Unchaining Value Sustainability through the value chain

Transcription

1 Address Telephone (0)20 Bedford Row London WC1R 4EB United Kingdom Fax +44 (0) sustainability.com Website www. sustainability.com Unchaining Value Sustainability through the value chain Fall workshop 1 Participants ICT Andreas Manhart (Oko-institut e.v) Antonio da Luz Veloso (Deutsche Telekom) Heinz-Gerd Peters (Deutsche Telekom AG) Leontien Plugge (Global Reporting Initiative) Markus Terho (Nokia) Michael Kuhndt (Wuppertal Institute) Food Anja Meinecke (PricewaterhouseCoopers) Annemieke Wijn (Rainforest Alliance) Carsten Schmitz-Hoffman (Common Code for the Coffee Community) Christof Walter (Unilever) Christoph Tamandl (CIAA Federation of Food & Drink Industries of the EU) Jeanne Bloch (Business for Social Responsibility) Kenza Le Mentec (UNEP) Nicolas Lorne (Nestlé) Paul Rowsome (Carrefour) Organisers Cornis Lugt (UNEP) Judy Kuszewski (SustainAbility) Alexander Nick (SustainAbility) Patrin Watanatada (SustainAbility)

2 November 2007 Page 2 2 ICT current challenges and potential solutions 1.) What are the major challenges in terms of sustainability through the value chain? 2.) What solutions are needed to achieve sustainability through the value chain? 3.) How are companies moving forward in the 3-stage model? What is needed? Major challenges include: Overall price pressure, Outsourcing and Offshoring Lack of good governance structures in developing countries Lack of education and capacity along the supply chain / OEM s lack of understanding local situations Missing incentives for suppliers to address sustainability Lack of access to best available technology Lack of care in audits Burden of documentation No-tax payer and controversial subsidies Huge amount of sustainability issues (difficult to prioritize and to address all of them) Missing trust and visibility engineering mindset within industry Short product cycles which are software driven Lack of cooperation between different business units Getting beyond 1 st tier supplier Missing interest from contract manufacturers Potential solutions include: Common Code of Conducts (EICC) Joined assessments (EICC and GeSI) Joined up reporting systems (E-TASC) Joined up purchasing practices (consistent approach) Common audits Sustainable design Joint / co-design for sustainability Join forces (companies, NGOs, international organizations) for product labelling Capability building / cooperate with local partners Local based monitoring programs On site joint problem fixing / advice Creating supplier awards for outstanding social and environmental performance The discussions in the group focused around the following issues: Getting beyond the first tier supplier: The contract manufacturers are still

3 November 2007 Page 3 perceived as a major burden in order to address sustainability along the supply chain. The underlying reasons are controversial signals from buyers (price, delivery time vs. sustainability aspects), vague business benefits, different cultural backgrounds and lack of education and awareness amongst others. Joint up innovation processes: What is the potential for joining up forces between suppliers and buyers to integrate sustainability aspects into new product development? Collaborative approaches are currently already explored by Nokia on design issues. Product labeling: A good way forward could be to introduce a product labeling scheme. Product data would then include information on production conditions. It would need to be an independent certification body that allows the end user to understand what social and environmental standards are met in a specific electronic product. Such an initiative needs the involvement of a variety of stakeholders from academia, NGOs, corporations and UN bodies. So far, no criteria or methods have been defined for any reliable system of certification. Role of audits: Audits are perceived controversial as this kind of control is easy to circumvent. Moreover, it created an own auditing industry. NGO engagement in audits is perceived useful to a limited extent as NGOs shall still be able to carry out their primary objectives. 3 ICT good practices / examples 1.) What are good practices that should be highlighted? 2.) What makes them successful and what are their challenges? 3.) What role should multi-stakeholder initiatives play? The group decided that it makes sense to look at concrete examples of good practices in the ICT supply chain. Therefore the term good practice should be preferred to the term best practice. To classify an example as good practice, the initiative needs to be implemented strategically in the company and lead to a change of change in management processes. The following examples could be identified. This list is not comprehensive and further information about the initiatives need to be researched. Company Deutsche Telekom Description Integrated sustainable procurement strategy into DT Global Procurement Policies and Practices Rated best-practice by SAM in category standards for Supplier Introduction of e-tasc and adoption of GeSI-SAQ Set up of stakeholder engagement process

