Could you give us an insight into how Marks & Spencer has conducted research into what its customers’ expectations are in terms of corporate responsibility?

We participate in some MORI tracking of all these issues and analyse the results carefully. The MORI information goes into tremendous detail as to what consumer attitudes are and what specific elements of corporate responsibility they are interested in. We have to be cautious about the emphasis we place on this kind of information. It provides a good snapshot of today but the real challenge is extrapolating these views into the future and setting them within the wider context of a complex web of shifting societal values and opinions.

How do you go about identifying and maintaining communications with stakeholders?

We’ve worked hard in the last 18 months to identify who the main stakeholders are in our business, with particular emphasis on those on the environmental side such as Friends of the Earth, Greenpeace, WWF, and many others. We try to have a fairly regular dialogue with them, either with face-to-face meetings in the office or via email or telephone. We don’t set in stone the regularity of this dialogue, but try to be flexible in ensuring we understand their priorities and how they may shape our business.

With regard to employees, we are launching an initiative in the next few months to gather their views on what they would like us to be doing in terms of corporate responsibility. In terms of shareholders, we talk to our investor relations unit regularly about what shareholder questions are coming back. However, we tend to concentrate on what organisations like the FTSE4Good and the Association of British Insurers are asking for and often use that as a surrogate for the whole investing community.

Can you give us any examples of dialogue you’ve had with NGOs on specific issues?

Until around 18 months ago we had no real record of speaking with pressure groups and there was a degree of scepticism from them about our intentions. We built trust with NGOs by delivering on our commitments with real evidence and hard facts. For example, if we said we were going to tackle an issue such as pesticides we would provide real evidence that we had done so during our later discussions with them. Companies must support the good intentions they speak with NGOs about in the conference room with genuine changes in their day-to-day actions. This dialogue has resulted in action on pesticides, GM, sourcing wood, fish and agricultural products, restrictions on the use of certain chemicals and changes in the wash temperatures of the textiles we sell. Dialogue never results in NGOs becoming “business partners”. They continue to press us hard, but equally they are now more willing to listen to us and understand the practical reasons for our inability meet all their initial expectations.

Do you think these guidelines produced by the Association of British Insurers and the FTSE4Good are representative of the views of fund managers who look at M & S as an investment?

I think they are representative of where the market is going in the future. I don’t think they are necessarily representative of the views of mainstream fund managers today. But there is a growing trend towards greater consideration by mainstream investors of the risks and opportunities these issues pose to our business, not for altrustic reasons but simply because the management of an issue such as GM has the potential to effect significantly our commercial performance.

What’s changed in the management culture at Marks & Spencer with regard to corporate responsibility issues?

There wasn’t any one event that changed our views; it’s a whole raft of issues. When a business goes through the commercial difficulties that we’ve had, you tend to look at the business top to bottom, to look fundamentally at what it stands for . We looked at the whole company structure and business and realised that the world had changed around us in more ways than one. Customer expectations of retailers have shifted in terms of the traditional drivers of success i.e. quality, cost and functionality . But new expectations have been introduced covering environmental and social performance as well. It’s no longer sufficient just to sit back and simply comply with the law and imagine that’s enough. Our customers expect us to go beyond the law in many crucial areas now

How about supply chain issues?

The main issue for any UK clothing retailer at the moment is ensuring that the Ethical Trading Initiative requirements are complied with. That’s a major issue for us, ensuring that local wages are fair and that child labour is not used and we’re very proud of our record in that area. We’re also doing an increasing amount of environmental management. In terms of factory management, we are working on issues such as energy use, water use and onsite waste production. We've been hugely encouraged by our participation in the Project Acorn initiative that is developing a pragmatic but robust mechanism for driving environmental management in the factories that produce our products. But also important is our environmental impact from sourcing raw materials that make our products, be they fish, wood, cotton or wool etc. We are looking all the way down the supply chain at the social and environmental impact to see how we can improve our working practices.

What are the main challenges for a major retailer when you go back that far?

There are two types of challenge, one is technical – for example, how do we measure the performance of a fish farm that we buy from? How can we go beyond legislation? We’ve worked hard to try to benchmark ourselves against best practice to identify what the other global retailers are doing in terms of environmental and social performance in manufacturing.

The second major challenge is administrative. We’ve got well over 1000 suppliers and ensuring we are getting the message across effectively in a constantly shifting supply base is challenging. There is turnover in terms of the suppliers we buy from as we sell products one year that we won’t sell the following year, and therefore suppliers come and go alongside the ones in our core group that we do regular business with.

