Suppliers: from ripples to tsunami

November 01, 2003

Smell the (fairtrade) coffee

McDonald’s is to use Aroma fair trade coffee in all of its 140 restaurants in Switzerland next year. Following successful consumer tests in Zurich, the company will only use the Max Havelaar-certified brand to produce its coffee, espresso, cappuccino and other coffee products. McDonald’s decision will increase business for small coffee growers participating in the fair trade scheme by 120 tons a year. Contact Hans Maurer, McDonald’s, on 00 41 619 231 262 (

Millstone milestone

Procter & Gamble is introducing fair trade certified coffee products through its specialty coffee division, Millstone. The decision, announced on September 15, was made in response to pressure from shareholders and advocacy groups. Shareholders have since withdrawn the resolution they had filed on the issue, and activists have agreed to suspend their campaigns against the corporation. Contact Kelly O’Malley, Procter & Gamble, on 00 1 314 982 8635 (

The fairest of them all

Kraft announced on October 7 a partnership with conservation advocacy group, the Rainforest Alliance, to support the development of sustainable coffee production in Mexico, Colombia, Brazil and Central America. Kraft is to:

· provide technical assistance and training to improve living and working conditions on coffee farms;

· purchase significant and increasing quantities of certified sustainable coffee to blend into its mainstream European brands, and;

· stimulate consumer demand through the introduction of 100% verified products under existing trademarks in key markets within Western Europe and the US.

Meanwhile Citigroup is working in partnership with managed services provider ARAMARK and specialty coffee suppliers, Java City, to offer fair trade coffee in selected Citigroup offices across the US. Contact Jonathan Atwood, Kraft, on 00 1 914 335 1473 (; Helen Steblecki, Citigroup, on 00 1 718 248 469 (

Getting your priorities right

Nearly a quarter (23%) of UK purchasing directors say their companies do not consider environmental impact or ethical trading in purchasing decisions, while four fifths (83%) are led by boardrooms to prioritise issues of price over ethical trading and innovation, according to a Chartered Institute of Purchasing and Supply survey of over 100 purchasing directors into the criteria used by UK companies when selecting suppliers and making purchasing decisions. Contact Caroline Howe, Hill and Knowlton, on 020 7413 3773 (

Show me the money

Although sustainable supply chain management makes good sense, there is no real incentive to do it, according to No Writing on the Wall, a new paper from the Nordic Partnership, a collaboration of the World Wide Fund for Nature, Danish think-tank Monday Morning and key Nordic corporate players. The paper, based on discussions with international NGOs and leading Nordic companies, indicates the first findings from the project Rules of the Game – Sustainable Supply Chain Management and examines some of the dilemmas and barriers to sustainable supply chain management. Contact Trudy Follwell, Nordic Partnership, on 00 45 3536 3635 (

Critical mass
Large corporations and other institutions have the potential to bring about shifts to an environmentally sustainable market through their large scale purchases, according to a study by US based research organisation, Worldwatch Institute. [I]Purchasing Power: Harnessing Institutional Procurement for People and the Planet notes that even a single large green purchase decision could result in a ‘ripple effect’ that would generate enough demand to shift entire markets. Contact Lisa Mastny, Worldwatch Institute, on 00 1 202 452 1999 (

AMEC Award

Marks and Spencer has presented a Supplier Award for Excellence in Health and Safety to AMEC, the international engineering services company. The award recognises AMEC’s achievements in health and safety performance in delivering retail store renewals and new retail developments for the company. Contact Frank Stokes, AMEC, on 01789 204 288 (

Slim pickings

Britain’s largest supermarkets are blamed for fostering an environment that allows gangmasters to recruit foreign casual workers who are paid a pittance to pick fruit and vegetables. A House of Commons Committee report published on September 18 warns that supermarkets’ dominance over their suppliers creates a pressure that gives suppliers little time to carry out checks on casual workers. Contact Environment, Food and Rural Affairs Committee, on 020 7219 3262 (

Editorial Comment

The recent findings from the Chartered Institute of Purchasing and Supply make salutary reading. Less than one in three UK purchasing directors – who between them control a collective annual budget of £1,100 billion – consider the environmental or social impacts of their buying habits as ‘essential’. Over one in five don’t consider these issues at all. So who’s to blame?

The CIPS points the finger squarely at senior management, who need to “recognise both the risks and rewards of responsible purchasing”. With nearly three-quarters of companies already having corporate social responsibility policies in place, however, senior executives aren’t struggling so much with recognition of the challenge but implementation of the solution in the supply chain.

Enter the industrious researchers at the World Bank. Commissioned to investigate the barriers to implementing supplier codes aimed at promoting CSR, they were forced to conclude that the codes themselves were a major stumbling block to guaranteeing better environmental and working conditions. Inconsistent, inflexible and difficult to monitor in increasingly anonymous supply chains, there’s a clear need for fine-tuning the multiple individual buyer codes that now exist. Examples from the toy, garment and supermarket industries of developing a single, commonly agreed base code proves that such fine-tuning is possible. But is it ultimately desirable?

Feedback from the Bank’s study shows that suppliers and their representatives believe this kind of top-down compliance approach, driven from distant buyers, will never bring about the radical transformation that supply chain advocates would like to see. Instead, the study advocates an approach that emphasises local ownership. If purchasers in London feel compromised by the conflicting priorities of pricing criteria and sustainable production, it’s no different for the grower in the field, the trader in the market, the government agent in the port or the processor in the factory.

Building incentives through the supply chain, beginning with the local producer, must become the first step to effective implementation. So the thumbs-up from Procter and Gamble, McDonald’s and Citigroup in favour of sustainable coffee production is welcome. Even more so Kraft, for its partnership with the Rainforest Alliance in providing technical assistance to South and Central American coffee growers.

But investments in supply chain management like capacity building, worker empowerment, environmental protection and price guarantees don’t come cheap – especially when they are costs not being undertaken by competitors. Innovation and experimentation, as in the coffee industry, can result in some cost-saving solutions. But for senior managers, the challenge might start with improving the implementation of individual supply codes, but where it must head towards is collective, industry-specific action that shares costs to help suppliers pursue best CSR practice.

Corporate Citizenship Briefing, issue no: 72 – November, 2003