4 November 2007 Page 4 HP Nokia Toshiba Fujitsu Siemens Telefónica One of the first companies that set up a CoC; lead development of EICC Focus on capability training with own auditors FISI-project (Focused improvement Supplier Initiative): Capability-building programme in China for 30 key suppliers) CSR-project (Central European Supplier Responsibility): Joint HP and Copenhagen Center projec to equip SMEs with management tools Co-creation with suppliers Yearly supplier day Development of Nokia Substance List (list of all substances Nokia has banned), web-based platform for suppliers, including information on materials content moderate extent of outsourcing SA 8000 certification Level of transparency Open corporate culture, easy access to senior managers re csr issues Provide capacity building trainings 4 Food current challenges and potential solutions We discussed several key challenges which fell under three topics: (1) investment & marketing, (2) standards and metrics, (3) knowledge sharing. Participants agreed that there is a great deal of capacity out there but it needs to be unlocked. 4.1 Investing and marketing when return is difficult to measure Difficult to allocate risk & return of investments: How are costs of sustainability initiatives borne in a way that does not pass more of the cost to the consumer or grower than they are able or willing to bear? This includes both initial investments (e.g. traceability systems, certification especially difficult when there is no brand at the end) and recurring expenses (e.g. verification). o Potential solution: For the high cost of traceability Empower existing structures (e.g. cooperatives) to stimulate internal monitoring and enhance traceability. Ideally the entire commodity would be sustainable (e.g. palm oil) so

5 November 2007 Page 5 o that nothing would need to be traced. Potential solution: Public sector funding where appropriate e.g. funding the cost of verification for smallholders, or initiatives that contribute to the community infrastructure. Difficult to communicate and market sustainability initiatives to the consumer: What is the best way to communicate what companies are doing to the consumer (if at all)? How do we market when there are cost implications? o Potential solution: For greatest impact, make small changes in mass market products, rather than niche products. o Potential solution: Influence product design in order to embed sustainability into the product right from the start without increasing price. o Potential solution: Find new methods of creating value for all actors that don't require add'l premium paid by the consumer 4.2 Developing and using standards and metrics Difficult to develop the right metric: How does a company develop practical, meaningful metrics around human capital development in their suppliers, as agriculture moves from an input-intensive model towards a knowledge-intensive model? Difficult to find the right balance between enabling and enforcing supplier standards: Enabling, or working with suppliers to make progress towards standards, is important to build capacity. On the other hand, soft standards can be less credible to both the supplier and the consumer. Difficult for retail buyers to make purchasing decisions: Food retail buyers are the ones with real influence, but it can be hard to reach them. They are under a lot of internal pressure to deliver high quality at low cost, quickly. o Potential solution: Clear, accessible, user-friendly standards are critical for a buyer to be able to make his or her purchasing decisions as quickly and intelligently as possible. Use of existing buyer networks to disseminate information. 4.3 Knowledge-sharing throughout the value chain Between commodity initiatives. Frustrating to wait every time a new commodity initiative is launched for learnings to roll down, since the producers are different each time. o Potential solution: Need to highlight best practices and share between commodity initiatives in order not to replicate past mistakes, and speed things up by activating existing mechanisms/networks (agriculture boards, extensions, farmer field schools) Reaching small producers / SMEs. o Potential solution: Leverage the appropriate network (country federations? Unions (which connect the field and the company)? Co-ops? NGOs?).

6 November 2007 Page 6 Among competitors. Need help figuring out what is pre-competitive space in order to allow collaboration without fear of giving away info to competitors. o Potential solution: A role for UNEP (or similar) here. Between sectors. Some of the similar challenges are striking and learnings could be shared, but there is no current way to do this. There is, in general, a need for mechanisms that quickly identify suitable approaches for companies (e.g. the buyer, the product designer). 5 Food comments on report Commodity-specific industry-wide initiatives are more visible and tend to be for more anonymous commodities, whereas single product / company initiatives tend to exist if there s just one buyer. The 3-phase model is interesting and useful however, they are not necessarily linear. They are more like different strategies for different situations Would like more case studies especially to illustrate the 3-phase model. Highlight best practices that: o Get results by doing very simple things (e.g. Unilever s work with KTDA) nothing wrong with low-hanging fruit and it is important to get the process right. Forget the consumer go for these types of initiatives. o Make the business case for suppliers if there is no productivity gain, what else do they get?