regular meetingsand minutes to gather evidence of compliance problems discussed and to inform thedevelopment of action plans.
• Measure training effectiveness and learning retention by testing workers immediately
after training, and then again three to six months after training.
• Routinely monitor the achievement of your corrective actions plans in order to stayon track.

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Best Practice: Regularly tracking its compliance status helps the business
identify trends, including problem areas, which may require changes in businessprocesses, or best practices to further reduce compliance risk and to meet its
environmental compliance obligations.
Investigate problems and analyze them for why they occurred. When a situationarises that it doesn’t meet environmental compliance requirements, you should
investigate and address the root causes of the problem and put in place sustainable
solutions to prevent a recurrence. For example:• Every identified compliance issue is an opportunity to improve your procedures andother controls, and should be investigated to find the underlying causes and develop
action plans to make improvements that will prevent a recurrence.
• If your compliance evaluation finds the same or similar non-compliance repeatedly,
it could mean that your process to identify and assign responsibility for putting inplace corrective and preventive actions is not working.
• Similarly, if you have taken action but are still not meeting legal standards or the PMI
RSP, it could mean that the corrective actions (controls) themselves are not effective
and need to be improved.

Frequently Asked Questions
What are some measures I can take to prevent air and water emissions
non-compliances?
Having an effective emissions management plan in place not only keeps the company
in compliance with legal and customer environmental standards, but it will help you
ensure the well-being of workers and community members. For example:• Emissions Inventory – keeping lists of the types of air and water emissions
generated by your production processes and accompanying standards
helps reduce compliance risks.
• Inspecting Source Points – keeping stacks, discharge pipes, drains, airvents, and other emissions discharge points well-maintained means they
are less likely to break down and create a compliance risk.
• Regular Maintenance of Control Equipment – control equipment
such as neutralization systems, bag houses, scrubbers and electrostatic
precipitators require regular maintenance in order to effectively remove
contaminants from your facility’s air and water discharges.
• Emergency Planning – Creating an emergency response plan andprocedures and practicing them, such as for the accidental discharge ofuntreated process wastewater, will enable you to respond quickly andprevent a major event and limit potential damage.
It is also critical to obtain worker buy-in for controlling emissions. Each work area
should have a list of emissions control requirements needed to meet legal, code, andcustomer requirements. Involving workers in the creation of regular maintenance64

plans prioritised by the most important areas for regular inspection will also create an
informed and invested work force. Prioritize areas for regular monitoring, and informworkers of how critical they are for maintaining emissions standards that ensure theirhealth, and that of their community and the general environment.

What are common sources of water contamination and pollution?
Pollution from industrial sources is a major factor contributing to water pollution andnon-compliance with regulatory requirements. Water pollution and contamination
occur when wastewater containing toxic chemicals is leaked or dumped into water
sources. Excessive levels of contaminants in wastewater that exceed regulatory limits
can result in polluting the water supply of not only the company, but potentially thesurrounding community as well. Common industrial sources of water contamination
include acids, alkalis, toxic metals, oil, grease, dyes, pesticides, and fertilizers. Someother damaging pollutants include petroleum products (oils, solvents and fuels)and hot water (which causes thermal pollution, damaging fish and plant life).
Pollutants discharged into water bodies can dissolve, remain suspended in water,or accumulate on the bottom of the water bodies or waterways. All of theseoutcomes may result in water becoming seriously contaminated. Identifying whattypes of products and production processes are in use at the company will lay thegroundwork for understanding applicable regulatory requirements and implementing
the necessary controls.

What needs to be included in my company’s environmental
compliance program?
Your environmental compliance program should include:• Assigning someone with the responsibility and authority forenvironmental compliance;• Finding and understanding all of the environmental licensing, permitting
and operational requirements that apply to your operation;• Inventorying your raw materials, production processes, equipment, solidand liquid wastes, and water and air emissions, and determining thespecific regulatory requirements that apply to each;• Evaluating your current compliance status with each of the identified
regulatory requirements;• Improving existing controls and/or developing and implementing newones needed to bring your operation into compliance with regulations;• Training all affected staff on the environmental requirements that apply
to their jobs;• Maintaining documents and records that demonstrate compliance withenvironmental regulatory requirements; and• Periodically evaluate your compliance with environmental laws and regulations
and making improvements as needed to achieve or maintain compliance.

