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From Simon Webley, research director, Institute of Business Ethics
A recent survey by the Chartered Institute of Purchasing and Supply suggested that more than eight out of ten corporate boards are instructing their purchasing directors to concentrate on price rather than ethics. If this is anywhere near the truth, then there are surely going to be high profile reputational problems ahead.
While purchasing officers have always been provided with guidance on the business aspects of their job, only recently have the issues about the conduct and reputation of those from whom goods and services are sourced been on the corporate board agenda.
These supply chain issues have come into the public consciousness following well-publicised exposures by campaigning groups and the media about working conditions of employees in factories where (mainly retailers) source their supplies.
It is a new experience for management to be held responsible not just for their own operations, but also for those outside their control, namely their suppliers. There is clearly an enhanced reputation risk to the company if it is found that any supplier – and there can be as many as ten in one chain – is employing children, forced labour, providing low levels of health and safety on its premises or is paying below the local minimum wage.
To meet these problems, some companies are appointing standards officers to monitor the policy and be responsible for its application among suppliers. Some are independently verifying their policy to allay public apprehension.
Ethical trading, as it is known, is becoming well established – the UK government backed Ethical Trading Initiative is an expression of this.
But however effective these policies and codes may be, they will not work unless they are operating in the context of an overall policy that addresses corporate values and standards throughout the business (at home and overseas).
It does not matter how good the fire precautions or washroom facilities are in the overseas factories of the company from whom you are buying, if payment is not made to them according to the terms agreed – especially with regards to paying on time.
Put another way, an ethics policy that is not based on core values can produce severe inconsistencies of behaviour and thus threaten reputation It follows that an ethical purchasing policy must be part of the overall ethics programme.
Developing a consistent and effective code of business ethics is not a simple matter. It requires wholehearted commitment at the highest level as well a consistency of approach throughout the organisation. If business values, as opposed to ethical values, are all that matter to an organisation, then it is unlikely that business will be sustainable in the long run.
Simon Webley
A recent survey by the Chartered Institute of Purchasing and Supply suggested that more than eight out of ten corporate boards are instructing their purchasing directors to concentrate on price rather than ethics. If this is anywhere near the truth, then there are surely going to be high profile reputational problems ahead.
While purchasing officers have always been provided with guidance on the business aspects of their job, only recently have the issues about the conduct and reputation of those from whom goods and services are sourced been on the corporate board agenda.
These supply chain issues have come into the public consciousness following well-publicised exposures by campaigning groups and the media about working conditions of employees in factories where (mainly retailers) source their supplies.
It is a new experience for management to be held responsible not just for their own operations, but also for those outside their control, namely their suppliers. There is clearly an enhanced reputation risk to the company if it is found that any supplier – and there can be as many as ten in one chain – is employing children, forced labour, providing low levels of health and safety on its premises or is paying below the local minimum wage.
To meet these problems, some companies are appointing standards officers to monitor the policy and be responsible for its application among suppliers. Some are independently verifying their policy to allay public apprehension.
Ethical trading, as it is known, is becoming well established – the UK government backed Ethical Trading Initiative is an expression of this.
But however effective these policies and codes may be, they will not work unless they are operating in the context of an overall policy that addresses corporate values and standards throughout the business (at home and overseas).
It does not matter how good the fire precautions or washroom facilities are in the overseas factories of the company from whom you are buying, if payment is not made to them according to the terms agreed – especially with regards to paying on time.
Put another way, an ethics policy that is not based on core values can produce severe inconsistencies of behaviour and thus threaten reputation It follows that an ethical purchasing policy must be part of the overall ethics programme.
Developing a consistent and effective code of business ethics is not a simple matter. It requires wholehearted commitment at the highest level as well a consistency of approach throughout the organisation. If business values, as opposed to ethical values, are all that matter to an organisation, then it is unlikely that business will be sustainable in the long run.
Simon Webley
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