Sustainable Supply Views

2012: California Transparency in Supply Chains Act comes into effect

2012-01-03T20:40:00.012+01:00

Following the December article on the UK Bribery Act and as we step foot into 2012, regulation that emphasizes inter-connectivity of CSR and law has been unleashed. The California Transparency in Supply Chains Act came into effect on January 1st, 2012.

HUMAN TRAFFICKING

The Act was originally adopted by the State of California in 2010 and it requires impacted companies to disclose their efforts, if any, to ensure their direct supply chains are free from slave labor and human trafficking. According to UNODC (United Nations Office on Drugs and Crime), human trafficking:

involves an act of recruiting, transporting, transferring, harboring or receiving a person through a use of force, coercion or other means, for the purpose of exploiting them.

In fall 2007, Gap Inc. discovered that an embroidery subcontractor of one of their suppliers in India had engaged in child trafficking. Subsequently the American company took comprehensive measures to prevent such issues, including extensive supply chain tracking and awareness raising, but the company image and reputation had undoubtedly been damaged by this case. Such modern slavery dilemmas are exactly what the California Transparency in Supply Chains Act aims to elude.

THE REALITY

According to ILO, 2.4 million humans are estimated to be trapped in forced labor as a result of human trafficking. Many sectors are vulnerable to human trafficking and slavery cases, including electronics, apparel, hospitality, and agriculture, among others.

In 2009, the US Department of Labor published a report which identified 122 goods from 58 countries globally that are made by forced or child labor. This alarming report which included real-life, poignant examples coupled with pressure from NGO’s have led to action to link businesses to the issues of human trafficking and slavery. As slavery and human trafficking are crimes, exist globally and are difficult to uncover, companies have to act ‘beforehand’ to diminish their likeliness of occurrence.

WHAT NOW?

Companies required to comply with the California Transparency in Supply Chains Act are those who file California state taxes as retailers or manufacturers, conduct business in California, and earn more than $100M in worldwide gross receipts. Under the Act, these companies are required to publicly disclose measures implemented to eradicate modern slavery from their supply chains on an annual basis.

Specifically, companies must indicate to which extent they:

Verify and evaluate human trafficking and slavery risks in supply chain, with third party verification
Conduct unannounced and verified audits of suppliers to evaluate compliance with company standards
Maintain internal accountability standards and procedures for employees and contractors failing to meet the company standards regarding slavery and human trafficking
Provide employees which are responsible for supply chain management (i.e. Chief Procurement Officers, procurement professionals, etc.) training on human trafficking and slavery, aiming to mitigate risks within the value chain of products
Certify materials in the supply chain to ensure they are in compliance with the law regarding human trafficking of the country or countries in which they are doing business

Essentially, the Act requires companies to disclose their efforts, if any. It is therefore possible for a company to declare that they are not concerned by human trafficking and slavery and thus they will not have to implement policies or measures to address such issues.

However, companies must take caution in declaring exemption from the regulation. Even if the consequences of the Act are yet to be seen, consumers’ awareness is rising regarding respect of human rights along supply chains and NGOs are pushing hard for accountability on the topic. Some companies have already begun to disclose on their website how compliance with the Act is achieved, examples include Hewlett-Packard and General Electric.

WHAT NEXT?

For now, California is leading the way on this subject in the US as no other states have followed suit. However, on a federal level, Congresswoman Carolyn Maloney has introduced a similar bill on August 1st, 2011, the ‘Business Transparency on Trafficking and Slavery Act’. The bill is currently being considered by the House Committee on Financial Services.

Companies have the opportunity to take advantage from this Act to establish thorough policies and processes to eliminate human trafficking and slavery from their supply chains. Conducting supplier sustainability assessments and leveraging or partnering with third parties is and will become increasingly essential for companies.

One solution is the EcoVadis Supplier Performance (SP) platform which allows companies to assess the environmental and social performance of suppliers on a global basis and can support companies in the fight against modern slavery. The methodology specifically includes criteria on child and forced labor.

On a grander scope, there is a systemic shift happening in the world of sustainable procurement. This is why EcoVadis has coupled expertise on both Corporate Social Responsibility and sustainable procurement strategy to provide tools on the leading edge of movement in CSR including: CSR suppliers assessments, corrective action plans, supply chain risk mapping and buyer training.

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This article was written by Hélène Kadjar, which holds a double degree in Law from University Panthéon-Sorbonne and Complutense Univeristy of Madrid, as well as a Masters in Sustainable Development from Catholic Institute of Paris. She currently works for EcoVadis as a CSR Analyst.

Photograph by purplepick under a Creative Commons license

The UK Bribery Act: Law as a tool for Sustainability

2011-12-05T14:03:00.006+01:00

As a CSR analyst, I’ve seen a number of Code of Ethics and anti-corruption policies in the last year that outline the UK Bribery Act to employees. In many ways this can be seen as the first step in a company’s due diligence procedures required by the legislation. It’s also a demonstration that it’s working. Or perhaps this is a little pre-emptive. But much has been written about the ambitiousness of the UK Bribery Act, and this has been rightly earned. The act is the most comprehensive in the world and has been heralded as a major step to combating corruption & bribery across the board, by, amongst others, Transparency International UK.

It’s an example of law being used as a way of compelling companies (and notably their supply chains) to embed CSR & sustainable procurement practice in key issue areas. And there’s a need for it. Environmental initiatives by companies & their supply chains have torpedoed, partly due to the dominant climate change discourse of the last few years, and partly as they are often linked to cost reduction & efficiency. Pressing issues in the labor standards and business ethics arenas do not always derive the same kind of direct benefits - of course cutting out corruption completely will create a level playing field for business and will make it more efficient & fair - but aside from the ideological argument, corruption & bribery are not always the first port of call for CSR and sustainable procurement professionals. This act goes some way of dissolving this problem.

Regulation is clearly the “stick” in CSR dialogue, but it is a necessary one. When fighting against “business as usual” and apathy towards anti-corruption, there is a need to use legal means to strengthen reform. A recent study by Ernst & Young suggests perceptions around bribery remain depressing. There’s still the assertion by many that bribes are a natural way of doing business – especially in “some parts of the world”. The study summarizes: “To help their company survive or grow, more than a third of all respondents are prepared to offer cash payments, gifts or entertainment to win business” and further reveals that the corruption perception of respondents of mature markets is 20%, while emerging markets is 38%. This means professionals “perceive” more bribery & corruption in emerging markets. What does this do to day-to-day business practice?

So to the UK Bribery Act for a solution! The act has expanded the possibility of liability for corrupt acts; it has extra-territorial reach both for UK companies operating abroad and for overseas companies with a presence in the UK; it also extends the crime of bribery to cover all private sector transactions and creates a new liability offense of failing to prevent bribery if the company has not implemented adequate due diligence measures to prevent this.

