Presentation used for teaching students at Kings College London and Birkbeck, University of London (BSc. and MSc respectively) on the case for supplier engagement, the issues, and how some companies are tackling the issue. Case studies from Waitrose, Coca-Cola Enterprises, and others

1. Working with Suppliers on
Responsible Business Issues
February 12th 2015
Lecturer: Tobias Webb
Tobiaswebb.blogspot.com

2. Why bother?
• For a lot of sectors, that’s where the ethical and
environmental liabilities and impacts are.
• So much is outsourced to contract manufacturers
and providers today, many brands are just
brands, doing R&D, contracts marketing and sales
(some outsourced by franchise).
• Suppliers are usually poorer, lower margin and
often based in emerging markets or have fewer
resources they can apply to sustainability /
ethical management issues.
• Suppliers are vulnerable to being squeezed.

3. So what’s the business case?
• Factories with better
management have fewer
ethical breaches = less bad
headlines
• Fields with better
management are more
productive: More units…
• Reputation with NGOs and
Media stakeholders improves
• Supply security and resilience
• Financial efficiency which can
be shared
• Innovation and new ideas to
improve process, products and
even services
• Employees stick around!
(China)
Dole Foods uses SA8000 to improve productivity

4. Why help suppliers improve?
• Companies under
pressure on supply
chain ethics
• Audits only have limited
value to improve
• Supplier engagement
now has much stronger
business case due to
evidence

5. What do we mean by ‘improve’?
• Obliquity: Achieving
goals by alternate
means. For example:
• To stop factory fires,
teach managers how to
run a better factory
• Brands using “lean” to
achieve ethical gains:
Better management =
less accidents
Innovative factory engagement training

6. What’s the state of play then?
• Lots of basic engagement in audits: 1000+ companies
members of Business Social Compliance Initiative
• Many audits are open to corruption and fraud
• Most doubt they do much good when genuine: Likely help
stop the worst abuses at best
• Less depth than there should be in helping suppliers
improve their operational efficiency and business models,
access to finance
• Mainly it’s the biggest companies / brands who are doing
the most, often due to basic reputation concerns and
health/safety compliance rather than real innovation
• Good list of more progressive firms found at ETI website.

7. So why is this?
• Old, profitable models die hard
• Companies are under-resourced in engaging
suppliers – and don’t spend the money they
could on supplier engagement beyond audits
• Procurement teams are ‘old school’ focused and
incentivised on the best deal around
• The business model of some companies can be
anti-sustainability, based on playing suppliers off
each other and shopping around every five
minutes

8. So who is doing interesting work?
Coca-Cola Enterprises * Marks and Spencer * Unilever * Nestle
Ethical brands of course: Patagonia / Interface * Mars * New Look *
Nike – let’s take a look here – panel here and campaigners here and company
here
* Puma / Kering * Dow / DuPont * IKEA * SAB Miller * Wimar * Golden Agri
Resources * Sime Darby * New Britain Palm Oil etc
Many many others, too many to name here!
Apple is a good example of recent challenges and some solutions.
Here’s an example from Intel: Conflict free supply chains.

9. Ikea’s recent achievements
• Asian Fabrics, a textiles supplier in India,
achieved 100 per cent energy
independence after installing a 1.5 MW
PV array and four turbines that generate
20 MW wind energy.
• Jansons, textiles supplier based in
Erode, Southern India, inspired by Ikea’s
People and Planet Positive strategy
implemented 15+ measures. These
include ystem to recycle wastewater for
printing, new dyeing process which
uses less water, and saves energy.
Janson’s have been able to save over
285 MWh of energy and 69 million
litres of water through this initiative.

10. Ikea’s recent achievements
• Ikea in India associated with WWF
and other partners to support over
100,000 cotton farmers in India.
They are helped with skill
development, seed selection,
harvesting, water management, less
use of chemicals & pesticides and
marketing.
• In India, Ikea currently has 48
suppliers with about 45,000 direct
employees and about 400,000
people in the extended supply chain.
• Read more about it here

11. Golden Agri Resources
• Huge global Palm Oil
company, controversial:
Indonesia operations
• Campaigned against by
NGOs, Greenpeace etc
• Struck deal with pressure
from Nestle, Unilever,
with NGOs
• Committed to zero
deforestation footprint &
RSPO membership by
2015. Won back
customers.
• Share price rose as a
result
“No deforestation” commitment:
Now extended to pulp & paper
Sister company APP in Feb 2013

12. Coca-Cola Enterprises
• EU bottling/distribution
arm of Coke. Leading on
sustainability in Coke
world-wide
• Engages suppliers, holds
annual awards,
encourages eco-
innovation, offer support
• Shares results and best
practice
• Reducing supply chain
impact year after year:
Cutting carbon, emissions
and costs

13. Waitrose, UK supermarket
• Assisted vegetable
supplier Barfoots
• Reduced waste by 30,000
tonnes, Removed 3000
tractor journeys from
local roads to move waste
• Anaerobic digestion plant
offsets 3200 tonnes of
carbon per annum
• Ultra violet light
technology eliminated
the use of water during
sweetcorn cleaning

14. PepsiCo cuts carbon & water
• PepsiCo: Helping farmers
with direct rice seeding in
India cuts water by 30% and
carbon by 70%
• Engaging farmers in EU to
reduce carbon footprint
• Helped potato farmers
measure water and climate
footprints
• Encourage “more crop per
drop” attitude
• Stakeholder engagement
roundtable and some
results here
Direct rice seeding saves resources

15. Conclusions
• The business case is
evolving slowly
• Most companies see
suppliers as a cost, not
an opportunity
• Only a few understand
that engagement is
better than audits
• Audits cheap:
Engagement less
Audits have limited value

16. Conclusions
• Pilot projects/case
studies have delivered
excellent results
• Scaling these and
sharing knowledge is a
major brand challenge
• Technology seen as
major solution: Better,
smarter systems
• Innovation also coming
from emerging markets:
India, Turkey
Tesco: Funding supplier technical training

17. Conclusions: How do brands help?
• Access to technical
knowledge
• Best practice sharing
• Financing/loans
• Contract surety / Longer
term contracts
• NGO partnership brokering
• Change the way they
source: Fewer changes to
orders at the last minute,
for example PepsiCo’s Icrop technology helps farmers
Check out Zimele – Anglo American initiative on SME development

18. APP progress report and slideshow
Rainforest Alliance audit
2014
Forest protection issues
for APP
Plantation
Forest