What does it take to achieve a truly ethical supply chain?

Carissa Gallo for Ace&Jig

Words Billie Jenkins

The Ethical Corporation’s Top Supply Chain Sustainability Trends 2015 report revealed the biggest incentive for large corporations developing their supply chains was eliminating risk, with 32% reporting it as their single, biggest concern. The report collated data from 415 large corporations, and showed that whilst companies were excited about industry collaboration (24%), circular economy (16%) and consumer awareness (11%), they all shared strong concern for risks relating to the ethical conduct of businesses operating within their supply chain.

It is estimated an average 10% of a company’s ethical responsibility can be weighted to their supply chain choices (source: orsAR), and therefore the potential impact supplier relationships can have on their imprint is not a responsibility many organisations can afford to negate. The media, in particular the rise of digital content sharing, has dramatically closed the gap between consumers, overseas suppliers and the organisations they serve. Events, such as the spate of Bangladesh factory fires in 2012, highlight the significance of this new level of transparency in global business conduct, and the importance of ethical conduct for both the communities organisations operate within and company value.

In May this year, ISO will launch its ISO 20400 standard for Sustainable Procurement, a long overdue benchmark, outlining the expectations a company claiming to adhere to responsible, ethical conduct should meet. It is a significant step forward, the first standard with the level of detail needed to comprehend the scope and complexity of supply chain structures supporting global organisations. The draft, passed in February 2016, captures in the first paragraph the parameters of responsibility companies are expected to acknowledge and manage, stating it incorporates all the ‘economic, social and environmental impacts within their sphere of influence’. It is this positive leverage within the ‘sphere of influence’, as opposed to internal behaviours, which is the key to truly responsible business conduct.

In the Ethical Corporation report, 30% of the corporations reported that they believed traceability was growing to be one of the key issues in the ethical supply chain management, alongside environmental awareness. The significance of the ISO 20400, is its contribution to more specific accreditation of good practice, via a recognised provider, and an indication of real progress in the application of discussion which has been happening across industries for many years.

Elaine Cohen, speaking at the Sedex 2016 Supply Chain conference stated that, “Doing business in a sustainable way is not a loss but investment that pays off sooner or later.” For any business aiming for credibility, transparency and efficiency it is the only way to do business. As the understanding of the social and economic consequences of business conduct are better understood, and stakeholder awareness evolves, there has never been greater opportunity for organisations to cultivate a global supply chain which promotes positive impact.

This article was originally published by PNE Group

Billie Jenkins writes about sustainable business for CSR consultants PNE Group.