The act has of course been feared somewhat due to these extensions and widening of the threats to companies. But through these threats, creates compliance. And due diligence procedures. Without the act, would as many UK or UK affiliated companies act on corruption & bribery in the way they have done in the last year? The CSR pessimist might say no, the CSR enthusiast yes; on this occasion I may have to say I’m a CSR pessimist and the law can serve a useful & necessary CSR tool and it’s power should not be overlooked.

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This article was written by Maria Mursell, a CSR Analyst at EcoVadis. You can follow her on twitter @mariaGmursell

Photo from flickr creative commons, by The Uprooted Photographer

Auto Manufacturers, Supply Chain Sustainability and Conflict Minerals

2011-11-21T12:49:00.011+01:00

“If you want to go quickly, go alone. If you want to go far, go together.”
– African proverb.

A critical issue for the automobile manufacturing industry, especially for those with SEC financial reporting requirements in the United States, is compliance with the Dodd-Frank legislation, or in other words, the soon to be finalized Conflict Mineral regulation. A round table of experts was held in mid October to support in finalizing the rules, but to-date it is anyones bet when they will be final which adds to the industry anxiety over how to move forward.

This has certainly been a key topic of conversation for many sectors. The electronics industry, specifically the EICC-GeSI Extractives Work Group, has been the leader and has already started running pilot projects to ensure companies in the sector can meet the regulation which requires proof of due diligance on conflict mineral issues. At the Business for Social Responsibility 2011 Conference in San Francisco earlier this month, a panel of experts including Monique Oxender, Global Manager for Supply Chain Sustainability at Ford Motor Company, spoke on a panel about Conflict Minerals and discussed how to deal with this issue. She stated:

“It’s difficult to get support internally for extensive or costly actions, while expectations are still being defined with regard to conflict minerals. But regardless of what happens with the SEC legislation, the problem of conflict minerals is not going to go away. Business cannot provide solutions to all of the problems in the DRC, but there are certainly some concrete steps the private sector can take to improve the situation.”

Collaboration will be central to how businesses take on Conflict Minerals, just as it is central for how companies engage in sustainable procurement. The Automotive Industry Action Group (AIAG) has established a working group, for which Monique Oxender is the Chair, and their proposed solutions are similar to what EICC and GeSI have proposed for the electronics industry.

In a broader sense, automobile manufacturers are maturing and taking actions to take into account Corporate Social Responsibility (CSR) criteria in their supply chains. Renault, for example, wants to ensure their suppliers (French, English) are reliable not only on quality and cost issues, but also in respect to CSR criteria, such as environment, human rights and ethics.

Renault has already established a supplier CSR charter which was developed in line with Nissan and have taken the next steps to ensure suppliers are held accountable by leveraging the EcoVadis Supplier Performance (SP) tool.

This tool not only allows them to benchmark suppliers on their CSR performance, but it also allows them collaborate with their suppliers towards performance improvement. Additionally, EcoVadis is taking steps to support companies and to ensure the Supplier Performance (SP) solution provides support for the due diligence necessary for compliance on the Dodd-Frank Conflict Minerals regulation.

Times are changing quickly, but this cross-pollination and cross-collaboration is allowing everyone to keep up, if not ahead of the changing market and regulatory environment.

Photo provided by p4nc0np4n on Creative Commons license.
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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

UN Global 2012 defines supply chain sustainability

2011-10-21T11:14:00.000+02:00

This definition was uncovered recently by one of our expert analysts. EcoVadis believes in this definition and would like to share it here with our blog audience.

UN Global 2012 defines supply chain sustainability as: “the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycles of goods and services. The objective of supply chain sustainability is to create protect, and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.

Supply chain sustainability needs to be built into the design/redesign of supply chains and become a feature of continuous improvement strategies of the supply chain. As such companies should develop a road map which should integrate environmental considerations into the supply chain, assess sustainability within the context of a number of elements.”

- Dr Pieter Nagel (Executive Director of the Alliance for Supply Chain Innovation), From The Good Chain, Fast Thinking Magazine, Spring 2011 Edition

Quote from Australian Sustainability
Photo from opensourceway - Flickr Creative Commons

Greenhouse Gas Protocol Corporate Value Chain Standard Released

2011-10-04T11:42:00.002+02:00

The Greenhouse Gas Protocol launched two new standards in early October 2011 which will support companies to better report on their green house gas emissions, and will drive supply chain innovations.

The first is the Corporate Value Chain (Scope 3), which links directly into company’s supply chain and is a noteworthy step for companies to capture their true GHG footprint. Beyond simply monitoring and reporting, companies will be able to pinpoint areas for operational efficiency and for reductions throughout their value chain.

“These standards are a breakthrough for business. For the first time, companies will be able to measure and manage the full scope of emissions in their value chain and products, so they can take advantage of new opportunities as they reduce greenhouse gases,” said Manish Bapna, Interim President, WRI.

Watch an introductory video here.

The second is Product Life Cycle Standards which “enables companies to measure the greenhouse gas emissions of an individual product”. This information will allow for a great deal of innovation. Companies will be able to pinpoint areas of their products which account for the greatest emissions and to directly implement changes to those processes as needed. According to the Greenhouse Gas Protocol press release, these new standards are already gaining traction.

• The Consumer Goods Forum, representing over 400 consumer goods companies and retailers with a combined 3 trillion dollars in sales, has recommended the new standards be used by members who choose to measure and report scope 3 and product greenhouse gas emissions;
• The Sustainability Consortium has adopted the Product Life Cycle Standard as the GHG methodology used in their tools to promote product sustainability; and
• The Global e-Sustainability Initiative, a consortium of leading ICT companies and other experts, are utilizing the Product Standard as the basis for developing sector guidance for ICT products and services.

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

Textile industry suppliers’ environmental violations in China

2011-08-22T13:34:00.016+02:00

A year after the Institute of Public and Environmental Affairs' (IPE) study on heavy metal pollution by IT suppliers in China, Greenpeace investigates toxic water pollution caused by the release of hazardous chemicals in the textile industry. Chinese suppliers to Nike, Adidas, Puma, H&M and Lacoste are accused of discharging dangerous chemicals into water systems.

According to the Greenpeace International "Dirty Laundry" report, despite the presence of a modern waste water treatment plant, two facilitates in China (the Youngor Textile City Complex and the Well Dyeing Factory Limited) were discharging a range of hazardous chemicals into the Yangtze and Pearl River. Meanwhile, these two facilities have commercial relationships with a range of major brands, including Abercrombie & Fitch, Adidas, Bauer Hockey, Calvin Klein, Converse, Cortefiel, H&M, Lacoste, Li Ning, Meters/bonwe, Nike, Phillips-Van Heusen Corporation (PVH Corp), Puma and Youngor, and have also been linked with a number of other Chinese and international brands.