65Environmental
Management
Put in place a system, appropriate to your size andcircumstance, to manage the environmental aspects ofyour operations, including measures to assess, control andminimize environmental impacts. Implement appropriate
policies to embed environmental practices across youroperations and activities. Assign designated roles within yourorganization to have responsibility for environmental topics.
Take action to prevent or remediate incidents and continually
improve your environmental performance.
What does this mean?
An environmental management system is the set of interdependent policies, process
and procedures that a company uses to achieve its environmental sustainability
objectives.
A management system also serves to continuously improve key business processes
and outcomes to meet core strategic goals. An Environmental Management System is
how a company effectively controls its environmental aspects to prevent both shortterm and long-term adverse environmental impacts and meet its ongoing compliancecommitments.
Environmental management is an important business objective and a regulatory
requirement. An effective Environmental Management System balances theserequirements with running a successful business.

66

ISO 14001 is an international environmental management system specification
modelled after ISO 9000 (Quality Management Systems). It includes criteria for
an Environmental Management System that enables an organization to control its
significant environmental aspects and improve its performance. It does not specify
performance criteria, but describes system elements, including:• Establishing an environmental policy,• Determining the operation’s environmental aspects and impacts,• Establishing environmental objectives and targets,• Assigning resources, roles, responsibility and authority,• Providing competence, training and awareness,• Communication, documentation and recordkeeping,• Implementing operational controls,• Emergency preparedness and response planning,• Monitoring and measuring control effectiveness,• Evaluating compliance,• Taking corrective and preventive action,• Internal system audits, and• Management review of system performance.

67

Practices to meet this principle
Policies (rules)
The company should establish a written environmental policy statement that is:• A clear definition of your company’s approach to managing environmental issues.
This should include commitments to:– Regulatory compliance;– Pollution prevention;– Compliance with other requirements related to the company’s environmental
aspects; and– Continual improvement in environmental performance.
The scope of the policy should address all the company’s significant
environmental aspects and impacts.
• Endorsed and signed by the most senior manager of the facility or company.
• Regularly reviewed and updated to stay aligned with changes in requirements and as
the nature of the company’s environmental impacts change.
• Publicly available.

Assigned Responsibility
Designate a manager with documented responsibility and accountability for
implementing the company’s environmental policy, including:• Knowledge and experience on environmental legal requirements, and the company’senvironmental aspects• Ensuring that the company’s environmental aspects are identified, evaluated forsignificance, and controlled or improved, as needed.
• Routinely evaluating the effectiveness of environmental control measures.
• Monitoring all internal and external complaints and management responses related toenvironmental issues• Making sure that all managers and employees of the company have clearly definedroles and responsibilities for carrying out your environmental policy.
• Performing an annual review of your management system and make any required
adjustments, to ensure it is effective and achieving your policy objectives.

68Procedures (practices)
Company procedures and practices should include:• Ways to track and understand environmental laws, regulations, and customer
requirements.
• A process to review its operations and processes to identify how they can interact
with the environment – also known as “environmental aspects.” Environmental
aspects fall into the following main categories:– Land Use– Energy Consumption– Water Consumption– Waste– Emissions– Community Interactions• A procedure to identify the aspects with the greatest potential environmental impact
and for violation of regulatory requirements (also refer to Frequently Asked Questions
at the end of this document).
• Development and implementation of documented operational procedures andphysical controls to limit the operation’s impact on the environment and to comply
with regulatory requirements.
• Programs for the design, installation, inspection and maintenance of environmental
controls, such as air emissions control equipment and wastewater treatment systems.
• Documented programs for segregation and disposal of waste products, waste
minimisation, recycling and reuse of reusable materials, and energy conservation.
• A formal process to screen and select your suppliers and contractors based on theirability to meet your environmental policies and standards.

An environmental management system is ‘self-correcting.’ It will enable you tomake sure that all legal and customer requirements are being consistently met.

• A formal process for employees and external parties to anonymously report any
concerns regarding the company’s environmental performance.

