Category Archives: CSR

Top 12 Challenges Facing India in the Decades Ahead – 08 – Poverty

As per our last post, India is poor. Really poor. By far the poorest of the BRICs with 2/3rds of the population poor by any reasonable definition of poverty. Just how poor is India? In just about any ranking that matters, it’s not well off. When it is compared to the 16 countries outside of sub-saharan Africa that are poorer than it, India is in the lower half of the rankings at best, and near, or at, the bottom in a few cases.

For example, let’s start with some of the leading social indicators (Source: An Uncertain Glory, p 49):

  • Life Expectancy at Birth: 9th
  • Infant and Under-5 Mortality Rates: 10th
  • Access to Improved Sanitation: 13th
  • Mean Years of Schooling: 11th
  • Literacy Rate: 9th for Males, 11th for Females
  • Proportion of Children Under 5 Undernourished: 15th

And this list includes Afghanistan, Bangladesh, Burma, Cambodia, Haiti, Krygyzstan, Laos, Moldova, Nepal, Pakistan, Papua, New Guinea, Tajikistan, Uzbekistan, Vietnam, and Yemen!

Consider the sanitation metric in particular. In Bangladesh, which is considerably poorer than India, only 8.4% of the households practice open defecation. However, in India, 55% of households practice open defecation. How can you become a first world country if you can’t even provide your citizens with toilets? (Or even outhouses?)

The metrics are even worse when you compare it to the BRICs. Worst life expectancy. Worst mortality rates. Least access to sanitation. Worst literacy rates. Most undernourishment. In addition, it has the lowest immunization rates and the lowest health care expenditures as a percentage of GDP.

With respect to health care, India did launch the National Rural Health Mission in 2005-2006, but allocated it a measly RS 10,000 crores per year for the fist five years. Given that almost 70% of India’s population is still rural, if two-thirds are poor and likely in need of the program, that’s about 560 Million people who could use help from the program. If you do the math, that’s less than 1 rupee per five people! Plus, it seems to be going down a road of privatization, relying on private institutions and private insurance, with public transfers for the poor who make the BPL (Below Poverty Line) cutoff and qualify, and this is a direction that has yet to work successfully for any major country. In almost every country with good health care, a good public system preceded a good private system.

SI could go on, but you get the point. While India is increasing its GDP at a relatively rapid rate, it is still poor (and the poorest of the BRICs) and the average person is really poor and needs a lot of social assistance to even reach the same standard of life that poor people have in China, Brazil, and Russia. With about 800 Billion people who could use some form of government assistance, this is a huge burden in a country that collects, on average, 1 US dollar for every 3 citizens in tax revenue.

While You’re Celebrating Your Thanksgiving in the U.S.

Think about what you can do to make the rest of the world, including the 870 Million people in the world who are chronically under-nourished, thankful as well.

As Procurement Pros, you have a lot of control over the global food supply whether you realize it or not. Money does talk, and with enough pressure, the supply chain will walk to your marching orders. And if those orders are appropriate, maybe we can prevent half of the food being produced going to waste.

According to The Food and Agriculture Organization (FAO) of the United Nations, roughly 1/3rd of the food produced in the world for human consumption every year, approximately 1.3 Billion Tons, gets lost or wasted — due to losses during harvesting, storage, transport, and processing. This loss is almost four times what would be needed to feed all of the chronically under-nourished people in the world, and part of the reason food reserves are at an all time low.

And to make matters worse, the growth, and partial harvesting, storage, transport and / or processing produces 3.3 Billion tons of CO2 emissions and wastes precious water and energy resources. So, not only are people starving when there should be enough food, but we’re wasting limited fresh water and energy in the production of the food that is being wasted.

In developing countries, 40% of this loss is occurring at post-harvest and processing levels due to financial, managerial, and technical constraints in harvesting techniques as well as storage and cooling facilities. Additional infrastructure investments would solve the financial and technical issues, and getting smart people on the ground would solve the managerial issues. If a large grocery chain decided to invest on the ground, and reduce loss from an average of 35% to 10%, it would effectively increase production by almost 40% and lower the cost per unit by almost 30%. (Production levels go from 65% to 90%. 40% of 90% is 36%. 30% of 90% is 27%.) This is not a hard problem to solve. And it wouldn’t take too long before the grocery chain saw ROI.

In developed countries, more than than 40% of losses happen at retail and consumer levels. Faster transport, better storage, and better inventory planning could have a big impact at the retail level. The only thing a Procurement Pro can’t really control is consumer waste.

So think about what changes you can make in your organization to minimize food waste and encourage investments on the ground in the regions, and on the farms, you depend on. And when costs go down, your organization will have something to be thankful for too!

Stop Blaming the Supplier! Melamine in the Milk is Your Fault!

Research reveals that only 6% of procurement managers and directors have ever been made aware of unethical activity in their supply chain. (Source: EY.com)

As much as we’d like to believe that only 6% of supply chains have unethical activity, given that almost 86% of North American companies have a supply chain reliance upon China alone for key parts1, that’s a pipe dream. Depending on how rigid you want your definition of ethical to be, I’d guess that the number should be closer to 60%.

So why is it your fault if your supplier does it? Simple. It’s because less than half of your organizations do any due diligence in their supply chains! Only 48% of UK firms do any due diligence at all! Even worse, 14% of respondents to the EY survey did not even know what third-party due diligence meant, for crying out loud! You have to do due diligence and you have to ask tough questions and someone who can be trusted has to do a site visit to major suppliers at some point. If you do all this, and the supplier lies through their teeth, then, while your company may still be held financially responsible, it won’t be held criminally responsible and ethically you will know you did all you could (except cut the supplier loose before they did the unethical act, but at least you can cut them loose as soon as they do).

