To Make Your Supply Chain More Socially Responsible, Find the Value

An article late last year in the McKinsey Quarterly on making the most of corporate social responsibility — a topic that is at the forefront of everyone’s minds given the recent headlines about the rash of Foxconn suicides — made a great point: if you want CSR (Corporate Social Responsibility) initiatives to take off, find the value. Without it, you’ll be limited to pet projects, propaganda, and philanthropy — and while the latter can be good if you donate to the right organization, you’re not really doing anything as an organization if you’re just passing the buck.

The article suggested that the way to develop an approach that can truly deliver on lofty ambitions and achieve real success for the business and for society is through smart partnering which focuses on key areas of impact between business and society and develops creative solutions that draw on the complementary capabilities of both to address major challenges that affect each partner, and it made some good points. By combining strengths to overcome each partner’s weaknesses, two organizations can often make more of an impact than one.

But if you read closely, and think about the examples the article presents, the real key to success is finding a solution that brings short and long term value to society and to the business. If it only brings value to society, as soon as times get tough, funding for the initiative will be the first item cut from the budget. If the only real value is to the business, the recipients of the initiative won’t be that interested in participating and the company risks being, correctly, accused of propaganda and / or greenwashing. But if the initiative helps society and the business in the short term and contributes lasting value to society and the business in the long term, then the initiative will be a success (and the company will look like a hero in the eyes of the media, which will generate even more success for the company as it will increase its brand value).

The Unilever examples provided in the article are prime examples of how value insures success. In the Kericho example (in southwestern Kenya), where Unilever applied sustainability principles to the production of tea and focussed on productivity, sustainability, and environmental management, even though Unilever had to invest more money up front, Unilever won in the long run as they gained greater control over a critical supply of raw material while improving productivity. And the initiative was a success for society as the farmers made more revenue and increased their skills and living standards. Both parties win from the initiative, so both will continue to support it through the long term.

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