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Supply Chain Morality Is More Difficult Than Just Promises

Making moves to become ethical is about more than words

10Nov

A number of recent stories have again brought the issue of sustainability in the supply chain to the fore. Syrian refugee children in Turkey have been found making clothes for major British fashion brands including M&S, Zara, Mango, and Asos. This suggests that while companies are making the right noises, many are failing to follow up on their promises, preferring to keep costs down in any way possible and avoiding asking serious questions.

M&S, for example, claims that ethical trading is ‘fundamental’ to the company. Their actions, by and large, appear to back this up. All of the company’s suppliers are contractually obligated to comply with the retailer's 'Global Sourcing Principles', which cater to the International Labour Office’s (ILO) core labour standards. However, M&S is a global company. It has more than 82,000 employees in 59 territories so it is understandable that some may slip through the cracks. This is true of many companies in the global age, whose supply chains are so disparate that knowing everything that goes on is highly unlikely.

The Business & Human Rights Resource Centre surveyed 38 high street brands on the measures they are taking to protect refugee workers in Turkey. They found that only a few have introduced better policy and practice. Abuse, meanwhile, remains endemic. The real tragedy is that, despite growing awareness around the phenomenon, it is expected, and those who think it not a problem are labeled naive.

There is a clear motivation to saying that you are doing every conceivable thing to maintain an ethical supply chain. According to a recent HSBC Holdings report, around 77% of consumers in emerging economies and 58% of consumers in advanced economies say they are more likely to spend money on an ethical brand. Shelley Stewart, Jr, Vice President DuPont Sourcing & Logistics and Chief Procurement Officer, DuPont, wrote recently that: ‘Ethics make good business sense. This is certainly no surprise to the readership of this publication, and most major companies have a robust ethics program, most likely as the cornerstone of their core values. The challenge is in trying to expand your influence on ethical behavior outside the boundaries of your company to your stakeholders.’

However, given the complexity of the modern supply chain, can they really be held responsible for all their failures? The problem is the lack of action. It is one thing setting targets as M&S have done, but companies must take immediate action if partner’s fail in their duties. Companies not only need to set clear expectations up front, they need to ensure that the culture is in place where ethics are always at the front of everyone’s mind, and ensure that their core values seep down to their suppliers.

Retailer Next is one company often held up as an example to other supply chains. Over the course of the past decade, they have slashed the number of factories by 7% and dramatically increased the number of audits by 26%. In total, 92% of Next's products are now created in factories with an 'acceptable' audit rating of between one and three. Even with these efforts though, Panorama revealed that one factory actually boasted of employing Syrian refugees and Turkish children while making their clothes.

The Panorama programme raised a number of questions around ethics in the supply chain and who is responsible. According to the International Labour Organisation (ILO), there are some 168 million children trapped in child labor, which the ILO defines as ‘work for which the child is either too young – work done below the required minimum age – or work which, because of its detrimental nature or conditions, is altogether considered unacceptable for children and is prohibited’. While this has fallen dramatically since the turn of the Millennium, when there were 246 million, this is still unacceptably high. More than half of them, 85 million, were found to be in hazardous work. A degree of child labour is to be expected, with many families considering it an economic necessity and some societies more tolerable of the practice. We, however, are not, and supplies must be made to recognize that it is not acceptable.

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