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Consumers should reward supply-chain heroes

By Thomas Kostigen
MarketWatch
The cult of consumer awareness needs to run deeper than what sounds good or looks good. Supply-chain heroes need to be honored. Holding them out might just change perceptions of what makes a good company and what makes one bad.

Why can some companies get away with being bad corporate citizens at the expense of the developing world and others, try as they might, can’t shake past business sins?

Apple Computer, for example, has been widely called out for the labor practices of its supplier in China where workers — many underage — are exposed to hazardous conditions and materials. But those calls haven’t much dented Apple’s sales or brand.

Meanwhile, Asia Pulp & Paper, often deemed the poster child for deforestation because of poor logging and timber track record in Indonesia, is suspending next week natural forest clearance by suppliers on its own pulpwood plantations there and committing to the international standard of High Conservation Value Forest. Yet, I bet this effort, among the many APP has undertaken to show it’s changed its ways, won’t sway criticisms from the likes of Greenpeace et al.

To be sure, there should be no sale of indulgences in the corporate world. Sober assessments of past and current misdeeds must be weighed against proper penance — to extend the Catholic metaphor.

One of the more interesting ways to make these assessments is to look at the corporate supply chain.

Ceres, the Boston-based environmental and business coalition, and Sustainalytics, a research firm with offices around the globe, recently analyzed 600 major U.S. companies as part of a Road to 2020 report on corporate sustainability. While 43% of companies surveyed had supplier codes of conduct, only 25% performed even minimal monitoring to determine if suppliers were abiding by those codes, and only 10% had codes that referenced International Labor Organization conventions, according to Mindy Lubber, Ceres president. Read more about the report.

In an editorial for Forbes magazine Lubber writes, “In today’s highly integrated global economy, no company can afford a ‘hear-no-evil, see-no-evil’ approach to problems in its supply chain.”

That’s why supply-chain heroes should be celebrated and encouraged through direct investments. It’s one thing to divest of companies committing corporate sin. It’s entirely another thing — perhaps even a profitable thing — to invest in suppliers that do well and good.

The supply chain for the world’s largest companies and hence for us, usually begins in the developing world. By investing closer to the ground, we can begin a “geyser effect” that works far better than the oft-celebrated trickle-down theory. Social and financial impacts are felt far more immediately.

Take companies that belong to the Roundtable on Sustainable Palm Oil. Palm oil planters often slash trees and burn land to quickly grow palm for the oil we then use to cook with as common vegetable oil, or douse our baked goods in (think doughnuts), or for our toothpaste. RSPO promotes the growth and use of sustainable oil palm. See rspo.org for a list of member producers.

Or take companies that belong to the Conflict-Free Smelter Program. Members of the CFS have an independent third party evaluate their procurement activities to determine if materials originated from conflict-free sources. Coltan, as well as other minerals such as tin, tungsten and gold, are often sourced from the Democratic Republic of Congo, where the profits are used to fuel an extremely violent civil conflict there. See conflictfreesmelter.org for a list of members.

Or how about those that belong to the Forest Stewardship Council? FSC certification means timber and in turn pulp and paper are gotten responsibly from forests that are managed properly to preserve and conserve. See fsc.org for a list of certificate holders.

These are companies we may not hear much about, but can see the good they produce.

The cult of consumer awareness needs to run deeper than what sounds good or looks good. Supply-chain heroes need to be honored. Holding them out might just change perceptions of what makes a good company and what makes one bad.

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