Multinational companies are under increasing pressure to ensure ethical supply chain practice. Briefing looks at how some household names are managing operations all the way down the supply chain,.
There is clearly no better time for retailers to sell ‘ethical’ brands.
Citigroup, the investment bank, recently concluded that Marks & Spencer has stolen a march on its competitors with its most successful campaign ever – Look Behind the Label. And consumers are keener than ever to extend their purchases to include ‘ethical’ considerations, as a YouGov poll commissioned by M&S found. Over half of the people surveyed are more concerned about the sourcing of a product than five years ago, while a third have decided against buying a product because of ethical concerns.
Actions may speak louder than words, but the reality of competing in today’s marketplaces means that ‘words’ are becoming increasingly important. A large part of M&S’s success is due to labelling – every product displays the country of origin, while its global sourcing principles are integrated into its Terms of Trade.
The sheer power of the label is probably best demonstrated in the US by Timberland, after the company introduced product labelling detailing its social and environmental “footprint”. Other than showing an uncanny ability to continually innovate on these issues, both M&S and Timberland both manufacture and sell exclusively their own-label goods, making it relatively easier to manage their supply chains.
It’s the complex supply chains of supermarkets and discount clothing stores that the Labour Behind the Label (LBL) campaign group has investigated in its recent report. Refreshingly, LBL’s recommendations seem to be in tune with the reality of operating in today’s markets, calling for business and consumers to drive change and asking some quite legitimate questions. Unfortunately none of the companies the LBL features have provided answers or even acknowledged the report.
But there are some very encouraging signs of action. In May, one of LBL’s ‘targets’, Associated British Food’s Primark chain, joined the Ethical Trading Initiative – one of the best examples of ‘joined-up’ thinking on supply chain issues. Essentially a learning organisation, the ETI helps companies implement codes of conduct so that they can meet minimum international labour standards. It is collaboration such as this that stands the best chance of working. Whether oil and gas companies coming together to set up a global supplier database, or the IFC and ILO developing tools for monitoring labour standards into supply chains. The best way for business to take action (and meet surging consumer demand for ethical goods) is to do so together.
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Timberland’s footprint Timberland launched on September 12 environmentally friendlier packaging for its footwear products and product information labels that details aspects of its environmental and community “footprint”. “Timberland is constantly looking for new ways to reduce our environmental impact in every facet of product development, manufacturing and delivery,” said Jeffrey Swartz, Timberland’s president and chief Executive.
Swartz predicted a shift towards greater product transparency for consumers. “Consumers deserve the most information possible to make intelligent purchasing decisions. We hope other retail companies will see the importance of these practices,” he said. The Our Footprint label appears on the side of each footwear box and provides consumers with information about Timberland’s environmental and community impact. It resembles the nutrition facts label found on food and beverage products. The label consists of three sections: Environmental impact – the average amount of energy measured in kilowatt hours needed to produce a pair of Timberland footwear and the amount of energy that is generated from renewable resources; Community impact – what percentage of factories are assessed by against the company’s code of conduct and the total number of hours volunteered in the community by employees; and Manufactured – listing the name and location of the factory where the product was made. Contact Kate King, The Timberland Company 00 1 603 773 1379 www.timberland.com
Labour behind the label
Asda, Tesco, Primark and Matalan are only able to sell cheap clothes because they rely on exploitation of workers down the supply chain, campaign group Labour Behind the Label has alleged. Who Pays for Cheap Clothes? published on July 5, calls for low-cost retailers to provide answers to five questions:
How much are the people producing the clothes you sell paid?
What hours do they work?
Can workers defend themselves?
Do suppliers take you seriously on workers’ rights?
Are you really sure what’s going on?
The group says that the “mass produced, hassle-free, fast, popular clothing” the outlets offer is the equivalent of fast food and encourages a throw-away culture among consumers. LBL says it is also important to note that the responsibility does not just lie with the companies: two other groups of people have a role to play – consumers and the government.
“The pressure to go cheaper and cheaper, and to have tomorrow’s designs copied cheaply in store today, comes from consumers who lap up the prices on offer. Clearly we need to reconsider the way we shop, to make it clear to retailers that we will compromise – just a little is all that’s needed – if it means workers’ rights are respected, ” the campaign group says.
LBL supports the calls for legislation, “but at the same time we believe that in the absence of such legislation – and even if it were to exist – companies must still take responsibility for the conditions in which the clothes that earn their profits are produced”. Contact Labour Behind the Label 01603 666 160 www.labourbehindthelabel.org
Core issue Apple signed up to the Electronic Industry Code of Conduct (EICC) Implementation Group on August 17 following an audit of a supplier factory in China that assembles iPods for the company. Media reports alleged that workers at the factory were paid as little as £27 a month and worked 15-hour shifts.
Apple dispatched an audit team to investigate conditions at the manufacturing site to investigate labour standards. The team interviewed over 100 randomly selected employees representing a cross-section of line workers.
The audit found that the supplier complied with Apple’s code of conduct on a majority of issues, although there were violations and areas for improvement that Apple says it will work with the supplier to address. These included an “unnecessarily complex” pay structure and an “excessive” percentage of overtime – with the weekly limit exceeded 35% of the time and employees working more than six consecutive days 25% of time, albeit voluntarily. Apple says that it will complete audits of all final assembly suppliers of Mac and iPod products in 2006. Contact Apple 020 8218 1440 www.apple.com
Supplier survey
Europe’s largest oil and gas companies are planning to survey their suppliers to set up a global database on supplier corporate social responsibility practices.
The survey, initially being piloted by BP, Shell, Statoil and Norsk Hydro, will be sent to suppliers in September. The surveys will be self-assessed but it is expected that the companies will audit the information to build up an accurate ranking of suppliers across the world. Contact Gill Dickinson, Achilles 01235 838053 www.achilles.com
Better work
The International Finance Corporation, the private arm of the World Bank, and the International Labour Organization have agreed to collaborate in the development of a global programme for better labour standards in global supply chains.
The Better Work Program, launched on August 25, will cover a range of industries from clothing to electronics, focusing on improving labour standards and promoting the business case for better working conditions. The partnership will see the development of tools for monitoring labour standards and remediation systems, and a second phase implementing the tools in pilot projects in the Middle East, Southern Africa and East Asia. Contact Lucie Giraud, IFC 00 1 202 458 4662 www.ifc.com
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