Global Compact Policy Dialogue: Supply
Chain Management and Partnerships
(联合国供应链管理及合作会议)
12 – 13 June, 2003, UN Headquarters, New York
Summary Report of Supply Chain Management Sessions
Debbie O’Brien, Director, Business and Human Rights Program,
Business for Social Responsibility
Outcomes: The following
were identified as potential outcomes/next steps for the Policy Dialogue on
Supply Chain Management.
All GC companies to
seriously explore how best to go from top-down enforcement management
strategies to empowerment, capacity building and training. Expectation is that
the examples of good practice presented and the solutions suggested will
facilitate Global Compact companies to take a more proactive approach in
integrating the nine principles in the management of their supply chain
management.
Increased awareness and
understanding of the value that multistakeholder global initiatives have in
solving supply chain management problems that are beyond the reach of
individual companies or sectors. The following initiatives were presented at
the meeting: Ethical Trading Initiative, Rainforest Alliance coffee
initiative, Global Alliance, the Fair Labour Association and the Lawyer’s
Committee for Human Rights database on compliance with labour standards.
Expectations are that Global Compact participating companies will consider how
best to actively support these types of initiatives.
In conjunction with the
World Bank, the Global Compact will organize regional meetings to increase
awareness of good practice and stimulate increased measures for capacity
building among suppliers. The first meeting will take place in Brazil at the
end of the year, and negotiations are currently being undertaken for meetings
in Japan and China this fall. It is hoped that these meetings will generate
sufficient experiences and practice to articulate an upstream analytical
framework.
The Global Compact
secretariat will work with industry associations, labour, NGOs and CSR
organizations to identify existing tools and databases related to supply chain
management. We will then develop a strategy for dissemination and
awareness-raising through the GC website, the national networks and the
regional meetings. A working group will explore the possibility of developing
a simple, pragmatic business guide to implementing the nine principles in
supply chain management.
Introduction and overview:
The first meeting of the Global Compact policy dialogue on
Supply Chain Management was held in June 2003, in conjunction with the forum on
Partnerships. Over 200 attendees including representatives from companies, NGOs,
business associations, think tanks, the academic community and the UN system
gathered to discuss how best to apply the principles of the Global Compact to
their efforts to integrate Corporate Social Responsibility (CSR) practices into
their global supply chain policies and practices.
Opening Plenary Session
Mark Malloch Brown, Administrator of the UNDP, challenged
participants in the convening session to consider how globalization can work for
all, including corporations. He asked companies to use their purchasing power to
help develop small and medium-sized enterprises across the developing world.
George Heller, CEO of Hudson’s Bay articulated the company’s efforts to
collaborate with other companies to harmonize standards and develop joint
implementation programs to leverage their collective power with suppliers.
Barbara Krumsick, President and CEO of Calvert focused on the advantages of
partnerships to add capacity, expand the influence and help develop a shared
vision. Michael Posner of the Lawyer’s Committee for Human Rights (LCHR)
discussed the need for clear and consistent measurements for ensuring compliance
with existing standards, credible independent monitoring of conditions,
increased public disclosure and transparency, and meaningful engagement with
NGOs and unions in local sourcing communities.
Obstacles to effective implementation of CSR supply chain
policies
The following themes were prevalent throughout the remaining
presentations and ensuing discussions.
The current system emphasizes monitoring to the exclusion of
remediation:
Panelists agreed that despite an increased number of
independent audits, workplace conditions remain poor because the focus on
compliance lacks the needed sustainable component of assuring remediation. Some
attribute the wide variation in the quality and type of auditing regimes as the
source of the uneven conditions. There was disagreement about the importance of
independent verification: some felt it was critical to guarantee an impartial
assessment, while others believed that too many resources are currently devoted
to monitoring, and could be better used elsewhere. Even those more focused on
environmental issues agreed that the top priority for implementation of the
principles is social issues, but that measuring their compliance and developing
management systems remains a challenge.