Communication and Training
Use the following methods to make sure your employees are aware of policies andprocedures:• Provide training for managers, supervisors and employees on your company’senvironmental policy and objective.
• Train on the environmental aspects and impacts of their jobs using classroom
training, on-the-job training, written materials, and work area postings.

69• Refresh training on a regular basis and whenever employees change jobs or
responsibilities.
• Make sure the training covers all applicable environmental laws and regulations.
• Display environmental policies and local legal requirements in areas where workers
will see them and in a language they understand.
• Communicate the company’s environmental policy requirements to the company’scontractors and suppliers using your website, in contract terms and conditions,and during periodic meetings.
• Makes the company’s environmental objectives and performance available
to the public.

Documentation and Records
You should keep the following on file:• Copy of your environmental policy.
• Continuously updated copies of all applicable laws and regulations applicableto the facility• Copies of key environmental procedures, such as:– waste prevention, minimisation and disposal,– operation and maintenance of pollution control equipment,– energy conservation, and– others that address the facility’s significant environmental aspects andregulatory requirements.
• Environmental committee meeting minutes, action items, and attendance records.
• Environmental corrective and preventive action plans and reports, including
documented evidence of risk control improvements made.

Best Practice: Involve Workers
Support the environmental consciousness of your employees.. Topics likerecycling, energy conservation, and reducing human impact on the environment
could be issues they’d like to get involved with. Don’t hesitate to utilise
their knowledge, skills, initiative, and expertise to broaden the company’senvironmental efforts and outreach in the community.

• Copies of internal and third party audit reports and inspection reports by regulatory
agencies and accreditation bodies.

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Monitoring
Monitor trends and statistics to identify actual and potential problems.
• Establish and track simple KPIs to measure program effectiveness on an ongoingbasis, such as:– % of solid waste recycled– Number of emissions exceedances per month– & of workers who understand the company’s environmental objectives– Energy consumed per unit of goods produced.
• Regularly audit your system to identify actual and potential problems meeting internal
standards and regulations. Audits can be performed by trained and qualified internal
staff or by external auditors - including from your own customers.
• Monitor trends to identify and/or anticipate problems and develop solutions that
address concerns and prevent them from recurring.
• Regularly survey workers to measure their understanding and satisfaction withenvironmental policies and practices.
• If there is a worker-management environmental committee, use regular meetingsand minutes to gather evidence of problems discussed and to inform thedevelopment of action plans.
• Measure training effectiveness and learning retention by testing workers immediately
after training, and using follow-up worker questionnaires three to six months after
training.
• Routinely monitor the achievement of your improvement objectives in order to stayon track.
Investigate problems and analyse why they occurred. When a situation arises thatindicates the existence of non-conformance with company environmental policies
and customer code(s) of conduct, the company should investigate the causes, notjust the condition, and what can be done to address them.
• Every environmental incident (e.g. leak, spill, etc.) is an opportunity to improveyour procedures and other controls. Incidents should be investigated to find theunderlying causes and develop action plans to make improvements that will preventa recurrence of the same incident. Actions should also aim to prevent similar
incidents throughout the business.
• If your internal audit finds the same or similar environmental issues repeatedly,
it could mean that your process to identify and assign responsibility for putting
in place corrective and preventive actions is not working.
• Similarly, if you have taken action but are still not meeting standards, it could
mean that the corrective actions (controls) themselves are not effective and need
to be improved.
• Work with other departments to identify reasonable solutions. Take care to develop
solutions so that the problem does not recur and the solution itself does not create
other problems.

71

Why do management systems fail?
• Lack of senior management sponsorship and commitment.
• Failure to assign a senior manager with responsibility and accountability for
implementing the system.
• Creating a system that is more complicated than the business management
system.
• The belief that environmental compliance objectives will conflict withcompany’s business objectives.
• Creating extra or duplicate work that does not add any value and is not
integrated into employee day-to-day activities.

Take care to develop solutions so that the problem does not recur and the solution
itself does not create other problems.

72Frequently Asked Questions
Do I need a separate management system for environment?
No. The most efficient way to apply a management system approach to meeting
environmental standards is to use your current business management system, which
can be easily adapted to help your company meet environmental and other social
responsibility standards. You should evaluate your current processes for production,
maintenance, and training to make sure you have the right controls in place.
Of course, once you have put the necessary controls in place, you will need to doregular checking (monitoring) to be sure they are effective.

