Big effort to clean up supply chains

Globalisation has brought many challenges to the business world, but few rival that of ensuring that ever-extending supply chains are managed - with ever-increasing transparency - to the satisfaction of campaigning NGOs, the media and customers and consumers.

Much of our work has been helping companies such as Ford, Nike and Starbucks to rattle their supply chains by insisting on higher standards of ethical, social and environmental performance.

Nike, in particular, took its industry by surprise this year when its latest corporate responsibility report laid bare much of its own supply chain - information it had long said was too sensitive to disclose.

In many areas, growing numbers of companies have felt compelled to see who could disclose most.

Since 1993, SustainAbility has monitored trends in corporate disclosure and communication with a range of partners, among them the UN and Standard & Poor's.

Risk & Opportunity, our latest report on global trends in corporate non-financial reporting, was launched last year and we are now building up to the next survey, which will be published late next year.

In the meantime, our US team has been reading through 200 of the latest generation of corporate reports in search of emerging best practice, including supply chain management.

The reports reveal:

* First: Most companies say they comply with basic supply chain standards such as core environment, health and safety legislation, and labour standards.

* Second: Many companies say they do not permit suppliers to use child or forced labour, and that they comply with minimum wage laws, environmental regulations, overtime restrictions and so on. But you don't have to be an anti-globalisation fanatic to wonder how accurate most of this reporting might be.

The top-scoring business in our 2004 survey was the UK's Co-operative Financial Services, which resulted from the union of the Co-operative Insurance Society (CIS) and The Co-operative Bank.

CFS provides a raft of information on their suppliers, including the ecological and ethical screens that are integrated into how they do business.

Importantly, too, CFS has not only measured the effectiveness of its supplier screens, but also published the results. Even more impressively, CFS has measured the additional costs of pursuing ethical and sustainability best practice compared with lower-cost options of similar quality. And it has surveyed suppliers on their awareness of ethical policies. In the US, meanwhile, a growing number of major brands have been made uncomfortably aware of the need to shine a spotlight back down their supply chains.

John Elkington has been described as the "dean of the corporate-responsibility movement for three decades". 


Ways to handle outsourcing


SustainAbility's 12 steps to manage the corporate social responsibility implications of outsourcing in their home and recipient countries:


1. Consult with affected stakeholders before making a decision to outsource.


2. Clearly articulate policy and be honest and transparent about company decisions.


3. Limit or avoid involuntary redundancy.


4. Invest in retraining and skill development for affected employees.


5. Work with communities to help find ways to fill the gaps created by outsourcing.


6. Work with suppliers in the recipient country to develop best practice and awareness.


7. Set standards for suppliers and monitor their implementation.


8. Train and develop new employees and provide growth opportunities.


9. Help employees deal with psychological and cultural issues that may be involved.


10. Listen to local stakeholders to understand their needs and perspectives.


11. Invest in community, to secure the company's long-term social licence to operate.


12. Share technologies and skills to enable local people and companies to advance.