HOW TO ATTAIN CORP SOCIAL RESPONSIBILITY
AND SUSTAINABILITY IN
YOUR SUPPLY CHAIN
By Sanjay Desai, Director Supply Chain Management of Asia Pacific, Huntsman
Corporate social responsibility (CSR) is a framework of measurable organisation policies, procedures and resulting behaviour designed to benefit the workplace and, by extension, the individual, the organisation and society.
CSR allows businesses to respond quickly to the emerging needs of society, whether they are economic, environmental, or social problems. The government is a secondary beneficiary, as a successful CSR reduces the government’s burden to respond to a wide range of issues. In addition, companies that engage in CSR have a chance to establish a positive image for themselves in the eyes of society, which helps advertise their products. Yet, in spite of all the benefits that CSR might bring, it demands coordinated actions from all stakeholders and non-governmental organisations in order to achieve sustainable results.
The Tipping Point: In the business world, fiscal imperatives often prevail over values— even the values of social responsibility and ethical behaviour—as corporations strive to mitigate costs and reduce uncertainty. Nowhere is that drive for certainty and cost containment more compelling than in the corporate supply chain. The global marketplace demands that supply chains be nimble and diffuse. Their broad distribution has elevated their significance beyond the functionality of manufacturing and transport, and they are transformative in the way they remake a corporation and the effect they have on local economies. An efficient supply chain is responsive to changing priorities by keeping costs in line, schedules on time and, more importantly, giving companies the room to scale for growth. The revolution in the supply chain demands citizenship that is even more robust, capable of encompassing both the parent company and its many contractors, even if they are on distant shores.
Steps companies should take to attain sustainability in their supply chain:
Assess and reduce your risks: Do you know what is lurking in your value chain? Are there substandard environmental practices being carried out within a small division in a far-flung location, or elsewhere in the supply chain that could do real harm to the environment and to your company’s reputation?
Include sustainability as strategic initiative in your business strategy: Sustainability is a strategic issue and should be given top management commitment, with responsibility for sustainability being assigned to management at board level. Sustainability is integrated in the corporate policy and strategy in the form of guiding principles and visions. Based on a top-down approach, sustainability is rooted in the value chain strategy and sustainability goals are defined in concrete value chain KPI goals.
CSR and sustainability is an opportunity to invest in R&D and get all stakeholders involved in it organisation-wide: Depending on your industry’s structure, you may need to push for R&D activities with regards to sustainability. One reason may be a business’s high dependency on natural resources; this applies in particular to LSPs.
Be aware of uncertainties regarding sustainability Issues in your value chain: Research shows that best practice companies recognise trends in their business environment earlier than their competitors, and are better able to assess their possible impact.
Link social and ecologicial goals with financial figures: True sustainability must give equal weight to the economic dimension. Sustainable value chain practices must be financed and provide payback within a reasonable time span.
Calculate and quantify the benefits of sustainability in your value chain: Calculate the sustainability benefits of value chain practices and develop ways to get credit for them. This includes everything from specific actions taken (e.g., efforts to reduce carbon footprint and partnering with more responsible suppliers) to deciding what to track and how and where you report and communicate performance.
Build a close loop supply chain which is not limited to just enterprise: Organisations must strive to build a close loop supply chain which is not limited to just enterprise but extended to external suppliers and partners.
An example of close loop supply chain which embedded CSR in their model is Xerox. In 1990, Xerox implemented a “machine take back programme”.
With this initiative, Xerox estimated an increase of “several hundred Mil $” saving potential and organisational esteem in the marketplace. This innovative model raised the efficiency bar in the marketplace and also created an image for Xerox as an organisation that embraces CSR and sustainability.
Framework for implementing CSR in your supply chain
A well-designed CSR implementation framework integrates board of directors to front-line officials and supply chain partners and is therefore intimately connected with effective corporate governance. A well-governed firm can reap optimal benefits for itself and its shareholders, and in turn for those who are affected by the firm’s activities. At all levels of a firm, inadequate direction and control of its activities and assets can jeopardise its very ability to operate. There is no “one-size-fits-all” method in pursuing CSR approach. That said, there is considerable value in proceeding with CSR implementation in a systematic way, which is in harmony with the firm’s mission.