Will a management system require a lot of documentation and othercomplexity?
This is a very common concern, but an environmental management system does
not need to be any more formal or complex than the system you use to manage
your business. For example, a procedure can be as simple as a short list of what is tobe done, by whom, and how often. Environmental regulations themselves can getquite complicated, so your system must be at least detailed enough to meet thoserequirements.
As for records, you only need to maintain items that are needed to verify that you aremeeting standards, such as inspection and maintenance records, emissions monitoring
data, training records, audit reports, and permits.

My company has a certified Quality Management System. Can we use
this system for environment?
Yes. In fact, any company that has a formal management system, such as ISO 9001,
can integrate it to manage compliance to environmental standards rather than creatinga separate environmental management system. The risk assessment, regulatory
tracking, training, communication, auditing, corrective action, and other elementsof these systems can very easily be adapted for environmental management.

How do I go about performing an environmental aspect and impact
assessment?
The purpose of any company’s environmental management system is to manage
its environmental aspects in order to minimize or prevent environmental impact.
Identifying its environmental aspects is a helpful way for a company to determine
the elements to emphasize in its environmental management system.

73

You can start to create the company inventory of environmental aspects by listinga few environmental “themes.” An example of an environmental theme is air. A
typical environmental aspect associated with this theme is the emission of CO2. The
environmental impact of that aspect is the greenhouse effect. Other possible themes
are: water, soil, use of energy and raw materials, waste, and so on. You can then makean inventory of potential environmental aspects for the whole company, or by activity
or department (see below).
Environmental Theme

Environmental Aspect

Environmental Impact

Air

Sulphur dioxide
emissions from burning
fuel oil in boilers.

Acid rain (acidification ofwater and soil)

Water

Discharge of wastewaterfrom plating operations

Poisoning of fish; metal
contamination of plants

Soil

Leakages from storage
tanks

Soil contamination

EnergyUse of water, fueloil, natural gas, andelectricity.

Depletion of natural
resources, air pollution,
greenhouse effect

In creating your inventory, you only have to identify the environmental aspects that you
can either directly control or over which you have some influence. For example, you
can directly control the amount of fuel oil used at your facility, but you probably haveno control or influence over the fuel used to generate the electricity you purchase.
Once you have created the inventory of aspects, the next step is to assign significanceto each one. Significant environmental aspects will be addressed in the management
system, either in terms of establishing or maintaining controls, or setting improvement
objectives and targets.
The most direct way to determine significance is to establish a number of rating
criteria and use them to evaluate your environmental aspects. For example, possible
significance criteria could include:• Are there legal requirements that govern the aspect?
• How widespread is the aspect across the facility/company?
• Are there company or customer standards in place?
• Are there associated environmental impacts with permanent/irreversible
damage?
• Is there any significant impact on employees?
• Can it be improved?

74After weighing the significance of each of your company’s aspects, the result is alisting of which environmental aspects are significant and must therefore be controlled
or improved.
Your company must keep its significant environmental aspects in mind when setting
environmental objectives and targets. If an aspect has little or no potential for
improvement, it will be determined less significant. This makes it easier to develop
objectives and targets for the significant environmental aspects.

What is Plan-Do-Check-Act?
Plan-Do-Check-Act is a way of describing a management system to show how risks
are controlled and how processes and performance are continually improved.
Plan means to identify requirements (laws and standards), evaluating risks that may
prevent you from meeting those standards, and establishing policies, objectives,and processes needed to meet standards and achieve objectives.
Do means assigning responsibilities, implementing your policies and procedures,training, and communicating.
Check is making sure that you are achieving your objectives and meeting standards.
This involves measuring performance using Key Performance Indicators (KPIs),
performing audits, surveying workers and community members, and other ways
to evaluate how you are doing.
Act is taking corrective and preventive actions when your results are different fromyour goals, such as when audits find non-compliances. This step also includes a regularreview by senior management of the suitability and effectiveness of your overall system.
Outcomes and decisions from that review are used to Plan system improvements.

