Supply chain issues are well known in the apparel, electronics and sporting goods industries, but what about the interiors and building products industry?
INTRODUCTION
Businesses want to protect their brand and supply chain issues play a part in protecting a company’s reputation. Everyone sadly remembers the collapse of the Rana Plaza building in 2013 which tragically killed 1127 Bangladesh workers, and what this meant to the brands associated with this tragedy.
Over the last few years, and even more recently, in the last 6 months, I have seen a huge momentum swing in regards to sustainable supply chain in the interiors and building industry. Customers want to purchase ethical products. Particularly when so many products or materials are being sourced from developing nations where there is a greater risk for human and labour rights abuses, e.g. China, India, Vietnam, Taiwan etc
What is driving this?
There are a number of factors. Firstly, larger corporations are trying to do the right thing and have systems in place to ensure they conduct strict due diligence of their suppliers, to ensure they are purchasing ethical products.
A number of multinationals and construction companies are signatories to the UN Global Compact (UNGC). The UNGC lays the framework for organisations to ensure they support and respect international human rights and to ensure they are NOT COMPLICIT in human rights abuses.
Corporations are issuing their suppliers with a Suppliers Code of Conduct, to help reduce risks and to set out the requirements for social and environmental compliance.
Secondly, Ecolabelling schemes have included ‘compliant supply chain’ in their standard requirements and the Australian Green Star Rating Tools and the US LEED Rating Tools have an Innovation credit for ‘Social equity within the supply chain’.
What does a sustainable supply chain look like?
A sustainable supply chain or responsible sourcing or ethical procurement means that companies are addressing social responsibility and environmental management within their supply chain. One of the first steps in this process is to initiate a ‘Suppliers Code of conduct’. A Suppliers Code of Conduct sets out a list of requirements for the suppliers to comply with. These requirements include:
Social responsibility:
- ensuring safe work practices
- no forced, bonded or child labour
- harassment and grievance policies, procedures and mechanisms
- anti-discrimination and bullying
- ensuring workers’ rights in regards to freedom of association and collective bargaining
- fair working hours and compensation
- anti-corruption and bribery
Environmental management:
- ISO14001 EMS certification
- environmental policies and procedures
- compliance to local and national environmental regulations and laws
- waste and energy management strategies
- emission reduction initiatives
- low toxic products to include eliminating prohibited substances
- Product stewardship
So what does this mean for product manufacturers?
There are two key considerations:
- Your organisation may be asked by one of your clients, or a construction company to comply with THEIR Suppliers Code of Conduct, which means implementing social and environmental initiatives within your business.
- There is an expectation that YOUR company will initiate a Suppliers Code of Conduct to your suppliers, to ensure they are not complicit in human rights abuses and have a good level of environmental compliance.
Why do you need a sustainable supply chain?
On a very basic level, your clients and customers have an expectation that the products they are purchasing are made ethically, that there are no human and labour rights abuses (e.g. child labour, unsafe working conditions, forced labour, and unfair pay) and have systems in place to manage environmental impacts.
If your company is sourcing products, materials or components, or any service that is related to your business then it would be appropriate for your organisation to ensure your suppliers have environmental management and human and labour rights policies and practices.
Some of the larger corporates and construction companies have a ‘Suppliers Code of Conduct’ which outlines basic human and labour rights expectations.
What does it take for a company to get serious about implementing a sustainable supply chain?
Initiating a Suppliers Code of Conduct, is the first step, but by no means the only step. You need to understand WHERE the most risk is in your supply chain and where you have the most influence with your suppliers. Mapping your suppliers can help in this process.
A Code of Conduct will set out what your company expects from your supplier, but it really needs to be a collaborative process, you need to work together to address areas where there is the potential for human and labour rights issues.
A questionnaire asking the supplier what their practices are in relation to environmental management and labour rights will also help you understand the current state of play.
Communicate to your suppliers, why it’s important to your company (and your clients) and that you are there to support them.
On a final note…..
For product manufacturers, initiating a Suppliers Code of Conduct and ensuring a sustainable supply chain will be a clear competitive advantage for early adopters, but I suspect over the coming years, it will be a prerequisite for companies doing business with these larger corporations.
If you want to know more:
- Call Libby on 0448 026 508 or email us
- For more information on our Sustainable Supply Chain services
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