Our Due Diligence Setup

Why

It is not enough to establish a Code of Conduct, having it signed, and then putting it in the drawer for it to collect dust. To act responsibly is to define clear social- and environmental standards and to continuously evaluate and improve on these in close collaboration with your partners. This requires a strong due diligence system.

At Beirholm, our due diligence system takes on a lifecycle approach. It spans the careful selection of potential manufacturing partners, the forging of long and strong partnerships for mutual gain, the ongoing evaluation and identification of areas of improvement, frequent visits and independent audits, and the establishment of a grievance and remedy mechanism for the workers at the factories.

As for the grievance mechanism, we require the following of our manufacturers:

The grievance mechanism should be legitimate and accessible to all workers. It should be predictable and equitable towards all workers including vulnerable people and minorities. The manufacturers are to ensure that the grievance mechanism is transparent and rights-compatible and a source of continuous learning for the manufacturer and the workers. The grievance mechanism should be based on a mutual engagement and dialogue.

How

We have broken down our Due Diligence process into two chapters: qualification and cooperation. The qualification chapter includes 3 phases.

Phase 1:

• Country risk assessment is performed. Here, we evaluate topics such as safety of visiting, raw material sourcing options, social- and environmental reputation of the tetxile industry
• Manufacturer risk assessment is performed. The scope of this assessment is mainly derived from the risks identified in the country risk assessment

Phase 2:

• Beirholms sourcing department will make initital visits to the potential manufacturing partner. 
• Beirholms quality control and sourcing department will jointly visit the potential manufacturing partner
• Beirholms other departments will be involved if no critical findings are evident and we choose to proceed with the relationship

Based on our experience, it takes about 2 years for a potential manufacturer to be accepted to our supply chain portfolio.

Phase 3:

• To approve a potential manufacturer to enter our supply chain portfolio, the manufacturer has undergone visits from Beirholm, audits, visits to our office in Denmark, several trial orders, the signing of our Code of Conduct and Supplier Agreement, as well as setting up operational- and project teams
• The factories have also been screened in terms of infrastructure and setup, and social- and environmental compliance and future possibilities
• The manufacturing partner also has to comply with minimum requirements such as BSCI compliance, and a grievance and remediation policy has to be in place

The cooperation chapter takes form as a continuous evaluation along a matrix with importance and resource costs as the main dimensions. The assessment of a partner manufacturer is based on:

• Common goal(s)
• Cooperation form
• Social- and environmental responsibility and possibility including grievance and remedy mechanism and policy
• Systems and infrastructure
• Resources
• Competences