Supply chains must address climate change, child labour

Posted by Huan Nguyen

Less than a quarter of global businesses address climate change and child labour in their supply chains, an EIU study has found.

  • Four in five executives claim their companies have a responsible supply chain.
  • Yet 30% of firms have decreased their focus on supply chain responsibility over the past five years.
  • Only 27% of firms are willing to cooperate with non-competitor firms to raise supplier standards, and even fewer (23%) are willing to cooperate with competitors.

new report released by The Economist Intelligence Unit (EIU) finds that progress in raising ethical standards in global supply chains has stalled in many places. Although companies generally describe their supply chains as responsible and recognise a direct link with brand reputation, the research finds that few address issues such as climate change, child labour and gender equality.

The report, No more excuses: responsible supply chains in a globalised world, sponsored by Standard Chartered Bank, finds that issues for which it is relatively easy to demonstrate quantifiable short-term risks and benefits/opportunities (such as health and safety risks and waste reduction) receive more attention from firms than less tangible longer-term ones such as climate change. Issues that only affect a sub-set of people, such as child labour and gender equality, also appear to be side-lined.

More positively, four in five respondents said their companies address general problems in their supply chain ‘well’ or ‘very well’, and almost all respondents said their companies’ standards are compliant with or more stringent than those of governments (94%) or industry watchdogs (97%), respectively. This indicates a degree of complacency given that many key issues are still overlooked. The study concludes that a failure to acknowledge the risks and lack of understanding among companies of their own supply chains is not a positive result. Companies should think long-term and build a business case for more transparent, sustainable and socially-inclusive supply chains.

This report, together with Sourcing Transparency: Who should clean-up supply chains? — a mini-documentary produced by The EIU — launched at the CEO Agenda event in Johannesburg, South Africa as part of the Growth Crossings series. The event is available for viewing on live-streamand it brings together global executives to examine strategies that companies can use to succeed in an increasingly isolationist world, and identify emerging trends that will shape the future of industry.

With its global premiere at the CEO Agenda event, Sourcing transparency looks at how policy makers and companies are paving the way in creating more transparent and responsible supply chains.

In addition, Supply chains: a collective responsibility includes video interviews with such globally-renowned experts as professor Richard Locke, provost at Brown University, to understand how supply chain complexity has created a need for the private sector to better regulate itself.

Download No more excuses: responsible supply chains in a globalised world

Watch Sourcing transparency: Who should clean-up supply chains?

Watch Supply chains: a collective responsibility

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