Suppliers

The supply chain is and will remain the centre of much corporate responsibility interest, if only because many of the issues of concern - employment practices such as child labour, human rights abuses and lax environmental standards - rarely now exist within the mainstream operations of large Western companies. They have been outsourced along with so much else in what has been a profound restructuring of the way many large companies organise around core functions only. The aim is almost totally cost driven, often through just-in-time efficiencies. At the same time and cutting directly across that trend is the growing concern in brand name companies about exposure from social risks and high-profile NGO campaigns. However three main factors limit what brand-driven supply chain good practice can achieve. First, there must be effective consumer choice and a real risk of boycott undermining this is growing confusion over labelling. The UK government is already active on green labelling, and the EU Commission sees a pan-European need to harmonise. Creative anarchy was a good place to start, but we need to move on. NGOs may not like the sort of state regulation they regularly call on for companies though. As we go to press, news broke that the Soil Association and Fair Trade Foundation reached voluntary agreement over use of competing terms such as 'organic'. Second, it's hard for many brand name companies to trace their sourcing route, even for vital items, where they are purchased on commodity markets without a link to named producers who can meet auditable standards. That's why the coffee news reported above is significant. The challenge now is to move it from niche and into mainstream. Third is the crucial need to develop that ubiquitous 'business case'. Procurement managers have tough targets (and personal bonus incentives) to strip X percentage of costs out of the supply chain. They inevitably resist CSR managers adding to their worries, and costs. So the need is to show - as we report opposite is done on the environment - that the extra costs of standard setting, auditing and certification are at least equalled by improvements in cost, quality and reliability. If this is just about adding social costs, there are real limits on what western consumers will pay for.