Corporate social responsibility goes beyond your business. Suppliers, subcontractors and vendees who are involved in the production chain should also pursue corporate social responsibility. In emerging markets, it is often difficult to determine how the separate links of your supply chain operate. For instance, many small family-run businesses are part of the informal sector where there is little transparency. This means it is often difficult to guarantee that all products are manufactured in a responsible way.
Below you will find instruments that can help you ensure the responsibility of your supply chain.
Due diligence means that you should identify and report what impact your business activities have on:
- the environment
- working conditions
It is important to be aware of your supply chain and minimise risks. For instance, if you have insufficient influence on your suppliers you can approach fellow businesses, European sector organisations, NGOs or the local authorities to help you to obtain more influence.
Monitoring suppliers with few company resources
Many large organisations already have methods to monitor suppliers. Smaller businesses are often unable to free up time and money for this purpose. Fortunately, there are a number of initiatives that help smaller businesses obtain insight into their suppliers.
European monitoring system
One of these initiatives is the European Business Social Compliance Initiative (BSCI). BSCI provides a system for monitoring working conditions. The aim is to improve global working conditions. The BSCI system encourages suppliers to comply with the International Labour Organization standards, among other things.
Tips and tools
Are you having trouble getting insight in supply chain? Please read our tips below.
Ask your suppliers about their CSR policy
Working together with your suppliers and vendees will make it easier for you to appeal to their sense of responsibility. Consequently promote CSR across the entire supply chain, not just within your own business.
Enquire about your suppliers' CSR activities
Ask your suppliers where their products come from and under which circumstances they are being produced. Do your suppliers occasionally outsource work and, if so, to whom? How many working hours are there in a working week and what do workers earn?
Doing business with reliable partners
Do business through reliable intermediaries/agents who also have a good command of the local language. Ask other businesses about their experiences and ask explicitly what the companies they have worked with are doing in the area of CSR.
Seek collaboration with NGOs
Many industrial supply chains are not transparent. Where do the raw materials, that you import for a semi-finished product, come from? Where is a specific component of a semi-finished product manufactured? These questions can often only be answered after a thorough investigation. However, many individual small businesses lack the resources for this purpose. Seeking collaboration with NGOs, may result in receiving answers to these questions.
Keep your supply chain short
Keep your supply chain as short as possible. Not only will this limit the chance of any misunderstanding in one of the links in the supply chain, it also offers advantages in the field of finance and quality.
Apply international guidelines
The Dutch government expects businesses outside the Netherlands to comply with in the area of CSR through these guidelines. So encourage your business partners to act in accordance with international CSR standards such as the OECD Guidelines.
Work with social standards
Important instruments for labour standards and terms of employment include:
• Social Accountability 8000 standard (for producers and suppliers in various sectors who require SA8000 certification at the factory level;
• Business Social Compliance Initiative (for the retail trade, industry and importers).
Use audit tools
Many NGOs and commercial enterprises have developed audit tools to assess the implementation process. These tools are often available free of charge.
Seek collaboration with fellow businesses
One single producer can damage your reputation. To prevent this from happening to you, it is essential that you collaborate with competitors and businesses in the supply chain. This will prevent businesses competing only on price from driving good businesses out of the market. Sector organisations can steer such beneficial collaborations in the right direction.
Include requirements in contracts
You are have the right to ask your partners or suppliers to comply with social, tax and environmental legislation. You can also include additional CSR requirements (such as working conditions or environmental aspects), in contracts with your partners. You could emphasise the financial advantages of CSR, such as consistent quality and lower staff turnover.
Obtain insight into work from home
Use careful diplomacy to find out how much work is outsourced to home workers. You can often deduce this fact from your supplier's production capacity. Making enquiries with local NGOs may also yield results.
Ensure compliance with codes of conduct
Give your business partner the time to comply with your code of conduct. You might have imposed requirements that need considerable investments. Be aware that not every business will simply be able to achieve this outcome immediately. Assess whether your supplier will be able to implement your code of conduct independently. If not, you should assist your supplier in implementing it. Always ensure that the code of conduct is available in the supplier's language. Also make sure that the supplier distributes your code of conduct to its employees and its own suppliers.
Monitor CSR agreements with suppliers
Monitor if your suppliers comply with the CSR agreements. Visit your supplier unannounced. During such a visit it will soon become clear whether your supplier is compliant. If not, it is important to discuss this matter with your supplier.
Use consistent purchasing methods
Make sure that your purchasing methods do not obstruct improvements in working conditions. In order to develop an ethically responsible supply chain, you should consider the following matters:
- consistent prices and longer/realistic delivery times;
- commitment to purchase stocks in 'bad times' (in other words, be prepared to conclude purchasing contracts);
- involvement in audits on working conditions in the workplace so you understand and endorse the principles;
- opportunity for suppliers to provide feedback on the pressure that they are facing, without jeopardising the contractual relationship;
- "preferred supplier" status for businesses that can demonstrate good or improved working conditions.