There were many voices of disagreements right after the Greenpeace report was released. The two Chinese facilities made official declarations claiming results of monitoring as untrue and that the methodology of monitoring had not been approved.

While CEOs from some of big brands made formal ized statements that they were not responsible for this issue, among which, Lacoste, Puma and Nike have claimed that they do not purchase from the mentioned factory, but rather do business with other facilities of the Youngor Group.

In China, the textile industry was classified as the top 5 most polluted industries in 2007, which is caused by waste water discharge (containing toxic and hazardous substances) from “wet processing" technology which includes dyeing, washing, printing and finishing. Despite implementation of sewage treatment plants, toxic substances can not be completely removed.

Regarding regulations, some developed countries have strict regulations on the use of hazardous substances throughout the entire process, while others are just about to enforce their regulations. This gap of regulatory oversight results in companies or suppliers being considered as “under compliance” by their country of operation, but by standards in more developed nations these same companies are committing serious violations.

As in this case, the lack of national Chinese regulation or directives on restricted chemicals is one of the major causes. Large companies face a big challenge when outsourcing operations, not to mention that the level of compliance on environmental regulations is not ensured in risk countries (as shown by the illegal chromium dregs dumping discovered recently).

Therefore, a regular assessment on a supplier’s CSR management system is critical. As mentioned by Greenpeace, big brands should take more efforts along their outsourcing and supply chain management and their sustainable procurement programs should take steps to go beyond ensuring that suppliers comply with local standards.

For oversea big brands, this is also a good example to realize and understand that they are confronted with major CSR risks which are brought about by their indirect business relationships. As it is always difficult to identify these hidden links through simple supplier contracts, Ecovadis is helping their clients to choose the optimum scope of evaluation of suppliers through assessing various risk characteristics (e.g. company’s size, geo-presence, industry of operation).

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This article was written by Ying Luo, a CSR Analyst at EcoVadis. To keep up to date with CSR issues in China you can follow her on twitter at @yluobo

Photographs by NRDC Media via Creative Commons license

ISO 26000 and Supply Chain Management

2011-08-11T11:20:00.007+02:00

What does the development of social responsibility guideline ISO 26000, mean for supply chains?

The goal of ISO 26000 is “to provide a simple, easy to use guidance document for non-specialists and encourage voluntary commitment to social responsibility”. This new ISO standard was always going to be ambitious; it was developed with the largest working group in ISO history, of 400 people, from 99 different countries, 69 of which are developing nations.

It covers the whole spectrum of issues pertaining to social responsibility, namely organizational government, human rights, labor practices, the environment, fair operating practices, consumer issues and community involvement. As Rob Steele, the ISO Secretary-General states, the subjects covered are relevant to all organizations, be they private or public sector:

“I do believe this is relevant for all countries and for all organizations, be they large, small, private sector or governmental.” (Read the full interview with Rob Steele here)

Aside from the breadth of scope, the other departure for ISO is a standard which is not certifiable, using the word “should” instead of “shall” throughout. Steele’s take on this is that there is a need to take CSR away from box ticking and towards a framework of constant progress and innovation:

“I think the opportunity to have a standard that is certifiable focuses people's minds on the certificate. In the case of ISO 26000, it focuses people's minds on the performance.”

A key word he also uses in this discussion is “flexibility”, not just because this standard is designed to work within any type of organization in any industry, but also because the objective of this standard is to embrace individualized evolution.

The inability to prove compliance is a problem when you’re looking to improve the performance of your supply chain in an immediate sense. Though it does demonstrate that what is required to see real progress is dedication and hard work for both individual companies and their clients who want to facilitate CSR improvements in their supply chains.

ISO 26000 is well suited to increase awareness, provide definitions and add legitimacy to the social responsibility debate. Dave Meyer argues that the guidelines will be useful for small to mid-sized Enterprises (SME) in particular, giving them an overview of social responsibility issues in one place. While standards and certifications are worthwhile, useful and quantifiable, guidelines are better placed to culture a climate of progress and in the form of ISO 26000, should prove more useful for generating an embedded CSR structure.

However, some have argued that as stand-alone guidance, ISO 26000 may not contain sufficient practical advice to facilitate SMEs to turn theory into reality. It is a lengthy document at 120 pages and although language is simple and clear, it may not be the most accessible piece of writing, especially for much smaller companies. It has also been criticized for not advancing or building on any of the already established principles it references, such as the UN Global Compact.

EcoVadis uses ISO 26000 in its methodology and assessment of suppliers. We quantify elements of sustainable development to create our unique evaluations, but the overall approach is to look at the potential progress and evolution of individual suppliers towards greater sustainability by focusing on management systems that are in place to mitigate risk. Innovation and opportunity our also key elements in our assessment process and we endeavor to communicate the importance of this to our clients and those we assess.

In an ever-changing, evolving and progressive CSR landscape, creativity and adaptability will prove themselves key assets and we feel ISO 26000 will go some way to aiding that.

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This article was written by Maria Mursell, a CSR Analyst at EcoVadis.

Best Practices in Supplier Engagement

2011-07-11T11:37:00.005+02:00

TriplePundit recently hosted a series on Stakeholder Engagement in CSR. EcoVadis CSR Analyst, Nicole Sherwin, weighed in on what true supplier engagement should look like. . .

Supplier Engagement: Shifting from Defensive to Collaborative

Companies are only beginning to uncover the best practices for engaging suppliers on sustainability. With suppliers providing the major inputs for the operations of businesses, it would only make sense that companies would be eager to engage this specific stakeholder on sustainability issues, but many companies are still fumbling over how to approach it. (Read more)

Production of Lead-Acid Batteries Indefinitely Suspended in China

2011-06-22T17:50:00.010+02:00

Recently, Chinese authorities launched a national wide campaign to fight against the lead pollution of the battery industry in China. From the statics of ILBF CHINA 2011 (8th International Lead Battery Fair), China's annual output of lead-acid batteries in 2009 was about 120 million kVA, with a total sale of more than 100 billion yuan. Lead-acid batteries account for 30% of Chinese battery output and in the past five years, the Chinese exports of lead-acid batteries has had a growth rate of 20+%.

But what is the true cost behind this growth?

Over two and a half years, thousands of workers, villagers and children have been found to be suffering from high blood lead level, mostly caused by the pollution from local battery factories. Since the beginning of this year, various news sources have disclosed the violations to the public and increasingly individuals have started to grasp the danger and gravity of the situation. People which live within the industrial zones were then quick to take personal initiative to go for health checks, and more serious case were being discovered especially in children.

