Working the supply chain

September 01, 2005

Supply chain responsibilities are becoming more complex. Not only are issues such as child labour and human rights important but other issues have arisen such as reducing “food miles” and holding large companies to account for the performance of their suppliers.

Say “social responsibility in the supply chain”, and most people still think of child labour, human rights and other nasties in far away places. These issues do matter and continue to play powerfully among NGOs, the media and ultimately consumers, at least for the big brand names. Indeed they are becoming mainstream, as evidenced by the new European accounting standard and the fact that the US-based professional supply chain managers’ institute, with its 40,000 members, is taking the issues seriously. However the full picture of supply chain responsibilities is becoming more complex. One sign is the pressure on supermarkets to source local produce, in order to reduce ‘food miles’ and maintain purchasing power in local communities. Another is the SABCOHA’s effort to extend HIV/AIDS best practice to small contractors in South Africa. (Previously, companies might have looked to their charity budgets to support partnerships on HIV/AIDS work or enterprise and regeneration.) A more remarkable development is the Environment Agency trying to expand its powers to hold large companies to account for the performance of their suppliers. More powerful still, certainly in the longer term, is the public sector’s growing interest in sustainable procurement. We’ve said before that 40% of the economy is in government’s hands: while cost pressures are acute – politicians don’t like putting up taxes any more than companies can push up prices without consumers switching their pressures – there is greater scope to balance short-term savings against long-term objectives. Anyone with significant public contracts should be tracking these developments with real attention.

Corporate Citizenship Briefing, issue no: 83 – September, 2005