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12 learnings from Ethical Corporation’s sustainable supply chain conference 2012

At Ethical Corporation we’ve just finished two fascinating days this week with 130 sustainable supply chain folks in London.

Our subject, obviously, was corporate supply chains and how to make them more sustainable.

Speakers came from Nike, Marks & Spencer, Skanska, B&Q, Ericsson, Lend Lease, Nestlé, Greenpeace, Oxfam, The Forest Trust, Solidaridad, Golden Agri Resources, Timberland, BT, Inditex, H&M, London 2012 and many others.

We largely banned PowerPoint (there were about 10 slides at the whole event, in total) and asked speakers to prepare some brief remarks on a particular point.

Then the rest was all about conversation and debate.

Here’s what some of the attendees thought of it.

We were helped by three individuals in particular who have single-handedly done a lot to progress the debate over the last decade:

Mallen Baker, who runs Business Respect and Daisy wheel interactive, John Morrison, who now runs the Institute for Human Rights and Business, and Alexandra Wrage, who runs TRACE, an activist anti-corruption group that’s also deeply pragmatic.

My thanks go to them for helping improve our events.

What were some of the takeaways? Here are some of mine, while they are still fresh:
  1. When it comes to selecting countries or regions to source from, sustainability is usually considered afterwards. In some cases (a handful at most), it’s considered at the same time, but that doesn’t stop selection. Sustainability comes in afterwards to help mitigate problems, lower risk, and in some cases, help improve supply chain conditions and field/factory management
  2. Supply chain risk is front and centre for companies buying commodities. This is according to supply chain directors and heads of sustainability. I heard talk recently of only 20 years of copper remaining.

    Whether that’s true, or not, access to food, timber and clothing resources, for example, are front of mind for forward-looking companies.

    One speaker noted that although the Uzbek Government has this year stopped* using children in the fields, the Chinese (Government or state/other companies, it was not clear) have bought the harvest for the next two years. Likewise, the German government is doing resource deals in countries such as Kazakhstan to ensure minerals supply. Here’s a book on this area.

    Companies who want their share of the perhaps dwindling pie will need to think hard about buying way beyond the spot market. Supplier partnerships are clearly a key part of this thinking, but by no means the only part

  3. Community investment is now becoming strategic when it comes to access to commodities. For example, if you want to sell a beer in East Africa, not only do you now need to think about local ingredient sourcing and farming, but also about long term community permission to manufacture and sell your product, or risk local or national wrath. When votes are at stake, companies usually lose out
  4. Internal corporate supply chain and sourcing standards are increasing in importance and rigour. Whereas a few years ago having a portion of your agricultural commodities sourced from ‘certified’ farms, forests or fisheries was enough to be able to say “look, we’re working on this”, now some large companies are realising that given the lack of scale for all sustainability certifications, their own, internal standards that come close to, or go beyond these, are increasingly needed
  5.  With regard to supplier partnerships to drive sustainability performance, companies are much more forthcoming on environmental improvements and data in the supply chain. Aside from the odd exception, (UK retailer New Look is one) they lack the confidence to discuss social and management improvements publicly
  6. Resources count: One of the leading companies in the space (I won’t say who given we ran the event under Chatham House rules) noted they had a global CSR team of 60 people. This, in their view, is what’s needed to drive progress and worker communication
  7. Competitors can collaborate, and the rate progress is speeding up. Apparel companies are collaborating via industry groupings (SAC) and B2B / Industrial companies are finding ways to work together on capacity building in sustainability education. There are many bumps in the road, but progress, and successful momentum seems to be taking a step change annually now
  8. Legal risks around corruption are increasing for companies, particularly from the US Department of Justice. However, Europe has been much slower to enforce laws and the UK Bribery Act is not taken as seriously as the FCPA in the US given the UK’s lack of backbone and resources to enforce UK law
  9. Despite the slow progress on the enforcement of anti-corruption laws, transparency is going to continue to move up the agenda. Companies are being asked to disclose more and more about slavery and product origins in general. And consumers who may not pay an ‘ethical’ premium absolutely expect the brands they buy from to manage the issues
  10. Supply chain collaboration ain’t just for Western brands. Leading companies in Asia are now working with the kind of implementation NGOs that only Western brands worked publicly with until recently. These collaborations are driving industry change, and gaining attention across Asia and elsewhere
  11. Challenging NGOs are keener than ever to talk to business. The old notion that “they just want to hammer brands to get attention/money/backslapping” is harder than ever to justify. It’s becoming clearer to both NGOs and companies that campaigning without offering or contributing to pragmatic change is unsustainable
  12. In a few companies their entire approach to products is becoming wrapped up in sustainability. This is still rare, but in the cases of Nike, Golden Agri Resources and Marks & Spencer (amongst a handful of others) we can now see this beginning to happen. The long road ahead has a hazy destination becoming more visible in the distance
You can find a lot more on sustainable supply chains at http://www.ethicalcorp.com/ – just use the search function…

I’ve spent a lot of time in the last five years briefing boards and running workshops for managers on sustainable supply chain issues, stakeholder engagement and sustainability strategy. More on this can be found here. If such a thing would be useful for your company, just let me know.

*This claim is disputed. See this more recent post for links and sources that say it is still happening.

1 Comment

  1. Great blog post, sounds like it was a very interesting conference.

    We've noticed several prominent business leaders vocally championing "People+Planet+Profit"/"Better Business" on Twitter and LinkedIn recently – e.g. Deborah Meaden supporting renewables, Richard Branson creating BTeam. I'd be interested to hear your thoughts on why this might be happening right now, and whether you think it will continue.

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