Country risk ratings and countries subject to Woolworths
ethical sourcing audits
This document explains Woolworths’ country risk assessment process and sets the criteria for
deciding which countries should be subject to a Woolworths’ ethical sourcing audit, an
approved waiver or an exemption.
Country risk information source
All risk data used to establish WoW Country Risk Matrix is sourced from Maplecroft Global
Risk Analytics. Additional sources of risk data may be used for further industry sector or
region specific assessments.
Maplecroft is a leading global risk analytics, research and strategic forecasting service
provider. It offers a wide ranging portfolio of risk indices, interactive maps, expert country risk
analysis, risk calculators, scorecards and dashboards for 197 countries. These technological
solutions identify emerging trends, business opportunities and risks to investments and supply
chains worldwide.
Indices used to evaluate country risk?
The key indices used to classify all countries according to their level of risk from ethical
sourcing perspective are:
•
•
•
•
Supply Chain/Labour Rights and Protection Index
This index is made up of a cluster of indices for child labour; forced labour; trafficking;
freedom of association and collective bargaining; discrimination in the workplace; and
working conditions.
Health & Safety Index
Corruption Risk Index
Rule of Law Index
Appendix 1 - Country Risk Matrix
Appendix 2 - Definitions of Indices
Country risk classification
Individual risk index scores and classification
• Each risk index is scored between 0-10 (0= highest risk and 10= lowest risk)
• The scale of 0-10 is divided into 4 levels of severity:
Risk Level
Very high
High
Moderate
Low
Risk score
0 - 2.5
>2.5 – 5.0
>5.0 – 7.5
>7.5 - 10
Colour grading
Overall country risk classification for our ethical sourcing decisions
The overall country risk rating is done in two phases:
Phase 1
The three indices of Supply Chain/Labour Rights and Protection, Health & Safety and
Corruption risk indices are combined to rate overall country risk for the purpose of our ethical
sourcing decisions. Lowest scored index determines the overall rating in phase 1.
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Phase 2
Countries that have all three Phase 1 indices rated ‘Moderate’ receive an overall ‘Moderate’
rating. Countries with a mix of ‘Moderate’ and ‘Low’ rating in Phase 1, are assessed using an
additional index. The Rule of Law Index is used as an indicator of law enforcement to ensure
our efforts remain focused on countries that have ineffective legal and regulatory practices
and enforcement. If the Rule of Law index is ‘Low’, the country is given an overall rating of
‘Low’ (see Appendix 1).
Countries subject to ethical sourcing audits
Overall Country
Risk Rating
Very High
High
Moderate
Low
Options to discuss
Subject to full scope of WoW ethical audit or a limited number of
approved waivers.
Exempt from ethical audits.
Note: regardless of any exemptions or waivers, Woolworths reserve the right to ask for or
commission an ethical audit if:
● specific areas of risk emerge in exempt countries;
● our staff visit the facility and believe that an ethical audit is warranted; or
● we are alerted by a credible third party regarding mistreatment of workers, dangerous
working conditions and other breaches of labour laws and conventions.
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APPENIX 1 - Country Risk Matrix
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APPENDIX 2 - DEFINITIONS OF RISK INDICES
The Supply Chain/Labour Rights and Protection Index
The Supply Chain/Labour Rights and Protection Index measures the risk of association with,
and involvement in, violations of labour rights in 197 countries.
The index is composed of six different indices: child labour; forced labour; trafficking; freedom
of association and collective bargaining; discrimination in the workplace; and working
conditions.
Labour rights exist as fundamental human rights in the workplace and are underpinned in the
International Bill of Human Rights (the Universal Declaration of Human Rights, the
International Covenant on Civil and Political Rights and the International Covenant on
Economic, Social and Cultural Rights).
Labour rights are enshrined in the International Labour Organisation's (ILO) labour
conventions which are in the form of international treaties and have been largely ratified by
states. However, labour rights violations persist, particularly in the developing world, including
in the emerging economies, and often, domestic laws violate international labour standards
despite a state's ratification.
At a minimum, states and employers are expected to implement the core labour standards as
defined by the ILO:
• Freedom of association and collective bargaining
• Prohibition of all forms of forced labour
• Elimination of the worst forms of child labour
• Non-discrimination in employment
The Child
Labour Index
Definitions
Sub- indices comprising the Labour Rights and Protection Index
The Child Labour Index is a component of Maplecroft’s Labour Rights and
Protection cluster of indices.
The Child Labour Index indicates the risk of child labour to business and
global supply chains. Risks include the perceived complicity of companies
through association with the employment of children by business partners
contributing to a value chain.
The risk of direct employment of children may arise due to deficiencies in
the establishment and implementation of mechanisms to prevent child
labour at the national and/or provincial level.
Violations of the prohibition of child labour impose obstacles to the
exercise of children's rights to education, childhood, development, play
and health.
The Forced or
Involuntary
Labour Index
The Forced or Involuntary Labour Index is a component of Maplecroft’s
Labour Rights and Protection cluster of indices.
The Forced and Involuntary Labour Index indicates the risk of forced
labour to business and global supply chains. Risks include the perceived
complicity of companies in forced labour through violations committed by
business partners that contribute to value chains.
Maplecroft calculates the index by analysing the frequency, duration,
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coverage and severity of reported forced labour violations in 197 countries,
as well as structure and process indicators such as legal frameworks and
the efficacy of their implementation.
The
Discrimination
in the
Workplace
Index
The Discrimination in the Workplace Index is a component of Maplecroft’s
Labour Rights and Protection cluster indices.
