United Kingdom [Change]

Managing your business - Business Strategy

• Introduction
• Latest News
• Managing your Business
• Environmental Management
• Quality Management
• Safety & Risk Management
• Legal Issues
• InTouch Sign Up
• InTouch Search

Q&A: supply chain morality

Dan Rees, director of the Ethical Trade Initiative, talks about the benefits of ethical trade

Q. Why should ethical trade be important to my organisation?

A. All buying companies have a responsibility for the workers in their supply chains and the situation of many of these people is dire. For example, 6,000 people die every day as a result of work-related accidents or illness and it’s well known that over one billion people in the world live on less than a dollar a day.

What’s horrifying about the global recession is that the poorest are suffering the most. Much of the progress that’s been made in ethical trade over the past decade is under threat. For example, real wages for workers are falling in many countries as the cost of staple foods such as rice and bread is rising. It’s more important than ever that companies take serious steps to protect the rights of the people who are making their products.

Q. What is ETI?

A. The Ethical Trade Initiative (ETI) is a unique alliance of companies, trade unions and voluntary organisations that work together to define how companies should implement their codes of labour practice in a credible way – and most importantly, in a way that has the maximum impact on workers.

By joining ETI, companies collaborate with some of the world’s leading players in ethical trade to find solutions to some of the toughest challenges it presents and to increase the effectiveness of their ethical trade strategies.

We now have more than 50 member companies, from fashion retailers and supermarkets to stone-sourcing companies and promotional goods suppliers. Corporate members collectively touch the lives of over six million workers worldwide.

Q. Ethical trade isn’t straightforward. What are the main barriers to ethical trade in supply chains?

A. One of the challenges companies face when they’re starting out in ethical trade is grappling with the sheer size and complexity of their supply chains. It’s really important that companies know who is making their products, who employs them and where they are located. But some of the largest companies have thousands of suppliers all over the world and it’s a huge amount of work to track where they are. Another challenge is how to obtain accurate information on workers’ conditions – audits can often fail to pick up some serious labour abuses.

Another challenge for companies is how to make sure that their buying practices – for example, the prices they pay their suppliers and the lead times they give them to complete orders – don’t constrain suppliers’ ability to comply with their code of conduct. When suppliers are squeezed on time and costs, this obviously has a knock-on effect on workers.

Trading ethically is not easy. But ETI corporate, trade union and non-governmental members have worked for more than ten years to find solutions to the many challenges involved. We now have a body of knowledge about how to get information on working conditions, how to get supplier buy-in and how to make sure that buying practices don’t constrain suppliers’ ability to provide decent conditions for their workers.

Q. What can I do to ensure ethical trade?

A. The first and most important step companies can take is to sign up to the principles of the ETI Base Code. They need to develop a credible system for assessing conditions in their supply chains and for closing off any corrective actions that are required.

What’s really important is how companies deal with their suppliers. They need to be robust and clear about what standards they expect, then help them to understand how they can meet them. They need to let suppliers know that while they don’t have to be perfect, they do have to be willing to listen and ready to try new things.

Q. Are there any economic benefits to ethical trade?

A. Many of our member companies tell us that there are business benefits to trading ethically. For example, some are consolidating their supply chains and developing closer relationships with fewer suppliers. This results not only in improved conditions for workers but also increased productivity, better quality products and more efficiency in the supply chain.

Companies that take ethical trade seriously can also help to manage risk to their reputation, and therefore the value of their brand, by demonstrating to others that they are trying to improve working practices and conditions among their suppliers and  reducing the likelihood of poor working conditions being discovered in their supply chains.

Dan Rees is director of the Ethical Trading Initiative

Published: 15 August 2010