12.05.2021  |  Sourcing

Seven steps towards an ethical supply chain

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Giving your supply chain a thorough sustainability check-up can be a daunting task. Many companies do not have a close relationship with their subcontractors, and do not feel that they have the leverage and purchasing power to make demands and ask questions. But this does not release them of their responsibility to ensuring a sustainable supply chain. That is why it is important to plan an effort that is efficient as well as effective.

Here are Factlines’ seven step guide on how to best approach this.

  1. Take the birds eye view and prioritize which action points make the greatest difference
    CSR covers a wide spectrum of considerations e.g., greenhouse gas emissions, recycling, workers’ rights, child labour, environment and so on. It is important choose which area is the most relevant for your supply chain, and how to best address risk areas and issues. If you work with resource intensive production then climate and environmental considerations might be the most important areas to engage in. If your products are very labour intensive then workers’ rights might be the key issues to focus in on. This does not mean that you should stop buying organic coffee for the office – Smaller efforts also have an impact. But it cannot compensate for what you do in your core business.
  2. Make demands – To products as well as production
    If you plan to take your CSR-efforts from “nice to have” to “must have” it is often unavoidable to make new stricter demands to suppliers. All businesses know how to make specific requests regarding quality and specifications, and the same must be done on sustainability. Environmental requirements are often simpler to specify and comply to than social requirements related to the production. It is possible to test the property of the product when at hand e.g., for harmful chemistry, and there are fewer grey areas and more off the shelf certifications and similar schemes. But both are equally important.
  3. Think holistically
    Obviously, the demands must be followed up with an effort that ensures that what has been agreed upon is also followed through in the real world. It must be clear and evident for the suppliers what you expect of them, and that follow ups and remedy processes are a natural extension of these expectations. This requires a broad effort consisting of various initiatives. First step is often a code of conduct, but too often it becomes a “dead document” that is sent to suppliers with the first order, and is not looked at ever again. The code of conduct should be followed up by other efforts such as audits that can give a snapshot of production conditions and self-assessment solutions like Factlines that gives an overview of suppliers’ compliance, evaluate risks and find where to take action.
  4. Build solid and long-term relations with suppliers
    It is essential to get suppliers on board with the changes that you decide to set in motion. And this requires good relations. It can be tempting to shop around among suppliers and make the price the dominant parameter. And with no strings attached it is easy to cut them lose again and claim breach of trust if problems should arise. But this approach can quickly turn out to be a bad business decision, both from an economic perspective and from a CSR-perspective. Long term relations lead to mutual understanding of needs and expectations. It leads to better products and makes it easier for the company placing orders to have an influence and make change.
  5. Take part and learn
    The world of sustainability is ever changing, and new solutions are constantly being developed. There is a host of media and network platforms where you can take part and gain knowledge and advice. Much of this only costs the time you put in, and that time can quickly be well spent, when you do not have to invent the solutions from the ground up.
  6. Ethical supply chains are a process
    A good, strong supply chain is a work in progress. It comes from cultivating relationships and often encounters cultural differences, local work conditions and differing expectations. Luckily nobody expects you to solve these issues all at once. If you make sure to communicate your process and the steps you take to address issues, you will rarely get in trouble with stakeholders.
  7. Make ethics a part of the company DNA
    Sustainability must be integrated in the company culture and anchored in the core business. Otherwise, the hard work is going to be a dead end of isolated projects that gradually slide in the background. More and more businesses have sustainability as a core narrative of their mission and vision. Some work with a triple bottom line, where raw economic numbers are evaluated on side by side with social and environmental impact. Thus, sustainability is thought into all parts of the production right from the first idea to the final product is put up for sale.

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