75

Resource
consumption &waste minimization
Minimize consumption of natural resources, prevent pollution
and reduce generation of waste, wastewater, carbon
emissions and other environmental impacts associated withyour operations and your products in line with precautionary
principles. Set targets for improvement, measure performance,and report on them.
What does this mean?
The purpose of reducing the consumption of resources and minimizing waste
generation is pollution prevention. Why manage a compliance problem when it can beprevented? Pollution prevention is the elimination or reduction of waste and emissions
at the source, and is the most cost-effective approach to environmental compliance.
If a company does not generate emissions or waste, it doesn’t have to permit them,track them, or invest in expensive control technologies.
Research has shown that for every expenditure on pollution prevention, a suppliersaves nine times that amount in raw materials, energy costs, time spent on permitting
and monitoring activities, and in treatment and disposal costs.
Source reduction is fundamentally different and more desirable than treatment
and disposal – or even recycling. However, companies often do not takeadvantage of the opportunities for source reduction because regulations typicallyfocus exclusively on treatment and disposal.

76Practices to meet this principle
Procedures (practices)
Company procedures and practices should include:• Ways to track and understand environmental laws, regulations, and customer
requirements related to resource reduction and waste minimization.
• A process to review its operations and processes to identify opportunities to modify
or replace processes and systems in order to reduce or eliminate:– Energy consumption (electricity, natural gas, propane, fuel oil, gasoline, etc.)– Water consumption– Use of hazardous materials– Generation of solid and liquid waste – both hazardous and non-hazardous– Emissions to air and water• A procedure to identify the opportunities with the greatest potential for reductions
in environmental impact and for return on investment.
• Development and implementation of modifications to existing processes andequipment designed to reduce resource consumption and waste generation.
• Programs for the design, installation and operation of resource conservation controls,
such as energy management and raw material reuse/reprocessing systems.

Best Practice: Companies that have replaced chlorinated degreasing solventswith alcohol-based systems have saved up to $170,000 per year in the costs
for raw materials, waste disposal and treatment of air emissions.
• A process actively solicit suggestions from employees and suppliers on how
to reduce resource consumption and waste generation.

Documentation and Records
You should keep on file the following:• Up-to-date copies of all laws and regulations related to pollution prevention thatare applicable to the facility• Copies of key resource reduction and waste minimization procedures, such as:– Operation of energy management systems (heating and cooling temperature
control; automatic lighting controls; etc.);– Operation and maintenance of production equipment to maintain peak
operating efficiency;– Re-use and/or reprocessing of production raw materials; and– others that address the facility’s pollution prevention programs.

77• Energy consumption and waste generation records, such as utility bills and hazardous
waste manifests.
• Copies of corrective and preventive action plans and reports, including documented
evidence of improvements made.
• Copies of internal and third party energy and waste audits and inspection reports byregulatory agencies and accreditation bodies.
• Records of employee training on the company’s resource reduction and waste
minimization programs.

Monitoring
Monitor trends and statistics to identify actual and potential problems andopportunities for further improvement.
• Establish, track and report simple KPIs to measure program effectivenesson an ongoing basis, such as:– Electricity consumption*,– Water consumption*,– Volume of hazardous waste generated (solid and liquid)– Emissions treatment costs– Raw materials costs*– Staff time spent managing environmental permitting and emissions monitoring*raw numbers or normalized per unit of production• Regularly review the implementation status of your pollution prevention objectives
and make adjustments if off track.
• Formally evaluate your pollution prevention program and outcomes on a regularbasis.
• Action plans should be developed to address issues identified by monitoring,assessments or employee suggestions.

Best Practice: Changing to a “pollution prevention culture” is an ongoing process
and a commitment by everyone in the company that needs to be supported
by a focus on goals and standards. Progress in achieving goals should becommunicated to all employees, who should be empowered to report pollution
prevention ideas and take action.”
Investigate problems and analyze them for why they occurred. When a situationarises that it doesn’t follow your company’s resource reduction and waste
minimization policies and PMI Responsible Sourcing Principles, you should investigate
and address the root causes of the problem and put in place sustainable solutions
to prevent a recurrence. For example:• Every identified problem is an opportunity to improve your procedures and othercontrols, and should be investigated to find the underlying causes and develop actionplans to make improvements that will prevent a recurrence.

