How full product transparency will revitalise the bureaucratic approach to managing sustainability in the supply chain
The conventional approach to exercising corporate responsibility in a company’s supply chain is to draft a company supplier standard and then audit for compliance using that document. The process often begins with a questionnaire and is followed by audit visits to suppliers judged to be the highest risk. The better programmes also include an offer of ‘capacity building’ for suppliers – in other words, they provide training and support to help them raise and maintain their standards.
Positive and usually well-intentioned as this course of action is, the impact is inherently limited by the narrow scope of the dialogue and the teacher–student nature of the relationship. It might work well when addressing very problematic issues (such as child labour), but telling suppliers what they shouldn’t be doing misses an opportunity to foster their talent for commercial advantage and innovation.
The flaws of the 700-question supply chain questionnaire
The questions below are from a real example of a supplier questionnaire I was asked to fill in by a corporate customer. Let’s look at how little each question actually drives real environmental performance:
1. Does your organisation have an environmental policy in place?
Any company can write up a policy in a couple of hours, but this doesn’t mean the policy is being implemented or monitored. Policies by themselves don’t drive performance, so the creation of an environmental policy will not necessarily have any impact on the products you are buying from your suppliers. For non-sophisticated audiences, it looks so good to say that 80% of your suppliers have an environmental policy. But in reality it means next to nothing.
2. Does your organisation have an environmental management system (EMS) in place?
ISO 14001 and EMAS are management systems, not performance systems. They just require an organisation to have a policy, comply with legislation, determine its impacts, and have targets. There is no link with performance. The other issue is the scope of these management systems. In general, they have a purely internal focus – they don’t include the raw materials used to make products, nor do they look at the use phase impacts of those products. If your suppliers have an EMS in place, this provides little assurance that the products they are supplying have less impact on the environment than any others.
3. Has your organisation identified the specific environmental impacts associated with the products, services or works it provides and taken steps to minimise them?
The supplier can just answer ‘Yes, we have identified them’. But how do you know that the issues it has identified are the biggest and most important ones? The supplier can also respond with any amount of corporate spin – cherry-picking some initiatives from the fringes and thereby allowing itself to look good.
4. Does your organisation observe legislation with regards to environmental issues?
Shouldn’t this be taken for granted?
5. Does your organisation communicate its environmental policy to its suppliers?
What demonstrable impact can be gained from sending a piece of paper full of generalities to suppliers? It would be far better to ask suppliers for radical innovations on the issues you want to improve.
6. Does your organisation check the environmental policy and performance of its staff?
Even if your supplier does this, how much of a difference will it have on the products you are buying?