Companies, trade associations and government departments are realising the benefits of using the supply chain to meet their social and environmental objectives.
FEEDING POLLUTION
Food transport has a significant and growing impact on road congestion, road accidents, climate change and noise and air pollution, according to a report published in July by the UK Department of the Environment, Food and Rural Affairs (Defra).Defra estimates the environmental and social costs of the impacts at £9bn per year, with more than half due to road congestion. The government is, however, working with the food industry to reduce these impacts by encouraging widespread adoption of best practice and measurement of performance. The draft Food Industry Sustainability Strategy , developed with input from stakeholders and published for consultation in April, includes proposals for the sector to prepare by 2006 a plan for achieving a 20% reduction in the environmental and social costs of food transport by about 2012. Contact Defra 08459 335 577 ( http://www.defra.gov.uk)
LOCAL PROCUREMENT
A new guide to UK public procurement, Public spending for public benefit , released on August 1 by the new economics foundation (nef), argues that the potential for public spending has been overlooked and that opportunities to promote regeneration through targeted public spending have been missed. Using 13 case studies to explore how some public sector providers have already adopted a new approach to procurement while adhering to legal requirements, nef demonstrates what the UK could look like if public spending was used to meet multiple objectives in a range of service areas including food, construction, waste minimisation, youth services and back office services. As a result of the findings, the North East Centre of Excellence, the regional body charged with encouraging effective, collaborative public procurement, has announced that it will draw on nef’s findings to increase the local economic impact of £1bn of local authority spending in the region. The regeneration division of Northumberland County Council found that as well as the initial contracts, local suppliers in Northumberland re-spent on average 76% of their income from contracts with local people and businesses, while suppliers from outside Northumberland spent only 36% in the area. Contact Justin Sacks, nef 020 7820 6300 ( http://www.nef.org.uk)
SUSTAINABILITY TASKFORCE
The government’s Sustainable Procurement Taskforce , established in May, has held its first meeting. The taskforce’s mission is to draw up an action plan by April next year that enables the UK to become an EU leader in sustainable public procurement by 2009. Members of the taskforce, chaired by Sir Neville Simms, include representatives from BT, Compass, Hewlett Packard and Skanska , all of which are suppliers to the government. Vodafone, Royal Mail, AWG, BAA and KPMG are among the other corporate members on the team. The action plan is expected to set out strategies for stimulating the market to innovate and produce more cost effective and sustainable options for all purchasers, and to set an example for business and the public that demonstrates that government and the wider public sector is serious about sustainable development. Contact Sustainable Development Unit, Defra 020 7238 5811 ( http://www.sustainable-development.gov.uk)
ENVIRONMENTAL ASBOS
UK companies may be held accountable for the environmental performance of the operators they use, under new plans drawn up by the government’s Environment Agency. Anti-social behaviour orders (Asbos) could be served on companies that flout the codes, Baroness Young, chief executive of the agency, said. “We will prosecute businesses for poor performance and environmental damage, whether we regulate them or not,” Young was reported as saying. “We will hold them accountable for the environmental performance of the operators they use”. The Environment Agency would also ‘name and shame’ businesses that performed badly on environmental matters. Its annual Business Spotlight report included details of penalties against Pizza Express , fined £75,000; Gatwick Airport , fined £30,000; and Barratt Homes , fined £15,000. Contact Environment Agency 01709 389 201 ( http://www.environment-agency.gov.uk)
POWER SUPPLY
The US-based Institute for Supply Chain Management (ISM) has called on supply chain managers to leverage their key organisational roles in order to lead to socially responsible business behaviour. ISM’s Principles of Social Responsibility outlines professional standards in seven areas: community, diversity, environment, ethics, financial responsibility, human rights and safety. ISM conducted a survey of current environmental practices – Social Responsibility and the Supply Management Profession: A Baseline Study – in which if found over half (51%) of the 1,163 respondents had a written policy for employees, while two fifths (40%) have a policy for suppliers. More than a third of respondents (36%) have little or no waste-reduction goals for their organisation, while over half (53%) say their companies do almost nothing to challenge suppliers to commit to waste reduction goals. ISM believes that its principles of social responsibility provide the first step towards increasing supply management’s role in improving the environment. Alcoa, AstraZeneca, IBM and Hilton are among the companies supporting the initiative. Contact ISM 00 1 480 752 6276 ( http://www.napm.org)