Collective company action is critical:
Much discussion was focused on the need for
collaborative efforts amongst companies to increase leverage with suppliers, as
expressed by the CEO of Hudson’s Bay. Sustainable compliance can only be
achieved when all companies in a given industry express the same message to
suppliers about the need to improve conditions. One panelist blamed the “free
rider” problem for poor conditions, highlighting the disparity in the level of
gravity with which companies remediate and punish factories unwilling to comply
with standards in a sustainable manner. The
business audience needs to widen considerably to ensure genuine
implementation of standards, both within and across industries
Conflicting performance measures within companies lead to
inconsistent implementation schemes: Until true
accountability for meeting environmental and labor standards is addressed in
employee compensation, procurement and sourcing managers will not emphasize
compliance above the sometimes conflicting demands of price, quality and
delivery. The standards are not sufficient as a stand-alone policy; they must be
integrated into core business strategies.
Despite years of work to improve conditions, many issues of
non-compliance remain: Freedom of association and
working hours were most commonly cited as areas of continued concern in the
workplace. One panelist suggested that freedom of association must begin with
true capacity building, occurring at the worker level. Legal obstacles to
genuine freedom of association in places like China and Mexico were also
highlighted. Meeting company standards ion working hours proves challenging
because many workers want to work more than sixty hours a week. Many noted that
specific issues in China, as the primary “supplier to the world”, must be
addressed.
For companies new to the development of supply chain issues, a
clear roadmap is missing for how to develop policy and implementation schemes:
The GC principles on human rights and labor
practices are ill defined and lack specificity – participants specifically
mentioned work with indigenous peoples and sought clarity on what it means to be
complicit in human rights abuses, particularly in cases where corporations
cannot control outcome. Some companies claimed they lack sufficient resources to
examine the practices of their suppliers. Many stated uncertainty about what
criteria should be applied to prioritize application of supply chain standards,
particularly in cases where companies have thousands of suppliers. The increased
use of e-procurement to gather bids from suppliers makes it more difficult to
develop longer-term relationships with suppliers, which some suggested may be
necessary to ensure sustainable practices.
The business case is currently ill defined:
It was commonly held that a clear methodology to
measure the costs and benefits associated with responsible supply chain
practices is lacking, particularly for the supplier. One panelist suggested that
suppliers are lacking the adequate skills/technology to build capacity, and that
companies can provide training and education on these issues in many cases. It
is important to respect cultural values and develop strong relationships with
suppliers to help assist in the development of sustainable management practices.
One supplier commented that he is able to attract additional business based on
his responsible practices, which does contribute in part to the business case.
Any supply chain policy must address workers?needs:
Many panelists focused on the need for suppliers to
survey their employees about their basic needs, and attempt to meet those needs.
The living wage continues to be a difficult issue to address, because it
currently lacks clear definition, and the full impact of its implementation is
unclear. Some suggested that beginning with ensuring that minimum wages are paid
would be a good
start. Others highlighted the potential danger that the supply
chain discussion can become too focused on workplace, and ignore potential
community outreach and empowerment that can address root causes of civil society
problems, including living conditions of workers and raw materials
The role of governments must increase for sustainable solutions:
Local governments need to take responsibility for
enforcing existing standards, and raising legal standards to meet international
standards
There is an increasing need for transparency of company actions
and workplace conditions:
It was recommended that reporting of workplace conditions be
routine, consistent, and complete within the scope that is laid out, and there
currently is a dearth of consistent units of measurement to assess compliance
across companies, countries, and categories.
Potential solutions for overcoming barriers:
The following solutions were proposed to some of the
obstacles identified:
Create tools for implementing
and defining the Global Compact principles to help companies imbed them in
strategic business strategies
Companies should develop
incentives and rewards for good practices, including long-term commitments to
responsible suppliers and performance standards for sourcing and procurement
managers
Public education of consumers
is crucial, to develop a stronger incentive mechanism for companies
Harmonization and
collaboration of standards, systems, initiatives and suppliers is needed: Must
have both collaboration and harmonization to strengthen collective power of
companies, and share implementation systems and, most importantly, ensure
successful remediation. It was suggested that a potential first step would
include working within industry sectors, then across them. Provide services
directly to workers, including meeting basic needs and education about legal
rights
Use tools in place for
environmental management systems and develop similar tools for social issues –
potentially using ISO methodology
Implement policies for
first-tier suppliers and put responsibility for sub-contractors on them as a
first step so implementation is not overwhelming for those just beginning.
Learn from quality standards:
what made implementation so successful and how can we apply lessons?
Develop shared database of
information both to leverage collective knowledge and to learn from trends in
specific locations
Create methodology so both
companies and suppliers can measure business benefits and risks associated with
successful implementation of supply chain practices.
|