Corporate Responsibility in Supply Chain Management

Corporate Responsibility – the inclusion of ethical standards into business – is also often called the triple bottom line i.e. involving social, environmental and financial components (or people, planet and profit). It is a corporate best practice that takes into consideration the impact of the company’s actions on the environment, on people (employees, suppliers, clients) and overall on the global community and takes full responsibility under the watchful eye of the media worldwide. Successful corporate responsibility will boost the brand image. The company becomes accountable not only to shareholders but to the wider society, with criteria of transparency, traceability and sustainability prominent in corporate responsibility reports.

This trend has seen significant growth over recent years, with several depressing cases brought into the open – factory fire in Bangladesh, Asian sweatshops or child labour. These serious shortcomings generate negative reactions from customers, media and even stock markets.  This is why terms such as “fair-trade”, “free range” or “living wage” have lately flourished on packaging and marketing material.

Because this corporate responsibility involves all stakeholders, it also encompasses the suppliers’ ethics in business practice. This means that procurement professionals will take into account and balance all social, ecological aspects of supplier management along with the assistance and value for money of the products or services purchased and because of globalisation, this will happen at a worldwide level. Responsible procurement will seek to have full visibility and monitor the following elements:

·         Environmental impact:

Companies will need to monitor how the production of goods and how logistics and transport of those goods affect the environment. This is clearly more significant in certain industries (manufacturing, agriculture, mining, chemicals...) or sectors (food, energy, pharmaceuticals...).

The supplier’s carbon footprint will be measured and have to comply with the corporate responsibility strategy of the buyer: greenhouse gas emissions, water and energy consumption, waste management (increase of recycled waste, reduction of hazardous waste).

Protecting bio-diversity and promoting sustainability is an area of significant concern when dealing with developing countries where the environmental guidelines may not be the same as in Europe.  This has come to light for instance with palm oil and the problem of deforestation in South-East Asia.  Some brands have had to face calls for boycott and negative image.

·         Social and human impact:

To prevent exploitation and promote human rights as well as health and safety in the workplace, the corporate responsibility will ensure compliance with local legal working hours, workforce age, fair wages and health and safety regulations. Furthermore, the company and their suppliers will monitor the implementation of equal opportunities and diversity within their workforce – i.e. make sure that there is no longer any discrimination on the basis of race, sex, religion, sexual orientation, disability or age. In certain cases, this may require positive discrimination.

·         Financial:

If profit remains the ultimate objective, involvement in charity events and fundraising have become essential to corporate ethical behaviour. Thus the choice of suppliers may also take into consideration the financial involvement into human, charity or community matters. Other financial considerations may involve scholarships, grants or internships, sponsorship or voluntary work for the benefit of the wider community.

With the implementation of a corporate responsibility strategy, the company’s behaviour within the wider community becomes that of a good corporate citizen – a corporate role model. Corporate responsibility in the supply chain management is something to be advertised and promoted to employees, shareholders, customers, suppliers and government institutions to benefit both the brand and the corporate image.

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