Supply chains are increasingly scrutinized and expected to meet multiple objectives. Consumers want access to products at affordable prices, and retailers want to make profits.
On top of that, there's growing recognition that supply chains also need to be fair to producers, and environmentally sound.
With supply chains stretching around the world in often long and complex forms, the challenge is about achieving transparency at every stage and sustainability for everyone involved. How do we do it?
This was the subject of a recent roundtable event hosted by the Guardian and held in association with Tesco, attended by experts from industry, research organisations and campaigning groups. It began by discussing the types of changes required if supply chains are to ever successfully address issues as wide-ranging as human rights, labour laws and climate change.
"In a lot of supply chains, this does really mean changing the way you operate," said Giles Bolton, ethical trading director at Tesco. "We decided a few years ago that whether it's about the environment, product quality or the way people are treated, we can't afford to just buy through agents in the UK. We've changed the way we source bananas, for example. We're big enough to have our own experts in countries to ensure suppliers operate to high ethical standards and, on average, we pay more than the Fairtrade minimum price for bananas."
Fairtrade and other certification schemes have done valuable work in improving fairness and sustainability along value chains, but they also have limitations. Duncan Williamson, senior policy advisor at WWF UK, pointed out that there are over 65 certification schemes for seafood, of which WWF UK regards two as representing genuine sustainability, with the others being "literally the legal minimum in that country".
And Stuart Singleton-White, senior manager of external communications for Europe and Australia at the Rainforest Alliance, suggested that we might also be seeing diminishing returns in what certification achieves.
"There's a dynamic with larger fast-moving consumer goods brands," he said "where they've got to a certain position with third-party schemes, and now feel they can maybe have a slightly lower standard that will still meet their needs and maintain trust levels, so there's a danger that these standards now can't really produce the change they're presented as being able to do."
It may be that the compliance paradigm isn't strong enough to tackle the inherent power imbalances of global supply chains. This imbalance isn't necessarily a deliberate tactic on the part of large companies, but they are implicated in it, said Peter McAllister, executive director of the Ethical Trading Initiative.
"I don't think companies set out to cause harm," he said. "It's a result of the way global supply chains work. If you want sustainable supply chains, you have to re-jig how you think. The compliance paradigm has driven some change, but it doesn't get at the imbalances of power and the fact that buildings have been built that should never have been built, and no one cared if the workers were safe or not. It doesn't tackle those bigger issues."
What needs to be done then? If we can't rely on the corporate social accountability agenda alone to drive real change, we need to go for governance, suggested Jenny Holdcroft, policy director at IndustriALL Global Union. At the national level, in developed countries, good governance is already in place. This is not so in many developing countries, which means global supply chains don't have enough checks and balances. Multinationals have the power to lobby governments in those countries to change this, if they want to.
"There's a real limit to what a single company can do on its own, which is why this is about governance," said Holdcroft. "Multinationals have power, but only through their own supply chain. If you have a critical mass of brands, you can really have a voice with governments. Multinationals, because of the powerful relationships they have, can play a role in stopping suppliers repressing unionisation. It would be great to see investors rewarding companies for actively engaging with governments in supply countries to say they want a living wage that applies to everyone."
Holdcroft pointed to the Bangladesh Fire and Building Safety Accord (see box) as an example of how big retailers can actually join forces to effect positive change, filling the gaps in local governance that have often allowed a "race to the bottom", with those at the bottom paying the price.
"The key with governments is proper defence of labour conditions and for poor conditions not to be a competitive advantage," said Prof Stephanie Barrientos of the Institute of Development Policy at the University of Manchester. "The competitive advantage should be that it defends workers' rights, and freedom of association, and living wages."
Such an approach depends partly on customers buying into those values more, and the roundtable discussed how retailers can act at the end of the supply chain to better engage consumers. "What happens in supply chains is complicated," said Laura Kelly, head of the business engagement hub at Department for International Development (DfID). It's not easy to convey to the public what the reality is for people in the developing world, and how valuable these jobs normally are. "How do we sell the story better, so people understand that the answer isn't just a certification scheme?" she asked .
Food waste is one point of entry, said Mike Gidney, chief executive of the Fairtrade Foundation.
"We hoover up food in supermarkets, and then chuck it away," he said. "There can be no consumer who thinks that's a good way to behave. It must be inconvenient if nothing else. So isn't there an opportunity to reframe the debate as the relationship between ethical sourcing and ethical selling? If there's overselling going on, how can retailers and consumers work together to bring that under control?"
Food waste is something that many retailers including Tesco are already engaging with, said Bolton, and there are other consumer-facing ways to drive sustainability from the demand side. Fish is one example.
"Something like 80% of the fish sold in UK is from five species," he said. "There's a role we can play in educating customers, We had a big push on that in stores last year,raising awareness by using special offers and explanations from our fishmongers to help customers try other types."
A significant number of consumers are already engaging with supply chain issues beyond a certification mark. Rachel Wilshaw, ethical trade manager at Oxfam, pointed to its Behind the Brands campaign, which provides people with information on the supply chains of the world's 10 largest food and beverage companies. "In the last year, 400,000 consumers have taken action to challenge one of the top 10 on how they deal with things like land grabbing and inequalities facing women," she said.
Initiatives such as these have also helped to make investors interested in, and better able to assess, the sustainability of supply chains. "NGOs are increasingly savvy in helping investors to see the materiality of water scarcity and climate change, and how that relates to their companies," said Abigail Herron, head of responsible investment engagement at Aviva Investors.
The volume and range of products sold by grocery retailers is now immense in the UK, and that scale puts them in a position to exert great influence upstream and downstream, in supplier countries and amongst their consumers. It's really their responsibility to step up and do this well, said Justine Roberts, founder of Mumsnet.
"Consumers want to trust retailers to do the right thing for them," she said. "That requires leadership and education, and most importantly transparency to take everyone on a journey, and have an open and honest engagement about what sustainability really is."
Original headline: Media: Making supply chains work for all parties
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