Traceability in supply chains looks set to be increasingly mandated and there are some easy steps that can help corporate compliance
No company wants the image of their products ruined by malpractice in their supply chains. Yet that’s what continues to happen, time and again. In today’s age of hyper globalisation, the base materials that go into your iPhone or your T-shirt, say, can come from any corner of the globe.
In an attempt to pinpoint where those actual corners are, the United Nations Global Compact has teamed up with the US-based sustainability organisation BSR to produce a practitioner-focused guide to traceability. The 45-page document advocates a seven-step strategy that the authors hope will become a “standardised approach” to ensuring supply chain traceability.
“At present, only a very small percentage of commodities are traceable on sustainability attributes,” says Ursula Wynhoven, chief of governance and social sustainability at the UN Global Compact. The benefits of correcting that “cannot be overstated”, she adds, arguing that full traceability will guarantee “respect for people and the environment” throughout the world’s supply chains.
Reassuring consumers is another big benefit. BSR’s director of advisory service, Tara Norton, admits that most shoppers “will be surprised” to learn that companies “don’t know where the stuff we’re selling comes from”. Plummeting meat sales following the 2013 horsemeat scandal in the UK highlighted the damage that such knowledge gaps can bring.
The commodities question
So what is the solution? The answer is twofold, according to the Global Compact and BSR. First, focus on where the largest impacts lie. In global procurement terms, that means key commodities. The Guide to Traceability suggests a list of 10 to start with: beef, biofuel, cocoa, cotton, fish, leather, minerals/diamonds, palm oil, sugar and timber.
Norton admits others could have been added. Yet, as an initial “sample”, the chosen commodities share dual qualities: all have significant sustainability issues attached to them, and all are the subject of existing traceability efforts.
This second point leads nicely to the other main hope of Global Compact and BSR, namely that companies will get on board with the plethora of industry schemes already out there. “What we don’t want is a whole lot of different little initiatives focused on all of these commodities,” says Norton.
The message is clear: determine which commodities are material to your business and then “stick to what we’ve got”. With 25 existing schemes cited in the Guide, from catch-alls like the IDH Sustainable Trade Initiative to product-specific examples such as the Forest Stewardship Council, there’s no shortage to choose from.
For the approach to work, however, companies have to be willing to collaborate. Not only will they find themselves better equipped to navigate complex supply chains, but acting collectively promises cost savings, too, says Wynhoven. And there’s a “system dimension” to many supply-side sustainability issues, she adds. Addressing these goes “beyond the influence of any one company acting alone”.
Critics will question whether existing traceability schemes pack enough punch. Sure, they make sense when companies collaborate. But what about the laggards that don’t? “There needs to be mandated accountability and verification woven throughout the industry schemes,” argues Patricia Jurewicz, director of the non-profit Responsible Sourcing Network, which calls for regulations against buying unethically sourced materials.
Policymakers appear to be listening. Take the Dodd-Frank Act and Lacey Act in the US, for example. The two laws contain respective traceability requirements for companies trading in minerals from the Congo and in timber products.
Corporate buyers would do well to follow the new guide’s advice. Not only is traceability the right thing to do, but it looks set to become the mandatory thing to do as well.base materials supply chain malpractice supply chain reporting traceability
November 2014, London
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