This is why you need good supply chain visibility, document management, and CSR monitoring. There are companies that do this, including Resilinc, Integration Point, and Ecovadis. (See the Vendor Post Index or Resource Site for more.) Reach out and get these types of solutions if you don’t already have them. They will be worth it.

1 Supply Chain Disruptions, Ted Landgraf, Above the Standard Procurement Group, July 15, 2012

The Wheatland Hop Was 100 Years Ago Today

And while it may sound like a new dance craze, it was actually a riot that took place during a strike on the Durst Ranch in Wheatland, California that resulted in four deaths. It was among the first major farm labour confrontations, blamed on the radical syndicalist trade union of the Industrial Workers of the World, and a * example of what an organization can expect if it tries to take advantage of poor workers in developing, and more importantly, emerging countries or, even worse, workers at home by trying to force interns and low-salaried workers to work long hours for little pay and no benefits.

As per the Wikipedia entry, in the summer of 1913, Durst advertised for temporary workers with a promise of ample work at high rates of pay for every hop picker that arrived on the farm by August 5. In this particular year, the supply of willing workers almost doubled the demand, and Durst slashed pay rates. To make matters worse, not only were workers on his farm making roughly half of what workers on other farms were making (for toiling twelve hours a day in fields that could reach 110F / 44C), but the workers were forced to live in tents on a barren hillside that they had to rent for 75c/week when they made, on average, $1.50 a day with drinking water a mile away and unspeakably unsanitary toilet conditions. And to add insult to injury, Durst retained 10% of the earnings until the end of the harvest, and only paid it out if the workers stayed until the end of the harvest.

It was only a matter of days before a temporary local chapter of the IWW was organized that demanded a better pay rate per lb of hops picked, worker supervision of measurement of the hops, provision of drinking water in the fields, improved toilet facilities, and assistants to help women and children load and unload heavy hop sacks. Durst responded that toilet conditions would be improved, water would be provided in the fields, and one worker could be allowed to witness the weighing process. The local chapter of the IWW then threatened a strike. Durst responded by calling the sheriff (who could not do anything for lack of an arrest warrant). By the end of August 2, a mass meeting for all of the workers was planned for August 3. On the 3, with a mass meeting underway, Durst went into town to gather authorities to put down the revolt. The sheriff, a number of deputies, and the district attorney was pulled into the ranch.

Upon arrival, shortly after the mass meeting had begun, the sheriff and his men tried to arrest the leader of the of the local IWW chapter, but workers intervened. In response, one of the law enforcement officials fired a shotgun into the air, which was taken as an act of aggression and which prompted a full-fledged riot and an attack on the sheriff, the deputies, and a district attorney.

Unfortunately, instead of being a warning siren for other farm and ranch owners that used migrant workers, it was only the first of other bitter strikes between California growers and farm workers that would take place over the next couple of decades.

In a nutshell, Corporate Social Responsibility is more than just good PR, it’s good business.

Ecovadis-Powered E-TASC: A Great Solution for ICT Supply Chain Sustainability

The Global e-Sustainability Initiative (GeSI) is a 36-member strategic partnership between the Information and Communication Technology (ICT) sector and organizations committed to creating and promoting technologies and practices that foster economic, environmental and social sustainability that recognizes that sustainability is a strategic issue. As a result of this recognition, GeSI has decided to do something about the situation. In partnership with EcoVadis, it recently developed and re-launched a new and greatly improved version of the Electronic Tool for Accountable Supply Chains (E-TASC). Designed to facilitate support and drive accountability in the area of human rights and other sustainability standards throughout the supply chain, the goal is that the tool will allow for a more effective and transparent management of ICT Supply Chains and allow companies to better report to their different stakeholders.

Within a month of launching, over 20 ITC companies are already fully deployed on the platform and using EcoVadis to assess suppliers and over 1000 ICT suppliers are subscribed and registered on the platform (which can be found at etasc.ecovadis.com). The platform has all the power of the core EcoVadis platform, which has been EcoVating the Globe for many years (as described in the linked SI post) plus new capabilities in the areas of collaboration and corrective action plans, multi-tier transparency, site audits, and SEC conflict mineral tracking (which is very important if you are a supplier that wants to supply to a US ICT company). In addition to the deep supplier sustainability, business practice, and environmental assessment, there is also an in-depth labour practice and human rights assessment as well as the ability to track sustainable procurement initiatives. But the biggest improvement by far is the ability to share supplier audits and associated data between participating member companies.

If every buyer does their own audit of a supplier, it not only presents a significant drain on the supplier (which will end up costing all of the buyers in the end), but diminishes the chance that any buyer will get a thorough audit. There are two reasons for this. First of all, if you are doing individual audits on every major supplier, the cost is going to add up quickly so you are going to opt for the minimal audit from the lowest cost provider. And you’ll get what you pay for. A check-the-box minimal review of operations and records. It won’t be hard for poor working conditions at a secondary factory, off the books underage labour, etc. to slip through. Secondly, if a supplier has to deal with dozens of audits, it’s going to try and rush each auditor through each audit due to limited time and resources. In this case, it’s going to have books, materials, tours, etc. prepared, stick to them, and possibly avoid areas that could be troublesome to you. But if all of the big buyers come together and commission one audit, through a platform such as E-TASC on the EcoVadis platform, they can afford to pay for a very thorough audit at a fraction of the price that is not stressful on a supplier’s resources. Every one wins, especially when the supplier can see their assessment through the platform, what corrective actions they have to take to improve it, and other recommendations for improving their standing with the industry overall. In additional, all parties can see the results of the audit against the industry standard benchmark.

It’s a great solution for the ICT industry and one every ICT buyer should check out BEFORE regulations come into play that will mandate more sustainability and traceability in their supply chain.