Archive: September, 2014

More on sustainability

In July I wrote about a series of presentations on sustainability that I attended with the CIPS Fellows. This piqued my interest and I’ve been looking out for interesting articles since then.

The Economist points out that “sustainability can refer to anything from building wind farms to combating social inequality” and adds that “an ill-defined, controversial notion is no basis for coherent policy.” Many so-called sustainability plans are efficiency policies driven by procurement that do little for the environment. Take, for example, consumer goods: the majority of greenhouse-gas emissions associated with consumer goods are produced either in the supply chain or by shoppers; there is only limited scope for such products’ makers to lessen their environmental footprints through green measures of their own.

For some companies that is changing. SABMiller, the world’s second-largest brewer and the focus of recent take-over talks has been a pioneer in the field. Until recently its sustainability efforts consisted of a laundry list of targets aimed at reducing carbon emissions or water usage in its brewing operations. This summer it unveiled new, broader targets which apply to suppliers, sellers and customers, as well as to SABMiller itself. It is promising to teach basic business skills to 500,000 small enterprises, mostly shops which sell its beer. It is helping farmers in India to use water more efficiently and it is sponsoring anti-drunkenness and road-safety campaigns aimed at its own customers.

Supply Management took a different approach by looking at sustainability in four sectors and tried to answer two key questions: is it possible for consumers to be sure that anything they are buying is 100 per cent ethical? And, are consumers able to make an informed decision about what they are buying?

1. Automotive

Sustainability is a big selling point in the automotive industry. When buying a car or motorcycle, consumers can access plenty of information about a vehicle’s carbon emissions and fuel efficiency. But finding information on whether the car is made with an ethical supply chain is much more of a challenge. There are industry reports such as the UK Society of Motor Manufacturers and Traders the car manufacturers annual CSR reports but these are limited to their policies to protect worker and human rights in the supply chain and mandatory reporting on conflict minerals (required by the US Dodd-Frank Act).

Supply Management gave a score of 3/5 for ethical concern and concluded that the policies are in place, but it’s not clear if the automotive firms really know what’s going on below the surface.

2. Food and drink

The ethics of the food supply chain were thrust into the limelight last year following the horse meat scandal that hit some major UK supermarkets. Producers like Premier Foods provide consumers with good quality information. Unfortuantely, most consumers are not aware of the company. Information on ethical sourcing on some of the major supermarkets’ websites is relatively accessible, if you are happy to search through the small print on a home page. When it comes to the eating out market, pub and restaurant chain Mitchells & Butlers has a clear section about how it sources its food in its report on social responsibility. Others point to their membership of the Sustainable Restaurant Association, which helps establishments ensure food is sustainable
Supply Management gave a score of 4/5 and commenting that the horse meat scandal may have pushed transparency, but there is still a worrying lack of information for consumers.

3. Technology

The CSR reports of high-profile companies like Apple or Samsung run to hundreds of pages and contain details of suppliers. Although audit are conducted regularly and there are examples when supplier contracts have been terminated little has changed on the ground
Supply Management gave a score of 3/5 and concluded that there is plenty of information available and asked if it signals real change?

4. Fashion

The ethical issues arising from the fast fashion supply chain model were brought into sharp focus after the Rana Plaza factory tragedy in Bangladesh in 2013. The sector’s dependency on a lean and agile supply chain that enables retailers to produce more lines each year at a lower cost and within weeks rather than months attracted heavy criticism following the disaster.

Supply Management gave a score of 3/5 and commented that retailers have responded post-Rana Plaza, but the similarity between policies makes it tough to establish who – if anyone – is leading the way.

The business case for the first wave of so-called sustainability plans is clear to see since most resulted in cost savings. Despite examples like SABMiller, the business case for the new wave is less clear. Unfortunately, most sectors require a scandal or tragedy to bring about any shift and even then it’s difficult for consumers to make informed decisions. Advocates of sustainability usually talk about investing in a licence now to be able operate in future. It’s hard not to be cynical about commercial organisations that claim to be forgoing short term profit for long term survival.