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April 21, 2008 In Ethical Supply Chain Management

Associations Attempt to Address Suppliers’ “Audit Fatigue”

When social compliance standards vary from organisation to organisation, many suppliers can experience what is known as “audit fatigue”.  As the expression suggests, it is common for suppliers to have several social compliance audits a year.  Furthermore, different auditing standards may require different corrective action plans (CAPs).  As a result, factory owners spend time and money endeavouring to meet all manner of standards, which can sap production resources and drive up costs.

A recent article in the Vancouver Sun on VANOC’s Buy Smart program illustrates the issue of audit fatigue and how it can impact the flow of business.  The article cites that one licensee factory refused to be audited as it had already endured five time-consuming audits previously and could not afford any further interruptions.  Obviously this factory does not meet VANOC’s minimum standards but it may in fact be compliant with The Code.

Two issues emerge as a result of this scenario.  One, it speaks to the lack of consistent social compliance auditing standards.  Two, it demonstrates that auditing can be duplicative, and therefore inefficient.  It is not uncommon for three or four competitive brands to have their products made in the same location and thus, having three or four individual audits seems unnecessary and wasteful.

Creating consistent auditing standards is not a new issue and so initiatives exist, already.  As an example, the Sweat Free Consortium hopes to bring both municipal and State governments in the U.S. under the same set of standards.  Groups such as the Ethical Trading Initiative (ETI) or the Fair Labour Association (FLA) also advocate for consistency in Code of Conduct standards.  This issue will certainly receive more attention as more organisations incorporate social compliance programs and we’ll likely be writing about it more so stay tuned!

For the latter issue of duplicating efforts, companies such as Fair Factories Clearing House (FFC) and the Supplier Ethical Data Exchange (SEDEX) provide opportunities for companies to eliminate these inefficiencies through sharing information.  Using custom web-based platforms, member firms are able to share information about workplace conditions in manufacturing facilities around the world on an optional basis.  FFC and SEDEX differ from ETI and FLA in that they don’t endorse one Code nor do they assign pass or failing grade to factories.  These systems simply allow aggregate audit information to be shared.  The aggregation of data addresses those issues related to antitrust or risks to a supplier’s competitive advantage.

If social compliance auditing is becoming a big part of your operation, using systems such as the FFC or SEDEX may not only allow you to store and organise your audits on a secure database, but it also could bring cost savings and increased efficiency to your program.

Here is a recent press release from FFC announcing Levi Strauss & Co., Nike Inc., Nordstrom, and Abercrombie & Fitch as its first “sharing members” for its new platform that was launched April 2, 2008.

http://www.fairfactories.org/press/Sharing%20Platform%20I%20launch%20press%20release.doc

Article in Vancouver Sun can be accessed at:

http://www.canada.com/vancouversun/news/story.html?id=b325f36b-97aa-4aec-8fea-3477d8a32cb9&k=68387

March 6, 2008 In Ethical Purchasing, Olympics

Stakeholders Key to Ethical Purchasing Policy for Global Games

The recent negative publicity around Beijing 2008’s licensed merchandise is evidence that issues of Ethical and Sustainable Purchasing is on the rise as a key strategic issue in the Olympic movement.  Organising and bid committees are waking up to this reality and, as a result, are making strong commitments to ethical and sustainable purchasing. 

 Setting goals related to sustainability is an increasing norm among Organising and Bid Committees.  Procurement is seen as a leverage point through which such goals can be realized, and damaging PR issues can be avoided.  The wider Olympic family, such as Olympic sponsors as well as both the International and National Olympic Committees, are also seeing the importance of sustainable procurement to their strategy and PR programs.   

Vancouver 2010’s has made and continues to make considerable efforts through setting a new benchmark in ethical and sustainable purchasing within the Olympic movement.  London 2012 is monitoring these initiatives and also intending to meet its sustainability goals, in part, through procurement.  A recent article in the Financial Times cites Mayor Ken Livingstone as committing to hold its Olympic suppliers to ethical criteria.  The Tokyo 2016 Bid Committee has also included a commitment to sustainable procurement in its bid. 

Another positive trend that is emerging is organising committees and their stakeholders are taking a collaborative approach to these initiatives.  This is evidenced through the increased dialogue between NGO stakeholders and the various committees.   VANOC has engaged its stakeholders throughout the development of its Buy Smart program.  London is continually engaged with its stakeholders on everything from developing its sustainability plan to venue construction to procurement.  

