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Alliance Boots story not all it seems

There’s been a hoo-haa in the media this week about Alliance Boots.

The company has been accused of bailing on an ‘ethics pledge’ by the Guardian newspaper.

Have a look at the article by going here.

They have not renewed membership of the Ethical Trading Initiative, a group working on labour standards in big corporate supply chains.

I came back to the office and mentioned this above article to John Russell, my colleague who edits our magazine.

As so often, all is not what it seems if you only read the newspaper.

John provided the below, which give you a lot more context for this decision:

“According to Richard Ellis, group head of CSR at Alliance Boots:

Alliance Boots pulled out of ETI because it wanted to assess how its suppliers perform on a broad range of sustainability issues, not just labour standards.

The decision to withdraw from the multi-stakeholder group will not save the company money and has nothing to do with its ownership by private equity.

Boots will use the money that is was spending with ETI to instead pay Business in the Community, the membership group, to assess both the social and environmental performance of its suppliers.

The sum Boots paid to ETI is the same amount that it will pay BITC to assess the sustainability of the materials and packaging being used by suppliers, for example, as well as working conditions in factories.

“We cannot as a business fund both activities. Either we pay BITC to audit [the whole supply chain], or we pay ETI to audit labour standards,” Ellis says.

“We want the whole of our supply chain and processes to be as sustainable as possible. ETI is really interested in labour issues and not in broader sustainability issues.”

“We’ve spoken to BITC and they’re going to audit the whole of the supplier verification process from labour standards right through to the materials being used.”

“It’s not about saving money. It’s about being assessed more rigorously on a broader agenda,” he explains.

Before it left the initiative, Boots spoke to ETI directors to see if the group would expand its services to cover environmental issues. It would not.

So Boots instead opted to be the guinea pig for BITC’s first attempt at supply chain sustainability auditing. “This is a new area for them. They haven’t done this before,” says Ellis.

The partnership came about after Boots won a BITC award for ethical supply chain initiatives a couple of years ago.

Ellis says Boots wants to “progress the agenda” on supply chain sustainability. It will share the lessons from its work with BITC with other companies, he says.

Ellis admits that labour standards remain the number one priority for brands looking at ethical supply chain risks.

He says: “There’s always more to be done [on labour issues]. It’s still our number one priority when we look at a new supplier. But we want to expand the things that we’re audited upon. We’re genuinely interested in the whole supply chain. Not just labour standards.””

So there you have it. A bit more complicated than the Guardian would like to admit.

But Boots does not get totally off the hook on ethics. Their supplier payment terms, in some cases, are unethical.

Paying anyone more than 30 days after they supply goods is wrong, let there be no debate about it.

And this story does raise questions about BITC’s capacity to do this kind of work.

It’s not what they usually do, and they are not as ‘activist’ as the ETI, nor anything like as public or multi-stakeholder in their work.

It’s a risk for Boots. And clearly a bit of a cost rationalisation exercise.

We’ll have to keep a close eye on this.

But the Guardian should be ashamed of itself for publishing the above story without the proper context.

2 Comments

  1. It is hard to avoid the conclusion that BOOTS left ETI precisely because ETI makes exacting demands on member companies. Their implementation of labour standards is open to scrutiny by unions and NGOs. Leading ETI companies are changing how they do business in a fundamental way; the expense of doing so far outweighs membership fees of ETI or other non-tripartite organisations. BOOTS has stepped away from this challenge.

  2. Interesting article, and not least the comment towards the end about whether BITC has the capacity to do what ETI is doing. But there is still some confusion here, as ETI didn't actually do the auditing itself, it is a tri-partite approach to developing and sharing good practice in the improvement of labour standards – trying to get the best codes of practice matched with improved verification. So it's still left unclear exactly what role BITC will play and whether this can in fact deliver the 2 for the price of 1 trick in terms of not just labour standards but also environmental issues, with anything like the peer learning approach or careful scrutiny the ETI offers.

    Furthermore, partners in the ETI have reached the conclusion that that auditing alone will not solve endemic issues in supply chains, if purchasing practices remain unchanged, and this is likely to be an increasing focus in future ethical and sustainable supply chain debates.

    ETI's value lies in the wide range of companies, trade unions and NGOs who are all working together to accomplish real improvements and learning, whether that's looking at roles of trade unions, sourcing from China or the groundbreaking work it did on UK gangmaster licensing. That's why it's still regrettable Boots has take the decision it has, and let's hope 'not renewing membership this year' doesn't close the doors to rejoining ETI in the future.

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