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|8 Mar 2012|
The social side of supply chain sustainability.
Improving sustainability in the supply chain is one of the top sustainability goals for companies this year and special emphasis will be placed on managing the social component. An in-depth survey of nearly 50 senior sustainability executives by sustainability research and advisory firm Green Research found that 73% of respondents said their companies would be dedicating significant staff time or financial resources to improving the sustainability performance of their suppliers in 2012.
So, why focus on the social? Put simply, sustainable supply chains successfully manage not only economic risk, but potential social and environmental issues, as well. While the concept of mitigating risk in supply chain management certainly isn’t novel, managing supply chains for sustainability is still very much in development. The social component of supply chain sustainability has recently begun to attract more attention. A look at some of the current action on social issues provides some valuable insight into this trend:
- An estimated 3,200 companies will feel the effects of The California Transparency in Supply Chains Act of 2010, which entered into force on January 1, 2012. This act requires retailers and manufacturers doing business in California (with sales over $100 million worldwide), to provide information regarding their efforts to eliminate slavery and human trafficking from their supply chains.
- The campaign End Human Trafficking Now has been influential in pushing through the Athens Ethical Principles, which are a seven-step charter designed to stamp out the use of trafficked labor by companies. According to a recent article in the Guardian Newspaper, the Athens Ethical Principles now have approximately 12,500 signatories—many of which are corporations. To date, most businesses engaged on the issue have concentrated on awareness-raising, however, it is necessary to start developing integrated solutions to address the problem.
- Apple released its 2012 Supplier Sustainability Progress Report in January, and, while some of the findings are startling, it demonstrates an honest commitment by Apple to address the social and environmental issues in its supply chain. Apple is being transparent about what issues they are uncovering at their supplier factories, and are demanding changes. To date, 229 facilities have been inspected by Apple, and these audits have found consistent violations of Apple’s code of conduct. Apple has found cases of involuntary labor, under-age workers, record falsification, improper disposal of hazardous waste, chemical exposures and excessive overtime at several of its manufacturing facilities since the audit program began in 2007.
Companies like Apple can use environmental and social performance to drive value in their supply chain as they recognize that sustainability is more than just risk to be managed. The unfortunate reality is that child labor, conflict minerals, unsafe working conditions, and human trafficking are all issues which pose very real sustainability risks for some corporations. Managing the social component of supply chains, however, is certainly not an insurmountable task—it is simply a task which must be taken seriously and given appropriate consideration. Ignorance is no longer bliss.
A company can only truly begin to eliminate social issues in its supply chain after it very carefully and transparently takes stock of the social injustices that are actually occurring throughout its supply chain. We will be tracking these and other supply chain issues over the course of the year—so be sure to check our blog for more supply chain sustainability insights in the coming months.