The scandal of lead poisoning set off a national alert to the whole country regarding lead pollution. On March 28th, Chinese authorities (e.g. the Ministry of Environmental Protection of the People’s Republic of China, the Ministry of Industry and Information Technology of the People’s Republic of China) launched together a campaign to take action regarding this issue. From this official decision, nationwide investigations are being carried out at each province and all non-compliance factories must be closed for rectification. This has already had an astonishing effect as all of a sudden 250 battery factories/plants were closed in Zhejiang, which represent 90% of the production in this province and 70% of factories were closed in Jiangsu. Since then, this storm has spread into other provinces such as Guangdong, Henan and Sichuan, which has suspended more than 60% of the capacity of the lead-acid batteries production in China.

China began the pollution discharge permit management system for the battery industry in 2005, according to which all the new installations must be audited before the operation. In 2007 a detailed permission requirement on environmental factors was also published. However, the compliance of the regulation has not been effective. On one hand, the cost of installing new equipment is around 20% to 30% of the total cost and for Chinese companies the installation of waste treatment facilities means an immediate loss in price competitiveness. On the other hand, the monitoring system in China has not been efficient enough to detect company violations. "In China, there are more than 2000 lead-acid batteries enterprises, but the only about 200-300 of them comply with the regulation," said one Chinese specialist in an interview with the local press.

Up until now, several months after the launch of the campaign, factories remain closed and there is still no sign of when factories will be reopened.

As companies are closed in such a quick manner, thousands of employees have lost their jobs, and moreover, their family member are likely ill. Some battery manufacturers have provided employees a lay-off pension or provided some social help for the medical care, but others have not seen any support and everyone is waiting for an official explanation. Another critical factor is that there must be a 500m protection area around all factories which restricts residents from access to their homes.

The implications for the global battery market have been huge. This “clean up” storm has left companies overseas with a shortage of lead acid batteries, and prices for lead acid batteries (used in various kinds of products, such as mobile phones, e-bikes and automobiles etc) are already surging, which has in turn also boosted the market for Cobalt.

It is a major challenge for companies to determine the true CSR performance of suppliers operating in China, or even to anticipate such a large disruption in the supply chain. Yet, one means to avoid collateral damage to the supply chain is to implement sustainable procurement systems cross-checks. In China and other risk countries where companies can sometimes easily get away with evading legal compliance, establishing internal monitoring systems (i.e. assessments, audits) and supplier sustainability engagement activities (i.e. trainings) is evermore important not only to ensure compliance to regulation, but also to encourage and support suppliers to go beyond.

This article was written by Ying Luo, a CSR Analyst at EcoVadis. To keep up to date with CSR issues in China you can follow her on twitter at @yluobo

Photo by Anja Disseldorp under Creative Commons license.

What will it take for your company to establish a Sustainable Procurement Policy?

2011-06-15T15:46:00.010+02:00

Last week Greenpeace launched a global campaign against Mattel Inc. which effectively persuaded the largest toy company in the world to promise to establish a sustainable procurement policy. The campaign leveraged the face of Barbie, perhaps one of the most recognized dolls across the globe, to tell the story in 18 languages of how the Barbie packaging is sourced from suppliers which contribute to deforestation.

Mattel, who suffered from major supply chain issues in 2007 when lead was detected in their toys and who spent US $110 million on “reputation repair”, are in the spotlight once again. This time around they have been primarily leveraged as the face for the campaign, while the true target is one of the largest producers of wood products in the world, Asia Pulp & Paper (APP) and subsequently all the companies who source products from them including Mattel (of course), Disney, Hasbro, and Lego.

Greenpeace did a chain-of-custody and forensic analysis on the toy company packaging and was able to identify contents of mixed tropical hardwoods from the Indonesian rainforest, the homeland of APP, and a region that has been vastly deforested.

It is no easy task to ensure sustainable operations of tier-one suppliers and an even greater challenge when looking to tier-two and tier-three suppliers, but figuring out ways to make it happen is increasingly important, especially for large firms where reputation risks are monumental. Why Mattel did not establish a formal sustainable procurement policy after their first major supply chain issue in 2007 is somewhat hard to say. One reason may be found in the actions taken by their VP of Worldwide Operations, who apologized for blaming their Chinese suppliers, stating that many of the product recalls were also due to product design errors on Mattel’s side (due to small magnets, not lead paint issues). Another reason is that they were strictly focused on product safety in their supply chain, and rightfully so considering their product users are children, rather than on sustainable procurement as a whole.

The toy industry, much like the apparel industry, has focused firstly on improving social conditions of supplier factories, but ensuring supply chains are also environmentally responsible has not been a priority, which is why this campaign aims to goes after the industry, even if Barbie herself is the face. Disney offers the most extreme example of this as they have a full blown International Labor Standards Program with 60,000 assessments of factories done since 1996, but regarding the environment, they have only just launched a basic supplier self-assessment last year.

Even Mattel has stated this past week that, “it is not the normal course of business to dictate where [packaging] suppliers source materials.” Maybe it wasn’t normal business for them in the past, but it certainly is now, especially since every product they deliver contains packaging as a key component.

In a way, Mattel is actually quite fortunate as there is no need to reinvent the wheel when it comes to sourcing and tracking the chain of custody for paper or packaging materials. Compared with other materials, wood derived materials have perhaps the most mature systems in place in regards to certification schemes, frameworks and support for managing chain of custody ( i.e. FSC or PEFC).

And so, a promise has been made to implement a sustainable procurement policy with specific regard to paper sourcing, but we hope to see Mattel take this opportunity to go above and beyond. As for the other three deer caught in the headlights – Disney, Hasbro and Lego – action has yet to be taken.

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

Revised OECD Guidelines to Mandate "Sustainable Supply Chain" Practices

2011-05-26T12:35:00.010+02:00

Just yesterday the OECD Guidelines for Multinational Enterprises, which provide recommendations for responsible business conduct in a global context, were updated for the fourth time since they were first adopted in 1976. Forty-two countries adopted the revision with the main addition “new recommendations regarding the violation of human rights and corporate responsibility throughout the chain supply”. It is the first inter-governmental agreement in this area.

It seems that the inclusion of sustainable supply chain practices was urgently driven by the issues regarding conflict mineral as in December 2010 the OECE published Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected Areas , but no doubt sustainability issues in global supply chain management have been mounting for some time. From the early 1990’s with Nike’s public exposure for operations in sweatshops, to the unexpected sustainable supply chain leadership of Wal-Mart, to today where there seem to be multiple initiatives for each industry and sector - Electronic Industry Citizenship Coalition (http://www.eicc.info/), Sustainable Apparel Coalition (http://www.apparelcoalition.org/), Pharmaceutical Supply Chain Initiative (http://pharmaceuticalsupplychain.org/), Sustainable Packaging Coalition (http://www.sustainablepackaging.org/), and the list goes on.

