Category Archives: CSR

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.

Is Your Supply Management Ethical?

Corporate Social Responsibility (CSR) and Corporate Ethics are becoming more important by the day. Just ask BP, the Gap, Chick Fillet, and Monsanto, who have all had to deal with Boycotts in recent years (for oil spills, supply chain factory fires resulting in worker death, stance on gay rights, and genetically modified food). You don’t want to get caught in the cross hairs of an organized activist group like PETA, GreenPeace, or Anonymous.

It only takes one slip up somewhere in your supply chain to become the target of globally organized boycott. Thus, you need to take a step back and ask if your supply management is ethical.

A code of Supply Management conduct, as described in The Procurement Game Plan, is a good start, but it’s not enough. You also need a supplier code of conduct, and you need to insure that not only do your suppliers honour the code of conduct they agree to, but themselves have a code of conduct for their suppliers. The buck stops with you, so you are responsible for making sure the buck is spent ethically. Turning down free World Cup tickets from a potential supplier is a good start, but making sure the supplier adopts a code of conduct that prohibits them from even offering such a wasteful, lavish gift in the first place is better — especially if that money is redirected to safety improvements and community programs for its workers.

Supply Management Ethics provide the foundation for CSR, so it’s important that your organization get them right. One of the experts on this topic is Stephen Guth, Chief Corporate Counsel and VP Vendor Operations for the National Rural Electric Cooperative Association and author of “The Contract Negotiation Handbook”, “The Vendor Management Office”, “Hotel Contract Negotiation Tips, Tricks, and Traps”, “Project Procurement Management”, and a set of free “Procurement Contract Templates”. This fall, Stephen is going to be giving a session on Building a Strong Foundation with Supply Management Ethics at the NLPA Conference where he will go beyond the usual horror stories of supply management professionals in jail jumpsuits and look at supply management ethics through the eyes of a forensic auditor. In this session, you will go beyond the process of learning how to put a code of conduct together and learn what investigators look for, who is most likely to violate supply management ethics, and why. You’ll learn how to identify potential problems and violators before they occur.

If you haven’t already, consider registering for the NLPA Conference today.

The Other 1%!

These days, we’re hearing a lot about the 1% — the percentage of the population who control over 35% of the nation’s wealth, and control, at a minimum, 23 times the wealth controlled by the average person. And while it looks good on the books, right now, this isn’t the 1% anyone wants to be in, given the ire directed their way. But that’s not the 1% this post is about.

This post is about the 1% of companies that have implemented ILO (International Labour Organization) compliant supplier codes of conduct that are monitored and enforced. As per a recent publication by Zurich and Rockwell Automation entitled “Safe Supply Chains Help Produce Sustainable Business”, only 43% of major US companies have implemented supplier codes of conduct. Of these codes, only 10% reference ILO conventions. In addition, only 25% of companies perform even minimal monitoring against their supplier codes of conduct. In other words, the percentage of companies that have codes of conduct that reference ILO conventions and that are monitored is 0.43 * 0.10 * 0.25 = 0.01, or 1%! Ouch!

This is a disgrace! This is not the 1% we want in the Supply Management world! Every organization needs to shape up and do something about this right now.

  • Step 1: Get a supplier code of conduct. If your organization doesn’t want to invest the time drafting its own, borrow one (such as the publicly available JLP Responsible Sourcing Supplier Workbook) and modify it as appropriate or simply state that your organization complies with all relevant ILO labour standards, summarized in the Brief Introduction to International Labour Standards, and you have the right to monitor and inspect supplier operations to make sure they do the same.
  • Step 2: Make sure all relevant ILO standards are referenced.
  • Step 3: Monitor suppliers and, with other customers, insure an audit is done on an annual basis (by a responsible, neutral third party)*.

This isn’t hard. Just do it!

*It’s too disruptive to a supplier, and too costly, for every customer to audit the supplier every year. Instead, big customers should band together and hire an independent third party who’s good at conducting audits to perform an annual audit and make the results available to all customers, who can collectively apply pressure to a supplier violating ILO and individually take issue with any aspect of the supplier code of conduct that goes beyond ILO that is specific to that customer.

Poor Working Conditions in the Supply Chain Start at Home!

Last month, we told you that new estimates put the driver shortage at 240,000 drivers and that it’s all our fault. Why? Despite the fact that 40,000 new commercial licenses are granted annually by the DOT (Department of Transportation), turnover is 100+ percent per year due to poor working conditions.

But it seems that poor working conditions aren’t limited to our drivers. It seems that our dock and warehouse workers are also getting the short end of the shaft when it comes to working conditions (to the point where the high salaries commanded by the dock workers, which can exceed $120,000 in the Port of LA for example, might not be worth it). As per this article in the National Business Review on why we should “stop hurting our container opening dock and warehouse workers”,

  • imported sea containers increasingly have toxic substances in them
    such as glues (from shoes), emitted gasses (from wood or MDF), and residue from fumigants,
  • unprotected workers who enter these containers can die
    and those who don’t typically get very sick and some develop long term health issues, including cancer, and
  • up to 30% of shipping containers contain dangerous levels of toxins
    with 18% of containers containing toxins at a level legally reportable as unsafe and almost 90% contain some toxic fumigant or volatile organic compound. WTF?

Kind of puts the salary demands in perspective when you consider that their jobs contain more potential dangers than a coal mine!

And if this isn’t bad enough, we also have the warehouse workers who, according to this recent infographic on Warehouse Safety and BLS data,

  • have a 14% of being injured on the job,
  • have a 3% chance of being seriously injured in a forklift accident on the job, and
  • have a 0.02% chance of being killed, most likely from a forklift accident!

Ouch! Our dock workers have it bad. Our drivers have it bad. And our warehouse workers have it bad. I think it’s time to stop focussing exclusively on the outsourced supply chain in a search for poor working conditions. There’s plenty of poor working conditions to fix here at home!

Can Beer Build a Better Business?

And now that I’ve got your attention, yes SI is serious!

As per a recent article over on Inside Supply Management (ISM) on “Brewing a Better Future”, Heineken plans to Improve, Empower, and Make an Impact! As part of its three-part strategic initiative, Heineken plans to increase partnerships, source local, and, most importantly, reduce CO2 emissions and water consumption.

With respect to CO2 emissions and water consumption, Heineken plans to:

  • reduce emissions by 40% in its breweries,
  • reduce and track emissions throughout the value chain,
  • implement the concept of a CO2 neutral brewery in at least three sites (by 2015), and
  • reduce water usage by 20%.

That’s one heck of a sustainability initiative, especially for a brewery where water consumption can be as much as 8 cubic meters per cubic meter of beer produced and where CO2 production can be as much as 10 kg per hecto-liter. If it succeeds, the improvements will be very significant, with over a liter of water being saved per liter of beer (as consumption will be reduced from 5.1 to 3.7) and kgs of CO2 emissions disappearing per hecto-liter (as output will decrease from 10.4 kg/hl in 2008 to 6.4 kg/hl in 2020).

If Heineken succeeds, the innovations that it will introduce could revolutionize not only the brewing industry, but the food and beverage industry as a whole. Let’s all hope that they manage to brew a better business (without sacrificing the quality of the beer, of course).