78• If your energy or water consumption monitoring finds the same or similar issues
repeatedly, it could mean that your process to identify and assign responsibility
for putting in place corrective and preventive actions is not working.
• Similarly, if you have taken action but are still not meeting internal requirementsor the PMI RSP, it could mean that the corrective actions (controls) themselves
are not effective and need to be improved.

Frequently Asked Questions
How is resource conservation and waste minimization related topollution prevention?
They are essentially the same and are a step beyond regulatory compliance. Pollution
prevention is any practice that reduces resource consumption and eliminates, or
prevents pollution at its source. Also known as “source reduction,” it is the “ounce-ofprevention” approach to resource reduction and waste management. Reducing theamount of pollution produced means less waste to control, treat, or dispose of. Less
pollution means less hazards posed to public health and the environment.
Pollution prevention is reducing or eliminating waste at the source by modifying
production processes, using of non-toxic or less toxic substances, implementing energy
conservation measures, and reusing or recycling materials rather than letting them
become part of a facility’s waste stream

What are some basic approaches to resource conservation and waste
minimization?
Pollution prevention approaches can be applied to all potential and actual pollutiongenerating activities, including those found in the energy, agriculture, manufacturing
and commercial sectors. Prevention practices are essential for preserving wetlands,
groundwater sources and other critical ecosystems – areas in which it is especially
important to stop pollution before it begins.
In the energy sector, pollution prevention can reduce environmental damages fromextraction, processing, transport and combustion of fuels. Pollution prevention
approaches include:• Increasing efficiency in energy use;
• Use of environmentally benign fuel sources.
In the agricultural sector, pollution prevention approaches include:• Reducing the use of water and chemical inputs;• Adoption of less environmentally harmful pesticides or cultivation of crop
strains with natural resistance to pests; and• Protection of sensitive areas.

79

In the manufacturing sector, examples of resource reduction and waste minimization
practices include:• Modifying a production process to use less raw materials and/or produce
less waste• Using non-toxic or less toxic chemicals as cleaners, degreasers and othermaintenance chemicals• Implementing water and energy conservation measures• Reusing materials such as packaging material, chemical containers andpallets rather than disposing of them as waste
In offices and retail stores examples of pollution prevention practices include:• Replacing incandescent and halogen lighting with CFL or LED;
• Installing systems to turn off lights when not in use;
• Automatically turning down heating and air conditioning systems during
off-hours;• Using LED display screens and turning off computers when not in use;
• Switching to non-toxic cleaning compounds.

Why is resource conservation and waste minimization important?
Pollution prevention reduces both financial costs (waste management and clean up)
and environmental costs (health problems and environmental damage). Pollution
prevention protects the environment by conserving and protecting natural resources
while strengthening economic growth through more efficient industrial production
and less need for businesses and communities to handle waste.

80

81

Resources
Forced Labor
International Labour Organization: http://www.ilo.org• Forced labour, modern slavery and human trafficking: http://www.ilo.org/global/topics/
forced-labour/lang--en/index.htm• Forced Labour Convention, 1930 (No. 29): http://www.ilo.org/dyn/normlex/en/f?p=NO
RMLEXPUB:12100:0::NO::P12100_ILO_CODE:C029• Protocol of 2014 to the Forced Labour Convention, 1930: http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:P029• Abolition of Forced Labour Convention, 1957 (No. 105): http://www.ilo.org/dyn/normlex/en/f?p=1000:12100:0::NO::P12100_ILO_CODE:C105• ILO Better Work: http://betterwork.org/global/?cat=10&paged=2
Fair Labor Association• http://www.fairlabor.org/our-work/code-of-conductir Labor Association• http://www.fairlabor.org/sites/default/files/fla_complete_code_and_benchmarks.pdf
Ethical Trading Initiative• http://www.ethicaltrade.org/eti-base-code/1-employment-freely-chosen
US Department of Labor Responsible Business Toolkit• https://www.dol.gov/ilab/child-forced-labor/index.htm
Verite Research• http://www.verite.org/helpwanted/toolkit/

