Editor’s Note – Matthew Gardner, Ph.D., is Managing Partner of Sustainserv. He will serve as moderator of the AIM Sustainability Roundtable on June 16.
The boundaries of corporate sustainability programs are rapidly expanding to include not just the operations of a particular company, but also the impacts and actions of its suppliers and business partners.
Many major corporations, such as Walmart, now require suppliers to provide detailed information regarding their environmental impacts, social and labor-related programs, and efforts to mitigate negative impacts they may be having on their environs. The environmental, social and labor records of a company’s suppliers may represent significant risk to the company’s business and/or carefully crafted public image.
Supply-chain sustainability has also entered the regulatory arena under the Dodd-Frank Conflict Mineral legislation, under regulations regarding human trafficking enacted by the state of California and Great Britain, and under other laws. These regulations compel companies to disclose the manner in which their supply chains source key raw materials or address the risks related to human trafficking and forced labor.
Social responsibility issues have also received attention of world leaders. In June 2015, following their summit meeting, the leaders of the G7 countries issued a statement recognizing “the joint responsibility of governments and business to foster sustainable supply chains and encourage best practices.”
But addressing supply chain sustainability is easier said than done. Small companies may interact regularly with as many as one hundred suppliers. Large multinationals in the retail sector frequently have more than 100,000 suppliers. Collecting information from a supply chain of any size is an exercise in disciplined data collection, risk assessment and strategic engagement.
Resources and tools are also available to help you prioritize your sustainable supply chain efforts. Programs such as Ecovadis (www.ecovadis.com) or Sedex (www.sedexglobal.com) have engaged thousands of suppliers globally, and offer access to large datasets of sustainability related information from these suppliers.
Other databases, such as the Social Hotspot Database (socialhotspot.org), offer information specific to social responsibility and labor/workforce related issues. These resources allow companies to prioritize which suppliers, sectors or regions may represent disproportionate risk, and thus necessitate greater scrutiny. Based on this, a company can focus its supplier inquiries, whether in the form of surveys or interviews, on those areas that represent the greatest risk, and deploy their limited resources effectively.