In October, Ethical Corporation hosted a sustainable supply chain conference in London. Speakers included Marks & Spencer, Nestlé, Carbon Disclosure Project, Heineken, Ericsson, the Ethical Trading Initiative, BT, Nike, Reckitt Benckiser, Oxfam UK, and EcoVadis. Some key areas focused on included:
- When it comes to selecting countries or regions to source from, sustainability is usually considered afterwards. Buying Practices can be further embedded into sourcing departments through ramping up the importance of sustainability in RFP templates, using financial rewards, and developing a series of rewards for suppliers that buyers can offer (including longer contracts and increased volumes.)
- NGOs and companies are often perceived as being at opposite ends of the chess board. However, it is clear now that supply chain collaboration is not just evident in Western brands but also amongst Asian brands. These collaborations are driving industry change.
- Industry standards are set in some areas (ILO standards), but not so clear in others (carbon footprinting.) Companies want to use an established global standard (i.e. Carbon Disclosure Project) to report their environmental data to stakeholders. It is crucial that companies engage their suppliers through a recognized standard to reduce the reporting burden on suppliers.
- Increasing legislation, such as the Dodd-Frank Act and the California Transparency in Supply Chains Act in 2012, particularly in the US are compelling companies to take a more robust approach to monitoring third party activities. However, in comparison implementation in Europe has been slower and the UK Bribery Act is not considered as significant as the FCPA.
- Supplier audits are not effectively utilized to roll out significant and tangible changes over time for many reasons, including it being unclear to suppliers what corrective actions to undertake. With vast supplier bases across the globe it is clear that for many companies this will take time. However, a pragmatic approach, clear change management communication strategies post audit and structured Corrective Action Plan (CAP) templates are clearly on the agenda.
- The supply chain has become increasingly more global and complex which presents greater challenges and risks. Risk commodities such as palm oil or production in high risks zones needs to prioritized. Continuous monitoring is critical in conjunction with ensuring suppliers signup to standards, help suppliers meet standards, or seek alternatives. NGO input should be factored into decisions as they likely to be the judge, and it is better to have a discussion in private than in public.
- Given the growing pressures on depleting natural resources, the need to maximize bottom line profits and decrease reputational social risks, it comes as no great surprise that a growing number of competitors are collaborating through working together on capacity building in sustainability or through sector specific groups (i.e. retailers collaborating via industry groupings such as the Ethical Trading Initiative.)
This article was written by Jasmin Aswani, CSR Senior Analyst at Ecovadis
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