The Olympic movement is moving into new territory as it strives to align with the greater community’s expectations around and commitment to sustainability and ethical and sustainable procurement will serve to raise the level of play.  Furthermore, those efforts that are based on collaborative approaches and stakeholder engagement will only ensure greater success.  

For more information on VANOC’s sustainability initiatives, please go to: http://www.vancouver2010.com/en/Sustainability 

For more information on London 2012, please go to: http://www.london2012.com/plans/sustainability/index.php 

The recent article in the Financial Times can be found at: http://www.ft.com/cms/s/0/bb32aa56-d82d-11dc-98f7-0000779fd2ac.html

February 6, 2008 In Ethical Purchasing, Sustainable Products

Do You Really Know What You Are Buying? The Perils of GreenWashing…

Although many organisations recognize ethical and sustainable purchasing as a key strategic issue, barriers to action still exist.  One example is a lack of awareness or understanding what constitutes an ethically or environmentally preferable product or ‘green’ product.  Many products can claim to be “all natural”, “environmentally friendly” or even “fair trade”, but without certification to back these claims, it is difficult to know what, exactly, you are buying.  A recent report from Terra Choice Marketing, “The Six Sins of Greenwashing” highlight six specific, and not so uncommon practices, of companies providing misleading product information: 

1)       The Sin of the Hidden Trade-off

This sin is characterised by using one environmental attribute to suggest that a product is “green”.  The report cites that often claims are made based on a narrow set of green criteria and do not necessarily take into account a complete environmental analysis that looks at a product’s full lifecycle.   A case in point is a recent article (see below) from Queens Journal on a “carbon-positive” wine company.  Plantatree wine promises to plant a conifer sapling for every bottle sold in an attempt to offset the CO2 emitted from an average Canadian.  While a laudable initiative, the article points out that it may be more beneficial to offset the emissions caused from the production process for making the wine itself.   

2)       The Sin of No Proof

Pretty self-explanatory, ‘the sin of no proof’ occurs when product make unsubstantiated claims about their green attributes.  Products sometimes make claims to be energy-efficient or not tested on animals, to name a few examples, but provide no backup information or certification as proof. 

3)       Sin of Irrelevance

Products will sometimes promote themselves as being distinctively green when in reality, they are acting in compliance with local laws and regulations.  Terra Choice uses “CFCs” as an example.  These substances have been legally banned for 30 years, therefore all products are CFC-free.  Those touting themselves as such are misleading the public into believing they are in some way more progressive than they really are. 

4)       Sin of Vagueness

The sin of vagueness is characterized by claims that are ambiguous or meaningless.  One common example is products that print the Mobius loop (recycling symbol) without a qualifying statement that tells consumer exactly what, and how much, of the product is made from recycled content. 

5)       Sin of Lesser of Two Evils

Organic cigarettes or environmentally preferable herbicides are examples of products guilty of ‘the sin of lesser of two evils’.  Although such products may indeed offer favourable environmental attributes, the products, themselves, pose greater negative impact to the environment and human health. 

6)       Sin of Fibbing

Again, this is pretty self-explanatory.  Simply put, some products will lie outright about their environmental qualifications.  Although this is least common among the sins, it can occur. How do you avoid these sinful products?  The recommended approach is to first look for eco certifications standardized by bodies that issue guidelines for making environmental claims.  As an example, ISO 14024 sets guidelines or standards for third party Eco-labelling organizations to follow and ensures that environmental information is presented accurately.  Furthermore, the report suggests that consumers remain aware of the six sins and attempt to evaluate products accordingly. 

Although this report focused on greenwashing, the same may occur with ethical claims as well.  Therefore, look for fair trade certifications for added assurance these products meet the standards you expect.

Look for the Logo.  (Examples of product certifications)

Ecologo   Fair Trade Certified

More information on product certifications bodies:

www.ecologo.org

www.transfair.ca

For a copy of the TerraChoice report, please go to: http://www.terrachoice.com/Home/Greenwashing/The%20Six%20Sins 

Queen’s journal article on Green Wine: http://www.queensjournal.ca/story/2008-01-15/news/tapping-sustainable-wine/ 

For more information on ISO 14024, please go to: http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=23145