DAMAGING BRANDS
Assurance for a Sustainable Supply Chain , written by the Fédération Des Experts Comptables Européens (FEE), the representative organisation of the European accountancy profession, found that brand loyalty could suffer if suppliers engage in questionable business practices. The report calls for companies to impose sustainability policies on its supply chain using supplier codes of conduct. Chairman of the FEE Sustainability Assurance Group, Lars-Olle Larsson, said that a company can impose its sustainability policies on its supply chain by using a supplier code of conduct. But to be useful, codes must have sufficient detail to allow clear interpretation and companies must be able to measure the extent to which suppliers are complying. Furthermore independent assurance is a powerful tool for use in the monitoring of suppliers, adding to the credibility of a company’s own reporting. “Independent assurance commissioned by the company provides the greatest degree of stakeholder confidence in the implementation and operation of its supplier code of conduct,” he said. Contact FEE &00 32 2 285 4085 ( http://www.fe.be)
MAKING THE SMALL COUNT
The South Africa Business Coalition on HIV and AIDS (SABCOHA) is trying to persuade large companies operating in South Africa, such as Germany’s Volkswagen and state-run power company Eskom to urge their small and medium suppliers to make use of a tool-kit designed to help fight the pandemic. SABCOHA has also launched the BizAIDS project, targeting formal and informal ventures with fewer than ten employees. According to officials figures published in July, up to 6.6m South Africans are HIV positive. Contact SABCOHA ( http://www.redribbon.co.za)
CHILD LABOUR SUITS
Nestlé, Archer Daniels Midland and Cargill are being sued by US-based International Labor Rights Fund and civil rights firm Wiggins, Childs, Quinn & Pantazis (WCQP) on behalf of former child labourers. The companies are allegedly involved in the illegal transportation of children from Mali to the Ivory Coast to harvest cocoa beans. Working conditions are said to be poor, with child labourers alleged to work 12-14 hour days, with no pay and little food or sleep, as well as being beaten frequently. Global Exchange, a San Francisco-based human rights group, has also filed suit against Nestlé, ADM and Cargill under California’s unfair business practice law for false or misleading statements. Global Exchange alleges that to date the companies have not taken any effective steps to prevent the use of child labour on farms that produce cocoa for companies like Nestlé, despite leading the public and their shareholders to believe otherwise. The complaint follows the passing of a July 1 deadline set by a voluntary industry initiative, the Harkin-Engel Protocol , implemented to eliminate the worst forms of child labour in the West African cocoa industry. A key part of the protocol was an obligation for companies to have in place an independent and credible system of farm monitoring, certification and verification for their suppliers to ensure no child labour was being used. Contact WCQP 00 1 205 328 0640 http://www.wcqp.com; Global Exchange 00 1 415 255 7296 ( http://www.globalexchange.org)
FILLING THE GAP
US clothing giant Gap published its second corporate responsibility report in July. The report focuses on worker conditions in the company’s supplier factories and features critical assessments of its monitoring programme by social compliance firms. The report admits to recurring problems such as overtime violations and non-compliance with child labour laws in factories overseas. Gap said 92 vendor compliance officers conducted an estimated 6,750 inspections in 2,672 garment factories worldwide in 2004. The company reported they had inspected 99.9% of its total factories, a marked improvement on 94% in 2003, resulting in 70 revocations due to non-compliance with its vendor code of conduct, compared with 136 the year before. Going forward, the company has pledged to maintain its standards using a four-part strategy to improve working conditions: monitor factories, integrate labour standards into business practices; collaborate with partners to drive systemic, industry-wide change; and communicate openly about its goals, successes and challenges. Contact Gap 00 1 650 953 4400 ( http://www.gap.com)
Editorial Comment
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.
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