Good supply chain management isn’t just about profits

Business Green

Published 10th August 2015

In this article for Business Green (requires subscription), Molly argues that businesses must look at their entire supply chain when considering their business ethics and sustainability. 

Full article

In business there is a lot of talk about supply chains, but this often boils down to an attempt to pressure suppliers to reduce prices and increase margins.

From a political point of view, however, paying attention to supply chain opens up the opportunity to share high standards of social and environmental protection beyond the initial market and sometimes on a global basis.

Take, for example, a report on conflict minerals passed by the European Parliament in May. The issue of conflict diamonds hit the headlines when supermodel Naomi Campbell was forced to admit she had been given diamonds mined in a conflict zone by former Liberian President Charles Taylor during his trial for war crimes. This was the more glamorous end of an international trade in valuable commodities that fund warfare in some of the world’s most troubled regions, particularly Africa.

Before my Green colleague Judith Sargentini raised the issue in the European Parliament, few of us were aware of the fact that our mobile phones contain rare earth metals mined in these very same conflict zones. In May, the Parliament voted for binding transparency rules which would apply to firms throughout the supply chain, putting the ball firmly in the Commission’s court in terms of the need for urgent legislation in this area.

Following the vote Sargentini said the new binding transparency rules would be “crucial” for keeping conflict minerals out of Europe.

“The European Parliament has […] set out its stall by voting for binding transparency rules for all companies and we will now work to convince EU governments to ensure this is reflected in the final legislation,” she said. “We need to ensure these rules go as far as possible to prevent conflict minerals from entering the EU market in goods and everyday products.”

Closer to home I was delighted to discover how an ethical cosmetics firm in the region I represent – Neal’s Yard Remedies, which manufactures its products in Peacemarsh, Dorset – are voluntarily monitoring their supply chain and using the economic potential to support producers in Kenya.

Susan Curtis, Neal’s Yard Remedies’ director of natural health, discovered that the Samburu women who gathered the frankincense for their face creams had no access to fresh water during their time spent in the bush, so they funded a solar-powered well to provide clean drinking-water.

To guarantee the ethical standard of their supply chain, Neal’s Yard Remedies has sought and won accreditation from Fair Wild Foundation which campaigns to ensure the highest standards for wild ingredients. To support the communities who provide their raw materials the company pays a 10 per cent premium on the market price, with the additional payment paying for school fees. For this they received the innovation award in the supply chain category of the Guardian Sustainable Business Awards earlier in the year.

As consumers we are trained to focus solely on price and to seek out a bargain. Thinking a little wider means considering the supply chain and asking ourselves what price was being paid elsewhere to ensure the very low price on the product on the shelf.

Consumption is a key part of our identity and, since few of us would wish to be identified with exploitation or the prosecution of war, some consideration of the supply chain lying behind the goods we buy could help us to feel better about our purchasing habits as well as allowing us to support the desire of those across the world for a safer, healthier and more prosperous future.