For the OECD, the topic has gained further traction with pressure from John Ruggie, UN Special Representative on Business and Human Rights, who has been strongly endorsing social due diligence.

In the new OECD Guidelines under “General Policies”, enterprises are encouraged to:

Engage in or support, where appropriate, private or multi-stakeholder initiatives and social dialogue on responsible supply chain management while ensuring that these initiatives take due account of their social and economic effects on developing countries and of existing internationally recognised standards.

While the words themselves may be simple, the inclusion of the supply chain into the OECD Guidelines is evidence of the major shifts underway and yet to come. This is a signal to all corporations and companies that embracing sustainable supply chain practices is imperative in order to be considered a "responsible business".

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

In the Spotlight: Apple, Foxconn and the IT Industry

2011-05-16T16:05:00.020+02:00

For better or for worse, Apple has become the poster child for how not to manage an IT supply chain. They are a perfect target as their brand is a global super star and they have a reputation of being shamelessly secretive, a characteristic that is especially taboo when Corporate Social Responsibility is the topic of conversation. Last week Apple was the focus of the International Action Day for Sustainable IT Supply Chains put on by makeITfair and Good Electronics and where the driving slogan was “Time to bite into a Fair Apple!” and on the very same day news broke that Foxconn International Holdings Ltd. (the infamous Chinese IT manufacturer of the Apple iPhone ) asked employees to sign a pledge not to commit suicide. Apple was again bombarded by bad press here, here and here. But let us not forget that Foxconn is also a key supplier for Motorola, Microsoft, Nintendo, Nokia, Sony, Amazon, Dell and others.

After 14+ employee suicides and 18 attempts in 2010, Foxconn, with pressure and guidance from Apple, hired psychological counselors, established a 24-hour care center and attached large nets to the factory buildings to prevent impulsive suicides. While such measures are arguably a step in the right direction, they do not address the root cause of the issue (a severely misaligned management system) and the suicide pledge itself is a blatant step backwards as it is simply a legal mechanism so that employees cannot sue the company. Foxconn did raise wages, three times, but their actions keep missing the point and have failed to properly address their stress-ridden workforce and various labor rights abuses.

As part of International Action Day for Sustainable IT Supply Chains, Students & Scholars Against Corporate Misbehaviour (SACOM) published a report disclosing the progress made by Foxconn one year after Apple first responded to the labor issues. Below is the summary, and it seems that not much progress has been made where it counts most. The details can be read in the report here.

It is unlikely that pressure upon Apple, FoxConn and others in the IT industry will let up any time soon as the spotlight is burning bright. Suffice to say, it is not just up to Apple to step up to the plate. In the Apple Supplier Responsibility 2011 Progress Report more than 40% of their suppliers inspected last year (127 in total) said that Apple was the first company to have audited them for social responsibility. Even without knowing the exact make up of the suppliers assessed, this figure is nonetheless very high. Having the resolve to assess and audit suppliers is only a first step, so what is everyone waiting for? There may only be one Foxconn, but the looming social, environmental or otherwise ethical risks across supply chains are unquestionably present. In moving beyond assessments, where lasting change will happen is when companies begin working with suppliers towards implementing corrective actions, actions that go beyond simple defensive measures, actions that help to embed corporate social responsibility into supplier management systems.

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

Trade and Kyoto and Emissions, Oh My! Taking Responsibility for Carbon Emissions in the Supply Chain

2011-05-02T10:23:00.004+02:00

A recent publication by the Centre for International Climate and Environmental Research in Oslo, concludes that figures on CO2 emissions based on the Kyoto Protocol do not relay the true distribution of carbon emissions between North and South. They argue that international trade has not been taken into account when reviewing these emissions and that the import of goods to the developed world from developing countries (particularly China) essentially mean that emissions are being off-loaded from the developed world. Under the protocol, emissions released during production of goods are assigned to the country where production takes place, rather than where goods are finally consumed, which means that by importing manufactured goods from developing countries that are not signatories to Kyoto and for economic development reasons have less restrictions on their CO2 emissions, developed countries have been able to mask their contribution to CO2 emissions.

So much so that when revised figures are calculated balancing out these imports, they reveal a very different picture: under the protocol as it stands now, developed countries can claim to have reduced their collective emissions by 2% between 1990 and 2008. But once the carbon cost of imports have been added and exports subtracted, there is an increase of 7%. If Russia and Ukraine are excluded (they cut their CO2 emissions rapidly in the 1990s due to the collapse of the USSR), the increase becomes 12%.

The report writers suggest that “policies that affect international trade should not be continually separated from climate policy” In particular, international trade and investment flows provide a link between production and consumption in different countries that should not be ignored when calculating CO2 emissions. Which is why it is more important than ever to ensure that companies account for the CO2 emissions of their world-wide suppliers if they want to get an accurate picture of their total emissions. With global trade increasing (WTO economists have revised their projection for world trade growth in 2010 upwards to 13.5% in September from 10% expansion in trade volumes predicted in March) it is critical to look at emissions throughout the supply chain in order to accurately gauge progress or highlight failures in meeting Kyoto Protocol’s reduction aims for countries as a whole.

This report demonstrate the critical importance of Sustainable Procurement initiatives, where Companies start to monitor and reduce CO2 emissions associated to their global trade, in particular suppliers in emerging countries. The recent initiatives from Sprint, BT, or Tesco are clear best practices in this respect.

This article was written by Maria Mursell, a CSR Analyst at EcoVadis.

Photo under Creative Commons license courtesy of Jim Bahn

Pressure Mounting in EU Regarding Sustainable Supply Chains

2011-04-21T12:16:00.012+02:00

Following the resolution which was adopted in November on CSR in International Trade, the EU has released a new study in Sustainable Supply Chains: Responsible Supply Chain Management : Potential success factors and challenges for addressing prevailing human rights and other CSR issues in Supply Chains of EU-based companies. The study looks at success factors and challenges in addressing Corporate Social Responsibility (CSR) issues in supply chains. The key question raised is: “Why for some CSR-issues in their supply chains, has CSR not yet provided a solution and why do companies, assuming that they may be aware of the issues, fail to deal with them, and what is needed to improve the situation?”