Child Labor
International Labor Organization (ILO)• ILO Convention C182, Worst Forms of Child Labor• ILO Child labor standards: http://www.ilo.org/global/standards/subjects-covered-byinternational-labour-standards/child-labour/lang--en/index.htm
Fair Labor Association• http://www.fairlabor.org/our-work/code-of-conductir Labor Association• http://www.fairlabor.org/sites/default/files/fla_complete_code_and_benchmarks.pdf
Ethical Trading Initiative• http://www.ethicaltrade.org/eti-base-code/1-employment-freely-chosen
US Department of Labor Responsible Business Toolkit• https://www.dol.gov/ilab/child-forced-labor/index.htm
Verite Research• http://www.verite.org/helpwanted/toolkit/
ILO Better Work• http://betterwork.org/global/?cat=10&paged=282

Working TimeInternational Labour Organization (ILO)• Working time – http://www.ilo.org/empent/areas/business-helpdesk/WCMS_DOC_
ENT_HLP_TIM_EN/lang--en/index.htm
Ethical Trading Initiative (ETI): http://www.eti.org• ETI Base Code: http://www.ethicaltrade.org/resources/key-eti-resources/eti-basecode• Purchasing practices case studies: http://www.ethicaltrade.org/resources/key-etiresources/purchasing-practices-case-studies• Principles of Implementation: http://www.ethicaltrade.org/resources/key-etiresources/principles-implementation
Verité: http://www.verite.org• For Workers’ Benefit – Solving Overtime Problems in Chines Factories: http://www.
verite.org/sites/default/files/Chinese_Overtime_White_Paper.pdf
Impactt: http://www.impacttlimited.com• Impactt Overtime Project: http://www.impacttlimited.com/case-studies/impacttovertime-project

Wages and Benefits
International Labour Organization: http://www.ilo.org• ILO Labour Standards on Wages: http://www.ilo.org/global/standards/subjectscovered-by-international-labour-standards/wages/lang--en/index.htm• ILO TRAVAIL – Wages and Income: http://www.ilo.org/travail/areasofwork/wages-andincome/lang--en/index.htm
Ethical Trading Initiative (ETI): http://www.eti.org• ETI Base Code: http://www.ethicaltrade.org/resources/key-eti-resources/eti-basecode• Living wage: make it a reality: http://www.ethicaltrade.org/resources/key-etiresources/living-wage-eti-conference-08-briefing-paper
UN Global Compact• “The Labour Principles – A Guide for Business:” http://www.unglobalcompact.org/
docs/issues_doc/labour/the_labour_principles_a_guide_for_business.pdf

Workplace Safety
International Labor Organization• Guidelines on Occupational Safety and Health Management Systems (ILO-OSH
2001): http://www.ilo.org/safework/areasofwork/occupational-safety-and-healthmanagement- systems/lang--en/index.htm• ILO Occupational Safety and Health: http://www.ilo.org/safework/lang--en/index.htm
Ethical Trading Initiative (ETI): http://www.eti.org• ETI Base Code: http://www.ethicaltrade.org/resources/key-eti-resources/eti-basecode• Principles of Implementation: http://www.ethicaltrade.org/resources/key-etiresources/principles-implementation
UN Global Compact• “The Labor Principles – A Guide for Business:” http://www.unglobalcompact.org/docs/
issues_doc/labor/the_labor_principles_a_guide_for_business.pdf

83United States Occupational Safety and Health Administration (OSHA):• http://www.osha.gov/Publications/safety-health-management-systems.pdf
European Union Agency for Health and Safety at Work• http://osha.europa.eu/en
OHSAS 18001• http://www.bsigroup.com/en/Assessment-and-certification- services/managementsystems/Standards-and-Schemes/BSOHSAS-18001/

