News round-up (Mar/Apr)

April 01, 2006

Supply chain ethics are stepping up a gear with both Wal-Mart and Nike raising their game. In addition research reveals that buying local organic food could reduce the environmental impact of food on the UK economy ny over £4bn.

Going Local

Buying food locally and from organic farms could reduce the environmental impact of food on the UK economy by over £4bn, says a recently published report in the journal Food Policy. Meanwhile, fostering links with local suppliers and examining how they spend their money could help local authorities to increase the amount of money circulating in their area by 400%, according to the results of collaboration between nef (the new economics foundation) and Northumberland County Council. The research found that local suppliers in Northumberland re-spent on average three-quarters (76%) of their income from contracts with local people and businesses, while suppliers from outside Northumberland spent less than two-fifths (36%) in the area. Contact nef 020 7820 6300 (

Nike ups the CR ante

Nike disclosed on April 13 the names and locations of more than 700 factories that produce its sportswear, becoming the first major apparel manufacturer to voluntarily reveal its entire supply chain. In its 108-page 2004 corporate responsibility report, the company also acknowledged that factories which it contracts to produce goods have harassed workers and forced some to work overtime.

The report, Nike’s first public corporate responsibility report since it made the decision to stop reporting in October 2002 when it petitioned the US Supreme Court to hear the Kasky versus Nike First Amendment case, was released in conjunction with the annual Ceres conference in Boston, MA. “We’ve been fairly quiet for the past three years in corporate responsibility because of the Kasky lawsuit. So we’re using this report to play a little catch-up and draw a more complete picture,” said Philip Knight, Nike founder and chairman, in his opening letter in the report.

Nike disclosed the names of 124 plants in China contracted to make its products, 73 in Thailand, 35 in South Korea, 34 in Vietnam – with others elsewhere in Asia, as well as in South America, Australia, Canada, Italy, Mexico, Turkey and the United States. Rival Reebok has already revealed the names and addresses of nearly two-thirds of its factories on its web site. Contact Jill Zanger, Nike 00 1 503 532 0316 (

Demands for suppliers

The integration of CSR into purchasing and supply management must be a top priority this year, says Ian Taylor, president of the Chartered Institute of Purchasing and Supply (CIPS). Taylor challenged CIPS’ 36,000 members around the world to commit to a CSR initiative relevant to their organisations by October 2005, such as:

l encouraging a supplier to introduce an environmental management system or become more energy efficient

l changing distribution networks to reduce vehicle journey distances and fuel consumption.

He also recommended that procurement teams develop a CSR policy and partner with the CSR team to consolidate efforts to change practices across the company. Contact Liz Cullen, CIPS 01780 761 575 (

Raising the game

Socially responsible sourcing should extend beyond supplier compliance visits to include awareness-raising both within companies and also among their suppliers if they are to succeed, suggests a report published by PricewaterhouseCoopers in February. Sourcing Overseas for the Retail sector – CSR and the ethical supply chain highlights the importance of managing reputation risk in the supply chain, in light of the growing trend to source goods from overseas. It recommends building capacity around relevant legislation, improved planning techniques and overall project management at supplier level. The report also calls for greater leadership from senior management and the integration of CSR with other key supply chain risks. Contact Kristina Blissett, PwC 020 7212 5133 (

Organic growth

Global commodities broker ED&F Man has formed Corigins, a new-US based company to supply high quality, traceable ingredients to the organic and natural foods sector. Corigins will also offer an integrated tracking system that allows food companies to comply with the auditing requirements of the US, EU and organic programmes. Contact Michael Straus, Corigins 00 1 415 777 1170 (

Fairly fair

Tesco, Asda, Morrisons and Sainsbury’s deal fairly with suppliers and comply “by and large” with the Supermarket Code of Practice, the Office of Fair Trading said in a report published on March 22. Where there was evidence of malpractice, in many cases suppliers did not complain, leaving the OFT unable to take action, the OFT said. But campaign groups are calling for changes to the code, which they say places suppliers at a disadvantage since complaints must be lodged through the supermarket in question. The OFT, however, has no plans to strengthen the code, as it fears that to make it “more rigid and prescriptive may stop mutually beneficial arrangements between suppliers and supermarkets”, resulting in greater costs to the consumer. Contact OFT 08457 224 499 (

Wal-Mart rapped

Wal-Mart has been fined $11m by the US government for employing illegal immigrants to clean some of its stores. The fines follow an investigation into the company’s use of contractors that employed illegal immigrants, 250 of whom were arrested following raids on 61 stores. Meanwhile, there are signs that the world’s biggest retailer is becoming more open. Parading its top executives in front of a gauntlet of journalists in March, Wal-Mart arranged for those same reporters to have an inside look into the company’s store, distribution and office environments as part of its first ever Wal-Mart Media Conference. Contact Wal-Mart (


Toshiba has introduced a group-wide procurement policy based on corporate social responsibility to promote legal compliance and respect for human rights and the environment. The policy is being piloted in Japan and the United States and will be extended to suppliers in Europe and the rest of Asia. Contact Toshiba 00 81 3 3457 4511 (

Gap has entered into a one-year partnership with the World Bank to provide management training for 650 supervisors at its Cambodian garment factories, in an attempt to improve labour relations and productivity. The €63,000 programme at seven factories will teach supervisors how to resolve conflicts between workers and employers. Contact Gap 00 1 650 952 4400 (

Forced labour and migration to the UK, a report published by the TUC, documents abusive treatment of migrant workers by unscrupulous employers. The report calls for the UK to adopt the ILO convention on migrant workers and for the extension of current anti-trafficking legislation to protect of all victims of forced labour regardless of migration status or the type of exploitation suffered. Contact TUC 020 7467 1248 (

Editorial Comment

Be warned: Wal-Mart – champion of low prices, sceptic of the CSR ‘industry’, refusenik on social reporting – is changing. In a series of full page ‘op ed’ adverts in US publications this spring, it confesses to have been so busy “minding the shop” that critics took it by surprise. It promises to get involved in the debate, not least because “Wal-Mart’s size and industry leadership mean that people expect more of us”.

And Wal-Mart is big by any standard: 1.6 million workers, the world’s largest private sector employer; 138 million customers every week; and 68,000 suppliers providing a mind-numbing 680 million stock keeping units.

Don’t expect Wal-Mart to go soft on its relentless driving-down of consumer prices. But if you are a supplier, do expect to be asked a lot more questions about your approach to CSR (they’ll want high standards AND low prices of course). And the rest of us can expect a trenchant exposition of the case that companies’ first social responsibility is to maximise their economic impacts.

Meanwhile, Nike has returned to social reporting, after a three-year Kasky-induced pause, with a bang – and a challenge. Better labour conditions in its own supply chain is no longer the aim. Improvements imposed through one contract in one factory are inevitably transitory. Now the goal is to raise standards in the whole industry. By declaring unprecedented detail, Nike aims to “jumpstart disclosure and collaboration”, and hopes we’ve reached the tipping point for mainstreaming best practice: in other words, forcing others to raise their game too.

The cynic would say that this is also a smart way to offset the heavy monitoring and compliance costs from the brand leader to others. But these moves by Nike, and by Wal-Mart and others, mark a step change in supply chain ethics.

Corporate Citizenship Briefing, issue no: 81 – April, 2005