The report begins by looking at different definitions of Responsible Supply Chain Management (RSCM). The International Chamber of Commerce defines it as “voluntary", whereby nothing is holding companies to take sustainable procurement actions. That is, as of yet. Additionally, both the ICC and UNGC definitions highlight the importance of "collaboration" between companies, their supply chains and their stakeholders. The study takes a specific look at both how voluntary initiatives are working (or not) and assesses successful implementation of stakeholder engagement and the challenges faced when involving different stakeholders in initiatives to improve sustainable supply chains.

Since all CSR issues have their own characteristics, causes, legal and non-legal regulatory issues, this study is just the beginning of an examination into finding key areas for improving Responsible Supply Chain Management. It examines three industrial sectors within Europe – cotton, sugar from sugar cane and mobile phones – and looks specifically into five CSR supply chain issues. The results are correlated with the “Protect, Respect and Remedy” Business and Human Rights Framework proposed by Harvard Professor and UN Secretary-General on human rights and business, John Ruggie. This framework delineates clearly between the roles and responsibilities of business and government and is used as a basis for examining a detailed set of case studies outlined in the 200 page report.

The report makes 7 recommendations to EU policy makers and EU Member States:

1. Increase supply chain transparency - A key current solution towards transparency is leveraging the Global Reporting Initiative (GRI) reporting standards, but it is noted that while CSR reporting is on the rise, reporting on Responsible Supply Chain Management is still in its infancy, as most reporting primarily relates to the internal activities of the company. Specific recommendations towards regulation include adopting legislation that would require large enterprises to disclose information on their supply chain or to require traceability throughout supply chains.

2. Strengthen the OECD Guidelines for Multinational Enterprises - The OECD Guidelines’ application to the supply chain is limited and in addition the consequences for non-compliance are either minimal or non-existent. It is recommended to broaden the scope of the Guidelines to include CSR supply chain issues in more detail and secondly to linking adherence to the Guidelines to eligibility for public support and benefits.

3. Enhance access to remedy for victims in supply chains - Effective grievance mechanisms are a crucial part of CSR, but it is the responsibility of States to take appropriate steps within their territory to ensure access to effective remedy for corporate-related human rights abuses. The study recommends the establishment of a monitoring authority at the EU-level.

4. Support multi-stakeholder initiatives aiming to enhance Responsible Supply Chain Management – Many large corporations are embracing such initiatives as they can reap the benefits of sector-wide leverage upon a supply chain of shared suppliers. That is simply smart business. The report recommends improving the effectiveness of multi-stakeholder initiatives by improving the regulatory environment in which they operate. Since such initiatives are voluntary the recommendation is that companies should be rewarded for their positive efforts by linking their participation to various forms of public support.

5. Address competition affecting labor rights – The point here is that States need to cooperate in applying their duty to protect. The EU and Member States could therefore address the issue of Responsible Supply Chain Management in their state level relations (i.e. negotiation on trade and investment agreements) with third countries such as China.

6. Due diligence for high risk sectors/countries – Disclosing on due diligence remains a voluntary company measure and the report recommends requiring companies to exercise due diligence particularly in high risk areas, such as the regulation passed in the United States requiring companies to annually disclose their exercised due diligence on the source and chain of custody of conflict minerals originating from the conflict-affected eastern part of the Democratic Republic of the Congo.

7. Promote Responsible Supply Chain Management through public procurement – Finally, of course it is not just companies who should take action on Responsible Supply Chain Management, but public entities should also establish policies and measures to ensure they are sourcing sustainably. There are currently many EU initiatives supporting this development including Procura+, the European Sustainable Procurement Campaign.

While there is no clear timetable or plan on how these recommendations will be reviewed and implemented, it is clear that regulatory pressure on the topic is mounting in Europe, and that companies who have not yet initiated a programs should reexamine their strategy. Not only will this keep companies out of trouble when regulations will become enforced, but taking steps towards implementing more robust responsible supply chain management now will only increase a company’s competitive edge, reduce risks and provide an innovative CSR story to market and tell to the world.
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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

Best Practices For Supplier Sustainability Evaluations

2011-04-14T12:34:00.009+02:00

The majority of companies are not interested in evaluating suppliers for the sake of evaluation, but rather they are looking to drive improvements, reduce risks and push towards innovation in the supply chain. We would like to share 5 best practices based on our expertise and experience in assessing sustainable supply chain excellence.

1.) Keep it simple. Sustainability jargon can be complex and notions which appear obvious to Corporate Sustainable Procurement Managers such as CSR, biodiversity or climate change may not mean a whole lot to a SME located in Central America or even to some of your local procurement teams, for that matter. Keeping it simple is important in order to ensure communication efforts are understood. Additionally, providing support such as trainings to buyers and suppliers on what CSR means to you and to your company is increasingly required if corporate sustainability initiatives are to be effectively implemented.

2.) Address the root cause. Too many initiatives focus on addressing non-compliance (i.e. adding an additional fire extinguisher to a facility), but issues will continue to persist every year if the root causes have not been addressed. To be blunt, CSR site audits are useless for the majority of suppliers. It is for this reason that EcoVadis has pioneered an innovative approach to rating a company "Sustainability Management System" by looking at 21 CSR criteria, rather than simply checking boxes based on non-compliance. Understanding how a supplier’s management system is structured and what policies, actions and results they have in place regarding sustainability is crucial to long lasting performance improvement.

3.) Remember: it takes time. CSR improvements do not happen overnight and change usually will take longer than you think. Some companies establish policies that set impossible expectations of suppliers such as “all non-compliance to be resolved within 30 days of audit.” This sets up both the company and the supplier for failure and frustration. Truth be told, it does not work this way and companies need to allow 6 to 12 to 18 months to see real changes.

4.) Integrate sustainability into the procurement process. By definition, CSR is voluntary and it is not to be mistaken with “legal compliance”. Suppliers will not make the voluntary effort towards sustainability unless they feel there is a risk in not doing so or on the flip side if there are rewards for those who go the extra mile. Sustainability should be valued from the very start of a supplier relationship, especially within the RFP process. Progress will not take place unless suppliers are driven beyond business-as-usual and given incentive towards sustainable innovation.

5.) Industry collaboration is key. Even the largest of organizations lack the leverage to impose detailed improvements upon their suppliers which is why companies need to align with their peers to push in the same direction. It is for this reason that EcoVadis released a Collaborative Action Plan module, which is the first of its kind allowing suppliers to have an integrated view of all improvement requests made by different customers. In this way, suppliers can simply propose a single plan of action to all customers which saves time, energy and most of all allows the supplier to take ownership of their improvements.

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

Past 25 Years of Sustainable Supply Chain Research

2011-04-11T16:49:00.009+02:00

A study released by Networks For Business Sustainability in partnership with University of Warwick and University of Bath titled Managing Sustainable Global Supply Chains assessed research from over the past 25 years to examine the driving forces behind why and how organizations implement sustainable supply chains.

