The Global Compact encourages signatories to engage with their suppliers around the Ten Principles, and thereby to develop more sustainable supply chain practices. However, many companies lack the knowledge or capacity to effectively integrate the principles into their existing supply chain programmes and operations. In particular, a challenge remains to ensure that sustainability considerations are embedded within all sourcing processes.
To assist companies in improving their processes, the Global Compact and partners are currently developing guidance on how to take a more proactive approach to integrate the Ten Principles into supply chain management practices. Because supply chain sustainability is a cross-cutting issue, this work is closely coordinated with the strategy and work done in the four Global Compact issues areas (human rights, labour, environment and anti-corruption).
In 2010, the Global Compact Office entered into a strategic partnership with BSR, a global business membership network and consultancy focused on sustainability, to develop an implementation guide and a learning assessment tool for Global Compact signatories. The guidance was launched at the UN Global Compact Leaders Summit 2010, on 24-25 June in New York. The learning assessment tool is due to be launched in the first half of 2011.
Global Compact participants are invited to login to the new website: “Sustainable Supply Chains: Resources and Practices” and share information about their sustainable supply chain initiatives or activities, including brief examples describing how they are incorporating and promoting sustainability issues and the ten principles in their supply chains. Examples can include how the company is managing supply chain sustainability internally, how the company is engaging with suppliers ori n partnerships and collective action initiatives to promote supply chain sustainability. Organizations, companies and special initiatives on this topic that would like to share information about their sustainable supply chain efforts are welcome to submit them to the website. All articles will be reviewed and approved by the UN Global Compact Office and CSR Europe before being published.
Access the website "Sustainable Supply Chains: Resources and Practices".
Please contact Anita Househam should you have any questions or suggestions for improving the site.
Corporate supply chains have grown in scale and complexity globally over the past decades. Open markets have enabled companies to source from suppliers in developing and emerging economies, or to move or outsource production, because of the cost advantage these regions offer. As a business strategy, this can deliver significant benefits such as reduced costs, and enhanced profitability and shareholder value. At the same time, it can contribute to much needed economic and social development, and higher standards of living for millions of people.
However, widespread concerns about poor social and environmental conditions in companies’ supply chains have emerged. Weak implementation of local social and environmental regulation has forced companies to address issues that traditionally have been seen to lie outside of their core competencies and responsibilities.
Moreover, public scrutiny of business behaviour has led to rising expectations that companies are responsible for the environmental, social and governance (ESG) practices of their suppliers. Failure to address suppliers’ ESG performance can give rise to significant operational and reputational risks that can threaten to undermine any potential gains from moving into these markets. As a result, a company’s overall commitment to corporate citizenship can be seriously discredited if low standards of business conduct are found to persist in their supply chain.
Corporate buying practices can impact suppliers’ ability to improve their business conduct. Downward pressure on cost and efficiency can force suppliers to contravene some of their own ESG standards in order to meet their buyers’ commercial requirements. At the opposite end of the scale, companies can use their purchasing power to help instill good ESG practices in small and medium-sized companies across the developing world.
Today, successful supply chain managers must increasingly think beyond short-term financial considerations to building relationships that can deliver long-term value along the entire supply chain. This includes incorporating sustainability issues into the company’s sourcing and purchasing practices. In fact, companies that do engage with their suppliers around these issues constitute one of the most important drivers for spreading corporate citizenship principles around the world.
Incorporating environmental, social and governance considerations into supply chain management can deliver a range of business benefits:
Anita Househam
UN Global Compact
househam (at) un.org