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July 24, 2007
BSR Proposes Going Beyond Monitoring to Achieve Truly Sustainable Supply Chains
by Bill Baue
The new report from Business for Social Responsibility posits a four-pronged vision for shifting
supply chain management from a surveillance model to a comprehensive, proactive solution.
SocialFunds.com --
In the globalization explosion of the late 20th Century, corporate pursuit of cheaper labor
stretched supply chains like rubber bands encircling the world to reach regions where supplier
labor rights, human rights, and environmental standards typically matched pay. Since before the
turn of the century, nongovernmental organizations (NGOs) and corporate social responsibility (CSR)
practitioners have attempted to pull standards up through factory monitoring and auditing,
achieving some success.
“We’ve seen a real flowering of efforts on fair
working and environmental conditions in supply chains, but progress has plateaued,” said Aron
Cramer, CEO of Business for Social Responsibility (BSR), a nonprofit that helps its 250 member companies strive toward
CSR best practice.
In mid-July, BSR released a report entitled Beyond
Monitoring: A New Vision for Sustainable Supply Chains. As the title implies, the report maps
a new supply chain landscape, shifting from periodic surveillance to “catch” negative practices to
comprehensive, systemic change toward positive practices. The report proposes a four-pronged
approach.
First, buyer internal alignment to address the “unresolved tension” (to quote a
World Bank report) between buyers’ commercial objectives and their desire to ensure fair working
conditions. Second, supplier ownership of good working and environmental conditions in their
workplaces in exchange for buyers securing long-term relationships. Third, empowerment of workers,
who take a stronger role in asserting and protecting their own rights. And fourth, public policy
frameworks in recognition of the limits of voluntary initiatives and the value of setting level
playing fields. The report breaks new ground with the final two pillars, which have largely been
neglected until now.
“This report shines a light on the broader and deeper efforts
necessary in order for supply chain labor conditions to improve, and as such it's certainly a
positive addition,” said Dan Viederman, executive director of Verité, a NGO that monitors and audits factories.
Verité just announced a
symposium in China on worker engagement and social responsibility in supply chains, touching on the
third pillar of Beyond Monitoring. “The activities described in the report are some of the more
promising thrusts in current supply chain CSR efforts.”
The report cites examples specific
to each pillar, as well as a couple of emerging models that encompass elements of all four pillars.
Illustrating the first pillar (buyer internal alignment) are balanced scorecards that
rate supplier performance in terms of social, environmental and sourcing performance, such as those
used by Jones
Apparel Group. Other examples extend to encompass alignment across companies: the Suppliers
Ethical Data Exchange (SEDEX) and the Fair Factories Clearinghouse, which allow
companies to share audit and remediation reports.
Flipping this strategy from buyers to
suppliers yields a second pillar (supplier ownership) example. The Electronics Industry Code of
Conduct (EICC) and the Global eSustainability
Initiative (GeSI) are building the Electronic
Tool for Accountable Supply Chain (ETASC), where suppliers can upload audit and self-assessment
data to share with all their buyers.
Under the third pillar, Nike recently broke ranks with
standard corporate practice by setting up a program to educate workers on their rights to freedom
of association (to be implemented in all its contract factories by 2011.) Finally, the World
Bank’s Foreign Investment Advisory Service (FIAS) works with governments and stakeholders in countries such as
El Salvador, Ghana, Peru, Lesotho, Vietnam, and Jordan to use CSR to increase labor standards as a
means of boosting national competitiveness.
The first model encompassing all four Beyond
Monitoring pillars is the International Labour Organization (ILO) Better Work initiative, which grew out
of its Better Factories Cambodia program. The second is a collaborative program in the information
and communication technology (ICT) industry in China that partners BSR with FIAS, EICC, and GeSI,
which is described in depth in a July 12 report.
Despite its comprehensive framework and plethora of examples, Viederman finds the report
falling short on one count.
“The missing piece is a clear articulation of the intended
outcomes, and then a willingness for all of us--corporations, NGOs, consultants--to rigorously hold
ourselves to achieving those outcomes and communicating whether we have or not,” Viederman told
SocialFunds.com. “Unless we as stakeholders readjust our perspective to focus on the outcomes from
these corporate activities, and help companies to do a better job on reporting on that impact, we
might be back in the same place five years from now talking hopefully yet again about a new wave of
corporate interventions.”
The report does acknowledge the dearth of “efforts to identify
benchmarks for success” and the inadequacy of measuring success by the percentage of factories
monitored—a “blunt instrument” that is “better suited to diagnosing the illness than providing a
cure.” While the report may be short on specific outcomes, BSR has a clear vision of sustainable
supply chains.
“Ideally, we move toward a comprehensive approach to supply chain
management that aligns both philosophically and practically with the goal of adopting a full
lifecycle analysis approach,” BSR’s CEO Aron Cramer told SocialFunds.com. “Such an approach
strives for true sustainability starting with product design through materials selection to the
environmental conditions of production, including the health and safety of workers in factories and
farms.”
“It also encompasses more concise supply chains, which lower social and
environmental footprints,” Cramer added. “Increasing public demand for green products should have
a salutary effect on greening supply chains. And ultimately, we need to green the end-life of
products so they feed back into the supply chain as recycled material—that helps close the loop,
with supply chains playing an important role in sustainable product lifecycles.”
©
SRI World Group, Inc. All Rights Reserved.
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