Surprisingly, the most prevalent motivation for companies to build a sustainable supply chain is not risk management, but rather a desire to maintain or attract new customers (accounting for 40% of the motivation expressed in the previous research, whereby risk management accounts for only 19%).

The most significant pressure to encourage company adoption of international sustainable supply chain management it comes almost equally from consumers, government legislation, societal concern and NGOs.

The report assess the current organizational practices and models for sustainable supply chain management based on the previous research – expect (i.e. codes of conduct), select, monitor (i.e. assessments/audits), reject - but that these practices are often approached in ways that undermine supplier relationships or fail to provide suppliers with support.

The authors argue that these practices should incorporate coordinated industry action and supplier specific development (i.e .training, investment) in order for them to be successful. Sector-specific actions which promote standards for compliance in sustainability “creates a competitive level playing field through which incentives for unsustainable supply chain management are reduced.” Finally, the research suggests that most important aspect to the development of sustainable supply chain solutions and to successfully reduce risk is to develop a supportive and mutually trusting approach when engaging with suppliers. Of course, developing such practices can be time-intensive, but this is the direction in which “best practices” for sustainable supply chain management are heading.

Download study here: http://www.nbs.net/wp-content/uploads/NBS-Sustainable-Supply-Chains-Systematic-Review.pdf

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

McDonald's New Sustainable Supply Chain Commitment Begins at a Roundtable (or make that a few)

2011-04-04T16:18:00.004+02:00

McDonald’s recently worked with the World Wildlife Foundation (WWF) to conduct an analysis of which raw material inputs have the most potential sustainability impact. They have decided to focus on five areas - beef, poultry, coffee, palm oil, and packaging – which can be seen in their recently released “Sustainable Land Management Commitment".

The company is developing a pilot program with the goal of tracing and certifying sustainable beef in the Amazon region. Beef ranching is to blame for over 80% of deforestation in the Amazon rain forest and the potential impact that McDonald’s, the largest global food service retailer in the world, can have is immense. As a member of the Global Roundtable for Sustainable Beef they are not alone in these efforts and are taking the lead alongside industry giants Cargill and WalMart.

McDonald’s has restated a commitment to not purchase chickens from suppliers who use Amazonian soy chicken feed, originally established after a 2006 report by Greenpeace on the negative effects of soy production. In the meantime, they are part of the Roundtable for Responsible Soy to encourage those in the value chain to change their practices, but no commitments have been made to support strategic suppliers of chicken, such as Cargill, any incentive to change. Unfortunately, the company is not focused on any other aspect of sustainable poultry such as requiring suppliers to abide by cage-free or antibiotic-free standards.

McDonald’s has committed to purchase 100% of coffee with sustainable certifications and by 2015 to purchase 100% sustainable certified palm oil. To accomplish this they have become a member of the Roundtable on Sustainable Paml Oil.

Finally, wood fibers make up most of McDonald's packaging, and they are attempting to move towards using only suppliers that boast third party certification. With the huge market power of McDonald’s there will be major shifts in supporting already sustainably certified suppliers and pressuring those without to come on board. From a macro point of view, the commitments that McDonald’s is making to partake in industry-wide actions (i.e. RSPO) will play a crucial role in developing sustainability throughout international supply chains and will support all food service businesses worldwide to have an greater impact on the supply chain.

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This article was written by Nicole Sherwin, a CSR Analyst at EcoVadis. You can follow her on twitter @NicSherwin

New challenges for electronics Supply Chain

2011-03-17T09:35:00.000+01:00

The IT and telecommunications sectors have long been at the forefront of sustainable procurement, yet the pressure to successfully actualize sustainable practices along each stage of the supply chain (raw materials, manufacturing and end-of-life recycling) is intensifying.

Beyond all the existing issues of diminishing raw materials, electronics companies source minerals such as cobalt, coltan and copper in countries that are often marred by corruption and civil war. “Blood laptops” and “genocide phones” are becoming commonplace terms such that in July the US included a “conflict-free” electronics provision into a financial reform law, conforming companies to disclose the origin of minerals purchased.

In manufacturing, the watchdogs of the Western world have been the primary investigator of electronics abuses, but the tide is shifting to include influential Asian-bred NGOs. In May, 34 Chinese environmental groups published a report accusing Global IT companies of inadequately mitigating their environmental impacts. With electronics manufacturing plants in their backyards, Asian activists are putting the pressure on.

As for end-of-life recycling, WEEE (a European directive) has imposed the responsibility of e-waste disposal on electronic equipment manufacturers. A recent study indicated that e-waste would reach 73 million metric tons by 2015. But the lack of transparency in the recycling chain, and the circumvention of trans-border regulations on the movements of toxic waste have generated a situation: most of the e-waste ends up in developing countries, causing serious environmental and human health threats due to the lack of appropriate recycling techniques.

Of course, all of these issues are further compounded by the planned obsolescence inherent in electronic products. In order for the IT sector to stay ahead in Sustainable Procurement and to stay competitive, they must not only monitor, but also engage both their upstream and downstream suppliers in a more than ever complex value chain.

Sustainability : Can Procurement do better than Governments?

2010-11-14T20:53:00.000+01:00

Since the failure of the Copenhagen conference, to agree on a real regulation of carbon emissions last December, it is becoming increasingly clear that governments are struggling to reach agreements on Sustainability issues. In May the French government decided to push back by 6 months the “environmental labeling” regulation, and watered down its scope. In July, the US “Climate bill” came to an inglorious end, when it was rejected by Senate.

Fortunately it seems that Corporate interest for Sustainability is not diminishing.

The UN published a survey in June indicating that 88% of CEO’s of Global companies consider “Sustainable Supply Chain” as a priority. In the past year, companies such as Walmart, Procter & Gamble and IBM have launched major initiatives to assess the Sustainability performance of ten’s of thousands of suppliers. Last month, the French Telecom Operators (Orange, SFR, Bouygues Telecom) also announced launching a common platform (operated by EcoVadis) to assess their suppliers CSR performance.

All these projects should also trigger a massive domino effect, as suppliers are required to gather Sustainability metrics from their own suppliers.

In the current economic crisis, addressing customers demands is critical for all companies, and those Sustainable Supply Chain initiatives are key to fostering change in the CSR practices of suppliers, especially SME’s. Analysis of the EcoVadis database shows that 12 months after the initial rating, 75% of suppliers are capable to improve their CSR performance.

We are entering a period where international regulations are more and more difficult to agree upon, and where public debt is limiting the capacity of Governments to fund Sustainability initiatives. The role of Procurement leaders, is therefore becoming critical, to help drive the Sustainability agenda of their suppliers, while minimizing risks, and fostering innovations for their own companies.

