Companies will ensure that suppliers meet the same environmental and social standards -- including disclosure of goals and performance metrics -- as the company has set for its internal operations.
Policies & Codes
Companies will set supply chain policies and codes aligned with their own social and environmental standards as well as universal standards including the ILO Core Conventions and the Universal Declaration of Human Rights.
Companies will have in place comprehensive procurement and sourcing strategies that include both social and environmental criteria in procurement and contracting.
Companies will have in place comprehensive capacity building programs for suppliers to ensure alignment with social and environmental expectations and will incentivize supplier goal setting and performance improvements. Companies will also have in place strategies to ensure suppliers beyond Tier 1 are meeting sustainability expectations.
Measurement & Disclosure
Companies will measure and disclose supplier social and environmental performance data and will set targets for improved supplier performance in line with companies’ own operational targets.
To become truly sustainable enterprises, companies must look beyond their direct operations and deep into their supply chains. A company can reduce its carbon footprint, water use and protect the rights of its workers, but if it sources products and materials from suppliers who perform poorly, its overall sustainability efforts are fundamentally undermined.
Companies can significantly influence the behavior of suppliers and have a key responsibility in driving sustainability throughout the global economy. As customers, companies can establish the conditions for future business. Clear expectations must be established and a high bar for performance set.
Companies must integrate social and environmental metrics into procurement decisions and product design and make clear to suppliers that long-term business relationships can only be established in the context of continual improvement of social and environmental performance. Quite simply, sustainability needs to be given the same status as quality, cost savings and production times.
But implementing such changes is challenging and companies may need help in instituting the necessary reforms and programs. That is why companies have to be prepared to provide long-term assistance and to collaborate with suppliers; they cannot simply set standards, sit back and insist on compliance. This means partnering with suppliers on worker training, education, safety and healthcare, and providing technical or other support for programs to improve energy efficiency, water stewardship and reduce pollution. Incentives and rewards for suppliers who meet these requirements should be core to these engagement programs.
As is the case with all aspects of corporate sustainability performance, transparency is key. Companies should disclose not only information about who is in the supply chain, but how those suppliers are or are not implementing social and environmental standards.