Four steps to profitably implement CSR into your supply chain
Are you considering developing a more ethically secure supply chain? Are you seeking a more effective way of monitoring your suppliers and associated factories, but concerned about costs?
The thought of upheaving your supply chain may seem a complex, painstaking and expensive task, especially if you have hundreds or thousands of suppliers to manage. However, fully integrating CSR into your supply chain will not only mitigate the risks associated with unethical practices, but can more than make up for the cost of creating an ethical supply chain policy. The key is to ensure your CSR, including supply chain KPIs, are fully aligned to your financial objectives.
Last month we discussed the cost benefits of an ethical supply chain strategy. This month we’ve outlined four key steps to take to profitably implement CSR into your supply chain.
1. Create a profitable, consumer-focussed strategy
Build a solid business case for integrating CSR into your supply chain – don’t just jump in and start upheaving your existing processes. You need to make sure that any proposed changes will be profitable to your company; ethically aware organisation ASOS recognises the need for its sustainability agenda to sit with its commercial motives.
Gear your strategy towards your consumers, involving them where possible; for example, M&S operates a fabric recycling scheme with Oxfam, through which some recycled fabric goes back into the supply chain. Where you have consumer support and involvement, you increase awareness of your CSR activities, which in turn increases your credibility.
2. Select ethically responsible suppliers
Ensure that your suppliers have official certification or a code of practice that is at least as good as yours. If they don’t, create guidelines for them, consulting ETI’s base code where necessary – ediTRACK’s Ethical Trade module stores both the ETI’s base code and customised versions for your suppliers, in addition to ETI compliant audit forms. Take into account issues such as low-paid or forced labour, workplace health and safety and working hours, and ensure they observe best practice. When selecting a new supplier, undertake an independent audit rather than relying on a supplier’s self-audit. If you have several suppliers to keep track of, use software that stores audit details and rates suppliers in order of their risk levels and ethical standards, enabling you to simply manage their compliance.
Taking a hands-on approach is the most fool-proof way to ensure your suppliers are complying with audits. M&S works with factory owners in Bangladesh to make sure workers are paid enough. If this sounds too intensive, try incentivising your suppliers to become more ethically conscious, for example by giving them a stake in the company – as retailer Divine Chocolate did; this way they have a financial interest in maintaining an ethical approach.
3. Make ethical product choices
You may wish to address the ethical soundness of the products within the supply chain, as retailer Target recently did. Target increased transparency in its supply chain by introducing new product standards, which vet the sustainability and environmental impacts of its suppliers’ product ingredients. If you do decide to switch raw materials or products, make sure that the sustainable product/part/service replacement is equally as good and effective as the original item – the product must appeal to a mass consumer market regardless of its sustainable status. The good news is that sustainability is no longer necessarily about compromising cost, quality or aesthetics – you can have a product that is sustainable, affordable, functional and attractive.
4. Address energy and resources
Aside from the obvious financial benefits of consuming less energy and fewer resources within your supply chain practices, lower dependency on these means as a whole you’ll experience less sensitivity to shifts in these markets. Ask suppliers to cut down on unnecessary waste and packaging, and investigate sustainable alternatives for power and transport options.
Regardless of cost, a responsible supply chain is fast becoming a ‘must-have’ rather than a ‘nice-to-have’, as is reflected in the number of high-profile retailers switching to more sustainable processes. With a strong, commercially focussed business strategy, shareholder support, consumer involvement, and software that makes it easy to manage the compliance of several hundred suppliers, any organisation can incorporate CSR into its supply chain.