As consumers’ demands for transparency and traceability go further down the supply chain, sourcing comes under a microscope. Human rights often falter in grey areas of procurement policy, with workers often the victims when there are gaps in legal procurement and ethical procurement.
Figures from the International Labour Organization (ILO), released most recently in 2017, revealed that more than 40 million people worldwide were victims of modern slavery in 2016, including around 25 million in forced labor. Of those in forced labor, some 16 million were being exploited in the private sector. Furthermore, there were more than 152 million estimated victims of child labor, almost half of whom were aged between 5 and 11.
In today’s callout, culture brands have a lot to lose as the lines between profit and social conscience are no longer so easily defined in the minds of consumers.
Experts opine on the future of procurement on Raconteur:
Group Director at the Chartered Institute of Procurement & Supply (CIPS), Cath Hill: “Ethical procurement is essentially a people business, affecting lives and livelihoods, for good or ill. Applying rigorous ethical standards to your supply chain is not just about compliance or completing necessary paperwork, but implementing good governance and preventing exploitation of human beings across the globe for the sake of profit,” she says.
Martin Buttle, Strategic Lead for General Merchandise at the Ethical Trading Initiative (ETI): “Brands should understand how their actions impact on their suppliers’ ability to uphold labor rights. For example, a company with poor purchasing practices, such as unrealistic deadlines or unit prices, can cause challenges for its suppliers, leading to increased risk of poor wages and excessive working hours. This is particularly the case if a supplier feels forced to accept orders below the cost of production to win contracts.”
Alex Saric, Smart Procurement Expert at Ivalua: “All too often, there is little communication and accountability. Cost is the only discussion point and data isn’t shared effectively, while risk and CSR assessments can be a ‘tick-box’ exercise, meaning transparency initiatives end up half-baked. Weaknesses notwithstanding, big brands can still set a positive agenda for supplier behavior, beyond compliance. If suppliers see that being responsible is more likely to win them a contract, ethical practices change from a minimum requirement to a valuable key differentiator. They must operate sustainably, or face losing out to more ethical competitors.”
Lee Rubin, counsel and global sourcing expert at international law firm Pillsbury Winthrop Shaw Pittman: “While any ethical shift is relatively slow and undoubtedly late, legislative momentum is only pushing in one direction and businesses would do well to watch this space closely. Brands should understand how their actions impact on their suppliers’ ability to uphold labor rights. When it comes to lawmaking, legal and ethical considerations are merging, typified by the Modern Slavery Act. While not all sections of the Act are directly applicable to business, the provision around ‘transparency in supply chains’ impacts the largest brands and companies.”
Shaun McCarthy, Director at leaders in sustainable procurement Action Sustainability: “The heat is on. These days the court of public opinion is an unforgiving place and brands need to be aware they are playing with fire when it comes to ethical procurement.”
Retail expert and consumer champion Martin Newman: “Consumers will shop with their feet and their mouse. If you pay this lip service or they think you’re being disingenuous, they will not only not buy now, they’ll never come back; and they’ll tell all their friends and family about it.”
Read the full article on Raconteur.
Photo: Tim J via Unsplash