Do you believe suppliers can perform better in the long term by embracing standards imposed by companies like yours and the Ethical Trading Initiative?

Yes. To give you an example, our main supplier of fresh produce and flowers from Kenya, a company called Homegrown, are amongst the very best of our suppliers across our whole supply chain. This is not just in social and environmental issues but also in cost and quality, the traditional elements of retailing. The proactive way that they are managing their social and environmental impact is a reflection of how they manage their overall business.

We believe there is a direct correlation between good performance in integrating corporate responsibility policies and good business performance in general.

Do you think that the performance and behaviour of your suppliers can impact on the way you are perceived by customers, stakeholders and the media?

Absolutely. In terms of our business case for interacting with the supply chain, one of the primary drivers is reputation. We’re only as good as our supply chain in terms of social and environmental performance. Indeed the true impact on society and the environment at a retailer do not happen at its stores but upstream and downstream in its operations, supply chain and when the consumer uses and disposes of its products.

If one of our suppliers has polluted one of its sites and killed 10,000 fish, it’s not that company name that makes the papers, instead the headline is “Marks and Spencer supplier kills 10,000 fish”. So this is one of the primary drivers for us to interact with our supply chain on these issues.

Do you believe that you can build up an account of goodwill with the media by embracing responsible policies and proving your commitment to them?

Definitely. Any big business has a brand and around that brand there is a reservoir of goodwill, a willingness to trust them in difficult times. I think it’s very important for any big business to manage its reputation and to generate this reservoir of goodwill. However well you manage your business, there is always the potential for an incident no matter how hard you seek to prevent that in advance.

Do you work closely with a risk management team at M & S to discuss these issues on an ongoing basis?

We have a corporate risk assessor whose job it is to work with all the units of the business to assess the traditional financial and quality risk as well as the social and environmental risks to our business. At the moment we’re holding a series of internal workshops for all our different business units such as clothing, foods, home and beauty to identify what the current social and environmental risks are and how they should be managed in the future. This is an integral part of our overall risk management structure.

How about internal training for local managers and internal company auditors to spot potentially costly mistakes in advance?

All the products we sell are own brand products. We have about 150 technologists at M & S whose sole purpose is to understand how our raw materials are sourced and turned into products. We make sure that they have a good understanding of what good and bad practice is. Traditionally they looked mainly at issues such as quality and production efficiency. Now they have also turned their attention to social and environmental issues. The training we provide tends to be one-on-one or in small groups catering to their specific needs.

Do you use external service companies to help you achieve this?

We seek to use a mixture of internal and external auditing of our supply chain. For example, we are currently putting in place a system by which suppliers will self assess their social and environmental performance. On top of that there will be a second party audit by M & S of a proportion of our suppliers each year backed up by totally independent auditors to check that the conclusions we have come to are correct.

How do you make sure your independent auditors aren’t simply telling you what you want to hear?

That’s always a risk. We are absolutely clear that our business case for using external auditors is to uncover the things that we would rather didn’t happen. If they are telling us what they think we want to hear then they are no use to us. They might make a short term gain in business from us but in the longer term they won’t be doing business with us.

We use external auditors to find out what is actually happening. We can be sure that if they don’t find the problems we hire them to uncover, a pressure group or member of the media will, and will expose us for it.

What does the upcoming summit in Johannesburg mean for Marks & Spencer?

We were heavily involved last year and are again this year with the sustainable production and consumption part of the UK's preparations for the UNED Conference in Johannesburg in September 2002. These preparations are being faciltated by Imperial College and we’re working with them to understand what the issues of the future are. They are bringing together a wide range of organisations, pressure groups, suppliers, retailers, consumer groups to debate what sustainability means in practice. It’s been a very productive involvement for us in terms of mapping out where we go in the future. Theirs isn’t a black and white answer, but involvement with this will give us a good understanding of what stakeholders will be expecting in the future. We believe the Johannesburg summit will have a tremendous effect on our business in the future.

For more on Marks & Spencer, visit www.marks-and-spencer.co.uk

Mike Barry will be a speaker at Ethical Corporation’s Europe 2002 Conference on the subject of effective ethical supply chain management.

For more information on the conference Click here for information
on Ethical Corporation Europe 2002
. Or email Christian@ethicalcorp.com or call 0207 375 7153