Sustainable Procurement Leaders

2010-07-28T10:39:00.009+02:00

19/05/2010: Interview with Luca Guzzabocca, head of Logistics Costs and Supply Chain Management at GRUPPO MONTEPASCHI.

1) Why is Sustainable Procurement important for GRUPPO MONTEPASCHI?

Sustainable Procurement is one of the significant engagements GRUPPO MONTEPASCHI has in CSR policies. For GRUPPO MONTEPASCHI, Sustainable Procurement is important because we are aware of the impact we can have by changing the way we procure goods and services. As the third largest bank in Italy, we work with more than 24 000 suppliers, from whom we purchase a large amount of goods and services.

As the oldest bank in the world, we believe that making far-reaching efforts towards a more Sustainable Procurement process can bring real changes in the market. Sustainable Procurement is not about competition between companies: it is about differentiation. We hope that our action in order to embed sustainability in our supply chain will be followed by other companies, that others will join our vision.

2) What part of the program are you the most proud of?

Honestly, there isn’t something specific we are proud of. What we are proud of is Gruppo Montepaschi’ holistic and pragmatic approach towards Sustainable Procurement.

The approach GRUPPO MONTEPASCHI has built is based on a holistic view. To formalize our Sustainable Procurement program, we have dedicated a lot of time to increase our awareness on all the issues involved, and different areas of the company were implicated in the execution and the overall management of our Sustainable Procurement Program.

Further, the approach we choose for Sustainable Procurement is really pragmatic: our Sustainable Procurement program is not only geared towards buying environmental-friendly products, but the program also takes into account the cost savings and the benefits the company can gain from the Sustainable Procurement process. We look at the proper trade-off between sustainability and competiveness.

3) Is it feasible to assess and develop the CSR performance of suppliers?

Yes, of course it is feasible to assess and develop the CSR performance of suppliers.

For the assessment of suppliers, the decision to introduce EcoVadis was part of our holistic view on Sustainable Procurement. EcoVadis allow us to look after the CSR commitment and profile of our suppliers. In 2009, we launched our first CSR evaluation program with EcoVadis, which involved 50 suppliers. The outcome was very interesting for our suppliers because they got the chance to look at themselves in the mirror.

Once EcoVadis provided us the results of the assessments, we organized one-to-one meetings with our 50 suppliers’ portfolios to explain the results in detail to all the persons interested. All of our suppliers wish to do something regarding their CSR performance, but there are differences according to the size of companies. Big companies are familiar with CSR topics and issues, they have set up plenty of CSR initiatives, and they report on their performance. On the contrary, the CSR approaches of small and medium enterprises are more critical, so we have to make more effort whilst outlining our requirements to them.

For GRUPPO MONTEPASCHI, it is a priority to support our suppliers, and they are learning from our meetings. We really expect to make a significant step forward in CSR commitment with our suppliers.

4) What results have you achieved?

Regarding our organization, we have included three dedicated resources to manage all aspects related to Sustainable Supply Chain Management, and we also provided training and awareness to all Procurement and Logistics staff (418 hours overall).

We improved our procurement process by assessing the CSR performance of our suppliers using the EcoVadis rating solution (50 top suppliers assessed in 2009; plan to cover 650 by 2012), and by defining a new selection process for products and services, which combines sustainability requirements with economic, technical, quality and innovation criteria.

GRUPPO MONTEPASCHI has also developed contract standards to capture sustainable requirements with a fair and mutual responsibility approach towards suppliers.

In order to measure the performance of our program, we have implemented a KPI framework and a control process to monitor supplier performance regarding sustainability and identify opportunities for improvement.

Finally, as a direct consequence of introduction of CSR concepts, the group has been able to achieve savings of 12.800.000 €, thanks to new energy, printing and office products policies (98% of the Group’s electric power coming from renewable sources; optimization of print device; majority of orders for office products restricted to a green catalog etc).

5) What advice for a Purchasing Director who would start today?

I would give four principal pieces of advice to a Purchasing Director who would start today embedding sustainability in the supply chain.

The first piece of advice is to learn day-by-day how to manage Sustainable Procurement in an effective way. Benchmarking activity and knowledge sharing is the key for a good start.

My second piece of advice is about the time objective of a Sustainable Procurement program. It is essential not to have a short term objective, but a long term objective of 20 years isn’t required either. In my opinion, a step by step 3 year plan is appropriate to embed a Sustainable Procurement process.

Thirdly, a company should invest in a full-time person to be their “champion” in Sustainable Development. This person will have an important role to play regarding Sustainable Procurement, including inspiring the process, supporting buyers and pulling good practices together internally.

Finally, and this piece of advice is of the essence: if a company doesn’t have a CSR commitment, if CSR isn’t supported at top level, embedding a Sustainable Procurement policy will be very difficult. A clear and firm CSR commitment from a company is crucial in order to set up a Sustainable Procurement process.

Many thanks to Luca Guzzabocca for participating in this interview.

Links:

GRUPPO MONTEPASCHI website: click here

GRUPPO MONTEPASCHI CSR reports: click here

New Accenture and UNGC study highlights importance of Sustainable Supply Chain for CEO’s

2010-07-09T10:22:00.005+02:00

Accenture and UNGC have conducted, in partnership, a survey of 766 CEOs around the world on Corporate Responsibility. The results of this survey demonstrate that the economic downturn, instead of restraining corporate commitments on sustainability, made these commitments stronger. In fact, 80 % of the CEOs say the downturn has raised the importance of sustainability.

The key findings on corporate responsibility are:

• 93 % of corporate CEOs believe that sustainability will be critical to the future success of their companies.

• 81% of CEOs (up from 50 % in 2007) said that sustainability issues had become part of their company strategy and operations.

• If CEOs recognize the progresses made by their companies moving from a sustainability strategy to execution, they also say several barriers to achieving their goals still remain, such as: complexity of implementation (cited by 49 %), competing strategic priorities (48 %), lack of recognition from the financial markets (34 %)

But this study was also very interesting in highlighting the importance of Supply Chains Sustainability:

• Supply Chain is the topic which importance has increased the most in the past 3 years (88 % of CEOs consider companies should embed Sustainability issues through their global Supply Chains, up from 59 % in 2007).

• Supply Chain is also the area where implementation gap is currently the biggest: although 88 % of CEO’s believe that they should be integrating sustainability through their supply chain, only 54 % believe that this is being achieved within their own company.

• 78 % of the CEOs believe that companies should collaborate with a variety of stakeholders, such as suppliers, NGOs and governments, in order to address sustainability issues.

Complete study here.