Responsible sourcing unearths unseen benefits

By Jon Woodhead, Head of UK Sustainability, DNV GL – Business Assurance

As expectations grow on companies to take responsibility for sustainability-related issues beyond that of their immediate operations, responsible sourcing has become a prominent issue across many industry sectors. It’s a significant challenge, particularly where there are vast and complex supply chains producing products that are very much in the front of mind for consumers and therefore subject to increased scrutiny. Last year’s horsemeat scandal goes only to show how quick and extensive a problem can become.

There is no one single definition for responsible sourcing, but essentially it comes down to one fundamental aim: satisfaction that the products you source and the suppliers you use, meet or exceed your sustainability expectations. To do this, you need visibility and a collaborative approach.

M&S, for example, believes that 80% of its impacts are within its global supply chain. Part of Plan A includes a £50m fund to help suppliers find new ways of working.
How you ensure visibility and ultimately manage your supply chain impacts, from environmental impacts to quality and safety, is critical. It’s no longer acceptable to only manage and report the impacts within a company’s immediate operational boundaries.

Managing supply chain responsibility is often talked about as a requirement to monitor performance. This is only part of the picture. A successful approach goes one step further, identifying areas where improvements can be made and building capacity through supporting suppliers.

Whilst we see a wide variance in performance, through our research in the Tomorrows Value Rating, our team has observed that, in the food and beverage sector, almost all rated companies have some degree of management system in place, whether a policy statement, framework agreement or supplier code of conduct. The few companies that go beyond minimal compliance describe systems of independent audit and certification, and report on the results.

A number of good examples stand out; Unilever’s Cool Farm tool helps farmers calculate and reduce their carbon emissions. In the interests of promoting best practice across the agricultural sector, Unilever has made the tool available to other companies free of charge. Twenty companies are now using it. Coca-Cola is developing a human rights metric to add to its supplier performance scorecard.

Barriers in addressing responsible sourcing naturally increase with supply chain complexity. Smaller companies often face a lack of resources which, in turn, affects the companies they supply, who can’t meet their sustainability commitments without the support of their suppliers. Take water footprinting: when you are a small-scale producer, supplying a large global corporate, this could be a task outside the skills and resources that you have available. DNV GL has been working with UNIDO to address this, creating an easy-to-use water footprint tool that is accessible to SMEs, reducing the burden on them to comply with their customers’ requests.

Responsible sourcing makes business sense. It promotes closer collaboration with suppliers, unearthing benefits you may not have previously been able to identify, and spotting opportunities to collaborate with suppliers. Importantly, it almost certainly offers huge scope for improving your overall sustainability performance too.