The Discrimination in the Workplace Index indicates the risk of
discrimination in the workplace to business and global supply chains. The
Index examines the extent to which individuals are treated less favourably,
directly or indirectly, in access to employment and/or in the workplace
because of their gender, age, ethnicity, religion or belief, disability,
contraction of HIV/AIDS, migration status, nationality, sexual orientation or
gender reassignment or based on any other grounds not related to the
requirements of the job which a person is required to undertake.
The Index investigates the extent to which individuals are treated less
favourably than others in comparable position and situation, without
reasonable and objective justification, when accessing employment and
during employment, especially in relation to working conditions, such as
compensation, working hours and health, safety and security, training and
promotion opportunities. Additionally, it highlights the extent to which
workers may be subjected to harassment and hostility in the workplace as
a form of unjust or prejudicial differentiation of such workers from other
employees in the workplace on grounds, such as their gender, age,
ethnicity, religion or belief, disability, contraction of HIV/AIDS, migration
status, nationality, sexual orientation or gender reassignment.
The Working
Conditions
Index
The Working Conditions Index is a component of Maplecroft’s Labour
Rights and Protection cluster of indices.
The Working Conditions Index measures the prevalence and gravity of
sub-standard working conditions, particularly in relation to minimum wage,
working hours, and health and safety in the workplace. Businesses are
exposed to these risks through the practices of state and non-state actors
which limit the right of a person to just and favourable working conditions.
Risks arise from the potential existence of poor working conditions in
companies' global value chains (i.e. in their own operations, or in those of
their suppliers, subcontractors, distribution networks or business partners).
Violations of the right to just and favourable working conditions include the
payment of wages that are below living wage and thus do not support a
worker and their family; discriminatory pay gaps; unreasonably long
working hours; workplace conditions below health and safety standards,
including the failure to provide effective protective equipment where
necessary or equipment that is safe to use and the failure to provide
adequate occupational health and safety (OHS) training to prevent injuries.
The Trafficking
Index
The Trafficking in Persons Index is a component of Maplecroft’s Labour
Rights and Protection cluster.
The Trafficking in Persons Index indicates the risks to business and global
supply chains posed by the illegal trade of human beings for the purpose
of exploitation. Companies may face trafficking risks in any region of the
world and at all stages of operation, supply and distribution.
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In view of the global extent of the phenomenon, no individual company can
conclude that it is safe from the risk of complicity in human trafficking,
whether by the nature of the sector in which it operates or the context in
which it is established.
The Freedom of
Association and
Collective
Bargaining
Index
The Freedom of Association and Collective Bargaining Index is a
component of Maplecroft’s Labour Rights and Protection cluster of indices.
The Freedom of Association and Collective Bargaining Index measures
the level of risk posed to business by allegations of complicity or direct
involvement in violations of the rights to freedom of association and
collective bargaining.
Maplecroft quantifies human rights risk that responsible business is exposed to through possible
association with, and exposure to, human rights violations at a country level, based on the most recently
published data in 2012/2013.All data sources are disclosed on www.maplecroft.com.
The Health & Safety Risk Index
Maplecroft's Health and Safety Risk Index assesses the risk associated with poor
occupational health and safety in 186 countries. In accordance with the Occupational Health
Safety Convention 1981, for the purpose of this index, 'health', in relation to work, indicates
not merely the absence of disease or infirmity, it also includes 'the physical and mental
elements affecting health' which are directly related to safety and hygiene at work.
The World Health Organization (WHO) has summarised the various definitions of
occupational health and safety (OHS) and has characterised OHS good practice as an activity
that:
●
●
●
●
Protects and promotes the health of workers by preventing and controlling diseases and
accidents and by eliminating occupational factors and conditions hazardous to health and
safety at work
Develops and promotes healthy and safe practices, work environments and workplaces
Enhances the physical, mental and social well-being of workers and support for the
development and maintenance of their working capacity, as well as professional and
social development at work
Enables workers to conduct socially and economically productive lives and to contribute
positively to sustainable development
The International Labour Organization (ILO) estimates that two million people die annually
from occupational accidents and diseases, and approximately 4% of the world's GDP is lost
through the cost of injury, death and disease through absence from work, sickness and
disability and survivor benefits. This makes good OHS a crucial goal for businesses and
employers who wish to have a safe and productive workforce.
Corruption Risk index
The Business Integrity and Corruption Index is a component of Maplecroft’s Access to
Remedy cluster of indices.
The Business Integrity and Corruption Index indicates the risk to companies and global supply
chains presented by inadequate integrity and corruption. The prevalence and persistence of
corruption in the public and private sectors, as well as the efficacy of government efforts to
combat corruption can pose significant risk to business reputation and operation.
Rule of Law Index
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The Rule of Law Index assesses the risk relating to the ineffectiveness of legal and regulatory
practices, based upon judicial independence, judicial effectiveness, and the
comprehensiveness, transparency and consistent application of business-relevant regulation
in a country.
According to the United Nations, the rule of law refers to a principle of governance in which all
persons, institutions and entities, public and private, including the State itself, are accountable
to laws that are publicly promulgated, equally enforced and independently adjudicated.
Rule of law, therefore, serves as a check on abuses of private and state power, ensuring fair
access and equitable justice. It ensures that individuals and groups can succeed in defending
their legal rights. This holds particular importance in the protection of human rights. From a
business perspective, the rule of law is important for consistent oversight and enforcement of
the laws.
On a broader level, the rule of law ensures that the political and judicial systems are
predictable and act in the interest of society, fostering economic and social development. In
countries where politicians are not accountable to the people and are able to exert significant
influence over the judiciary, the application and enforcement of laws and regulations can
change suddenly. This creates a climate of uncertainty, distrust and instability.
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