Dave Stangis and Katherine Valvoda Smith on how CSR professionals can drive business value for their companies
A central theme of our book “21th Century Corporate Citizenship” is embedding your corporate citizenship work into your company’s existing objectives. Once you know the risks and opportunities present in your supply chain, and have an understanding of the relevant codes of conduct, you need to work out a way to integrate this knowledge into your corporate citizenship strategy.
The process is similar to what you did with your stakeholders; your projects need to have supply chain requirements imprinted upon them. This will help your company develop more resilient systems to manage the risks inherent in your supply chain, and allow you to take advantage of inherent opportunities as well.
One of these systems should be monitoring resources, or a list of the key topics and issues you want to keep abreast of. Once you know what your company’s procurement “hot buttons” are, you can start to tune into them. Set up Google alerts for the relevant keywords; do a daily sweep of your monitoring sites; join a membership organization or two which will keep you in the know; talk to your peers at other companies for support and guidance.
These are all ways to keep up to date, but given you now know what codes of conduct your company needs to follow, how are you going to actually manage the process to ensure it adheres to them?
You want to find the person you can tap on the shoulder and ask “Are you responsible for the behaviour and performance of our suppliers?” Of course, that person may not exist, so what processes will you use to ensure the codes are properly communicated inside your company and to your suppliers, and is this even your job as a corporate citizenship person? Maybe it’s the responsibility of the procurement team? Or does one sub-team focus on, for instance, environmental issues while another drives improvement around social standards in sourcing?
You also need to decide whether you will ask your suppliers to sign your company’s code of conduct and whether you should conduct regular inspections. If this is the case, would you do the visit, or would you send a third-party inspector?
Bear in mind that there’s a window of risk for whatever you do. So, for your high-risk suppliers, for instance, you might visit twice a year whereas for your middle-risk suppliers it would be every other year. Your low-risk suppliers could just sign an affirmation. These are just examples for how you can adjust oversight and management based on risk, tolerance, and resilience.
The most important part is not just how you manage codes of conduct but how you set expectations, how you communicate them, and how you decide on the process to manage risk. Who owns and is accountable for that?
You can’t do it all alone
You can now see how important it is to build a risk map for your supply chain, so you can then decide how you might manage it. Remember, there can be tremendous value in teaming up with other companies in your sector so you can reduce this risk together. Conflict minerals is a great example. Many technology companies have come together as members of the Electronics Industry Citizenship Coalition to address this issue in their supplier code of conduct in order to reduce dangers in this part of their supply chain.
Oftentimes, you can’t do it alone. An interesting aspect of being a corporate citizenship practitioner is you get to work inside your company to do all these things: build internal teams, raise awareness of the risks, and create and maintain high expectations; it is an influential position.
Suppliers that bid for your corporation’s business will come to know your standards, especially when those same standards are integrated into contracts with you. Most companies are not very advanced in this area yet; so you get to be a pioneer. Only the biggest and best have it figured out (and even they struggle to keep on top of all the issues). You’re driving business value for your entire company by helping it deal with these questions.
From reactive to proactive
When you first start to examine your supply chain, everything’s going to look like risk; and, people being what we are, we’re more afraid of risk than we are motivated toward reward. So you’re bound to feel like your work with procurement is daunting, and that can lead to being in permanent react mode. You should try to avoid this. Your main opportunity is to move from being reactive to proactive, to help your company anticipate and prepare, and to find areas in which your company can differentiate itself from its competitors in a positive way. What do you want to be known for, not having anything “bad” going on, or for actually driving the agenda for change?
You can see this particularly well in companies that source a single core ingredient such as cocoa, paper, or coffee. Because they rely so heavily on one kind of material, many of them have stepped up to help farmers create a more sustainable process for growing that also works economically for their customers, for example using Fairtrade or responsibly sourced ingredients.
That’s the way you move away from being reactive or defensive – “We’re on TV for __” (fill in the blank here with any negative event that worries you) – to becoming positively proactive and talking about the improvements you’ve made. One method of doing this is to score your suppliers for their performance and even to build a recognition programme for your highest-performing suppliers, which can motivate all to aspire to be the best.
This is an edited extract from 21th Century Corporate Citizenship: A Practical Guide to Delivering Value to Society and Your Business, by Dave Stangis and Katherine Valvoda Smith.Ethical Corporation readers benefit from a 30% discount when purchasing this book. Quote 'TCCC30' on the following page: http://books.emeraldinsight.com/offer