Freedom of Association
International Labour Organization• ILO Helpdesk – Freedom of Association: http://www.ilo.org/empent/areas/businesshelpdesk/WCMS_DOC_ENT_HLP_FOA_EN/lang--en/index.htm• ILO Helpdesk – Collective Bargaining: http://www.ilo.org/empent/areas/businesshelpdesk/WCMS_DOC_ENT_HLP_CB_EN/lang--en/index.htm
Ethical Trading Initiative (ETI): http://www.eti.org• ETI Base Code: http://www.ethicaltrade.org/resources/key-eti-resources/eti-basecode• ETI – Freedom of Association and Collective Bargaining guidance: http://www.
ethicaltrade.org/resources/freedom-association-in-company-supply-chains• ETI – Union rights at work: http://www.ethicaltrade.org/in-action/issues/trade-unionrights
UN Global Compact• “The Labour Principles – A Guide for Business:” http://www.unglobalcompact.org/
docs/issues_doc/labour/the_labour_principles_a_guide_for_business.pdf• UN Global Compact Human Rights Dilemmas forum: http://human-rights.
unglobalcompact.org/dilemmas/freedom-of-association/
International Trade Unions Congress: http://www.ituc-csi.org/
International Covenant on Civil and Political Rights• Article 22 – Freedom of Association: http://www.ohchr.org/EN/ProfessionalInterest/
Pages/CCPR.aspx
International Covenant on Economic Social and Cultural Rights• Article 8 – Freedom of Association and the Right to Organise: http://www.ohchr.org/
EN/ProfessionalInterest/Pages/CESCR.aspx
European Convention on Human Rights• Article 10 – Freedom of Assembly and Association: http://www.echr.coe.int/
Documents/Convention_ENG.pdf
European Social Charter• (Part 1 – Freedom of Association): https://rm.coe.
int/CoERMPublicCommonSearchServices/
DisplayDCTMContent?documentId=090000168048b059

Land Rights
International Labor Organization• Indigenous and Tribal Peoples Convention, 1989 (No. 169): http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312314• Indigenous and Tribal Populations Recommendation, 1957 (No. 104): http://www.ilo.
org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO:12100:P12100_INSTRUMENT_
ID:312442:NO

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United Nations• Declaration on the Rights of Indigenous peoples: http://www.un.org/esa/socdev/
unpfii/documents/DRIPS_en.pdf• UN Global Compact – Preserving the Livelihoods of Indigenous peoples: https://www.
unglobalcompact.org/what-is-gc/our-work/social/indigenous-people• UN Global Compact – A Business Reference Guide: United Nations Declaration on the
Rights of Indigenous peoples: https://www.unglobalcompact.org/docs/issues_doc/
human_rights/IndigenousPeoples/BusinessGuide.pdf
International Finance Corporation (IFC):• Performance Standards on Environmental and Social Sustainability (2012): http://www.
ifc.org/wps/wcm/connect/115482804a0255db96fbffd1a5d13d27/PS_English_2012_
Full-Document.pdf?MOD=AJPERES

Sourcing of Minerals
Conflict Free Sourcing Initiative (CFSI): www.conflictfreesourcing.org/about/• Conflict-Free Smelter Program (CFSP): http://www.conflictfreesourcing.org/smelterintroduction/• CFSP Compliant Smelters & Refiners: http://www.conflictfreesourcing.org/conflictfree-smelter-refiner-lists/• CFSI Publications and Due Diligence Guidance: http://www.conflictfreesourcing.org/
additional-training-and-resources/publications-and-guidance/
Organisation for Economic Cooperation and Development (OECD)• OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas: http://www.oecd.org/corporate/mne/mining.
htm• Simplified guidance: http://www.oecd.org/daf/inv/mne/EasytoUseGuide_English.pdf
U.S. Securities and Exchange Commission• Disclosing the Use of Conflict Minerals: https://www.sec.gov/opa/Article/2012-2012163htm---related-materials.html

Environmental Management Systems
Ethical Trading Initiative (ETI): www.ethicaltrade.org• ETI Base Code: http://www.ethicaltrade.org/resources/key-eti-resources/eti-basecode• Principles of Implementation: http://www.ethicaltrade.org/resources/key-etiresources/principles-implementation
United States Environmental Protection Agency (EPA)• EPA for Businesses and Non-Profits: http://www.epa.gov/epahome/business.htm
European Commission• Environment: http://ec.europa.eu/environment/index_en.htm• Eco-Management and Audit Scheme (EMAS): http://ec.europa.eu/environment/emas/
index_en.htm
International Organization for Standardization (ISO)• ISO 14000 family – Environmental Management: https://www.iso.org/iso-14001environmental-management.html• ISO 150001 – Energy Management: https://www.iso.org/iso-50001-energymanagement.html

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