Audits and trainings are often ineffective at fomenting long-lasting improvements in labor and environmental standards in the supply chain. New technologies and transformative engagement models must be used to bring information directly to suppliers—beyond the first tier—to help them become more sustainable.
There is a gap in good governance and rule of law in countries from which companies are sourcing. Companies should use their influence and buying power as a catalyst to promote sustainability.
Collaborations form because there is a specific lever of influence at a specific time. So, collaborations should have a mission, clear objectives, and a defined time frame. Ultimately, the onus is on government and business to pick up where collaborations leave off.
“Suppliers are businesses, and we talk too much about them as if they are remote. The biggest lesson I have learned from speaking with suppliers is that they are confused and fearful about what their customers are asking and why. Companies need to better articulate why sustainability is important.” —Carmel Giblin, Sedex
“In many cases, we are put in the position of playing the role of local law enforcement. It is time to reassess how companies engage their value chains, civil society, and government in order to distribute responsibilities to be more effective in the long term.” —Marcela Manubens, Unilever
“It’s too much to expect business to move forward on its own. Business must be more assertive to push governments to start acting like governments. Smart legislation that leads to change is possible.” —Dan Rees, Better Work
Norton introduced the session by asking whether equitable supply chains are possible given that we have been discussing related issues for 20 years.
Rees said that supply chain sustainability is not a high priority for many companies due to commercial reasons. Sustainability is marginalized to assessing compliance and labor standards, issues that do not drive value for the company. Rees also noted that despite the fact the International Labour Organization (ILO) has existed for a century, many countries’ basic laws and protections are lacking. There is a gap in governance. The question he posed, therefore, is how companies can use their buying power as a catalyst to improve sustainability.
Giblin noted that companies have been getting much better at working with their suppliers to improve standards. Procurement and supply chain teams are integrating ethical issues into their supplier selection process. Things are starting to change, she explained, but new issues will always emerge.
Manubens highlighted that, in some respects, corporations are put into an unfair position with respect to suppliers. They are playing the role of the local law enforcement. She explained that companies must reengage all players in the value chain, including civil society and government, to ensure distribution of responsibilities.
Norton asked whether business is the problem and how panelists would respond to critics of business in this respect.
Rees noted that business must be seen as part of the solution. Suppliers are noncompliant or otherwise lacking in labor controls because companies ask for increasingly more and more on tighter production schedules. Company decisions impact livelihoods.
Norton inquired about the supplier perspective. Giblin explained that suppliers are businesses but are often talked about as if they are remote. Suppliers want to run successful businesses and are confused when customers ask them for certain information. They are also fearful, Giblin explained, that information will be used to sanction them. Companies must better articulate why sustainability issues are important and treat suppliers as responsible business owners.
Norton transitioned to a discussion about scalable solutions that address supply chain challenges. Manubens explained that Unilever has 160,000 suppliers and either sources from or sells to more than 80 countries. In her view, audits and supplier education do not yield results. Unilever wants to create an infrastructure that supports constant communication. More frequent communication will build a collaborative environment, reducing reliance on prescriptive language and building more inclusive relationships.
Norton probed further about whether collaboration was simply a buzzword or whether it has a track record of improving supply chain issues. Rees described Levi’s innovation lab and how they design products and processes that deliver environmental and social value. He shared a story of how a company innovated a product by working with its supplier to ensure that production was within budget without stretching the supplier’s capabilities. The lesson was that a company does not need a lot of time or even a multi-stakeholder initiative to work with suppliers to improve standards and deliver a valuable product.
Rees went on to question whether businesses can and should be solely responsible for protecting rights holders. In many cases, companies need to aggressively work together to lobby government to advocate for smart legislation. Essentially, they need to push governments to govern. Companies should collaborate with a very clear vision for how government can better regulate certain issues and raise standards.
During the Q&A session, one attendee explained how engaging suppliers (i.e., “getting them in the room” for trainings) has become increasingly difficult. Manubens discussed Unilever’s efforts to engineer solutions that bring information directly to suppliers. Using mobile technology and other community-based platforms accelerates information exchange and yields better results. Giblin described how suppliers in Sedex’s community have organized themselves through social media to share information about sustainability issues.
One attendee pointed to the fact that deep collaboration may not be scalable. In other words: Are there limits to productive collaborations? Manubens’s view is that an organization will fail if it does not collaborate in some way. At the same time, Rees tempered that view by explaining that collaborations are—and should be—unsustainable in a sense. Collaborators come together for one purpose and for a limited time, during which they have a unique influence. Ultimately, business actors and governments must pick up where collaborations leave off.