Companies trying to address ethical issues in their supply chains have been warned it may take up to 15 years to reach a consensus on how to carry out efficient monitoring
A new study on behalf of the Institute of Business Ethics claims those who have pioneered ethical supply chain monitoring over the past five years are adopting a wide variety of methods and will continue to do so for some time.
‘Although best practice options are beginning to emerge, many believe it will take 10-15 years to reach a consensus on the best approach,’ says the report, which was written by researchers from Impactt consultancy.
The study says that although many companies have produced codes of conduct for their supply chains, there is no general agreement on how best to implement the codes. Some companies ask suppliers to sign a declaration that they will comply with the code, while others – mainly the leaders in the field – choose to work jointly with their suppliers to address problems.
Companies also have ‘widely diverging’ policies on when they should stop buying from a supplier or demand instant corrective action, although most have ‘zero tolerance’ towards child labour.
Further differences have emerged on how to establish whether suppliers are complying with the customer company’s code. Some companies are using in-house staff to do this, while others prefer to involve outside bodies such as non-governmental organizations. Furthermore, there is little agreement as to who should verify the whole process.
General approaches also vary widely: some companies treat each project as distinct while others categorise by country.
The report, Where did that come from? A study of ethical issues in the supply chain, notes that a number of supply chain initiatives, such as the Ethical Trading Initiative, are now building cross-sector partnerships between groups of companies, NGOs and trade unions.
It says these ‘represent a step forward from adversarial campaigning [by NGOs] towards constructive engagement’ and will help build a consensus on what constitutes best practice.
The report’s joint author, Rosey Hurst, said companies were still ‘very far’ from a consensus on how to determine what is a living wage for employees in different countries. However, it was inevitable that a consensus would emerge as more companies began monitoring their supply chains, and clear standards would develop in time.
‘There’s no harm at all in starting with the easy bits,’ she stressed.