Sourcing responsibly is what modern day consumers would expect of brands. They expect the reputable brands to know exactly how their goods and marketing production were produced – from the raw materials to the moment of delivery to the customers. Consumers would go so far as to boycott a brand if somewhere along the supply chain the brand has turned a blind eye on cruelty, treated people unfairly, caused damage to the environment or acted irresponsibly for short-term profits. When unethical practices are uncovered, the brands face public shame, suffered detrimental backlashes that is damaging to the long term brand equity. 2013 collapse of garment factory Rana Plaza in Bangladesh harbored much criticism for brands like J.C. Penny, Benetton and Carrefour. One can cite many more examples: When Nike’s child labour issues were exposed, when Foxconn faced accusation of employees’ abuse, or, when various eateries in Greater China were found to use gutter oil, consumers and the shareholders reacted furiously, because they feel let down by companies they think they can trust.
Increasingly, consumers are taking up active roles in promoting sustainability by consciously choosing brands that think long-term enough to balance profit-making with sustaining a fair society.
What can we do?
So it is not surprising that the term “Corporate Sustainability” is often found on the agenda of boardrooms of leading brands. Board of directors and senior management take time to define the company’s social mission, setting clear goals and mapping out strategies. For smaller companies, discussions have also shifted away from “why does sustainability matter to us?” to “what can we do about sustainability?”
Corporate sustainability has become a necessary component in today’s business, which yet too many managers consider as duty-bound for the purpose of compliance. Worse still, smaller companies struggle to keep up as a result of a lack of manpower and resources.
Amongst the many programmes that brands in general could adopt to improve their corporate sustainability, Responsible Sourcing is probably one of the most easily implemented, direct in its relevance for the stakeholders of the business and the furthest in its reach to help build a better world through the influence of the business itself.
Some brands have resorted to appointing third party certification agencies to help implement responsible sourcing and enforce such policies with their suppliers. It is true, however, that tight supply chain management, especially engaging third parties, can be highly costly and may not be a route that is affordable to many independent and smaller brands, not to even start debating on its overall effectiveness. Obtaining certification is often a hurdle for smaller community-based suppliers whom sustainable procurement often advocates to support.
Five steps to implement responsible sourcing
Without spending a fortune, here are five easy steps to implement responsible sourcing for any brand:
1. Set up a Sustainable Sourcing and Procurement Policy to spell out the company’s commitment, principles, guidelines and expectations of how sourcing is done to provide buyers of the company a blueprint on how and from where to source and treat suppliers fairly, objectively, professionally and ethically.
2. Educate and maintain an active Program of Engagement with stakeholders, including buyers in the company as well as key suppliers. The program’s aim is to establish reciprocal commitment and support joint efforts in the pursuit of sustainability.
3. Having a full understanding of the Chain of Custody in the supply chain through actual visits and regular engagements with suppliers. Both raw materials going into the production and the labour conditions are key areas of focus. Maintain full records of paper trail as supporting evidence of responsible sourcing is important for serious implementation.
4. Market and advocate the practices internally and externally to multiply the effect of the efforts.
5. Continuously improve Intelligence Knowledge of socially and environmentally responsible supply chain management practices.
The topic of responsible sourcing may look daunting at first glance, but in practice, the steps to take are easy enough for any brand to follow. In doing so, brands are effectively taking up the responsibility of protecting their customers from accidentally and unwillingly supporting unethical behaviours. Seeing that reasonable action were taken towards responsible sourcing, consumers are also drawn to such brands that can give them peace of mind that products and services provided are “clean”, in turn strengthening customer loyalty. Increasingly so, prospective employees look into these areas as important factors of consideration in search for their ‘dream’ jobs. This is particularly relevant for companies whose core business may be socially contentious and is more prone to draw external criticisms.
Corporate sustainability is no longer an option
While corporate sustainability may not be the top business priority for many small businesses, perhaps abandoning it is no longer an option. Generally, business leaders and founders have to step up and go beyond delivering short term profits. Without departing from the core business function of the company, they are expected to advocate and lead by example that the company should uphold ethical business practices with respect to the business behavior of individuals and the organization as a whole to lead positive impact in the business world.
Realistically speaking, there is no need to be over ambitious and many of the suppliers are probably doing it. Any company can start small and build on what has been achieved and make sure others know about it.
About the authors
Bonnie Chan Woo is the CEO of Icicle Group
Jee Soo Lee is the CSR Intern (2014-2015) of Icicle Group