Collaborations for Supply Chain Sustainability: What It Takes to Generate Real Impact

Authors

• Paolo Fresia

  Former Associate, BSR

• Tara Norton

  Former Managing Director, BSR

• Jeremy Prepscius

  Former Vice President, Asia-Pacific, BSR

At BSR, we believe that truly sustainable supply chains are inclusive, resilient, and transparent. This means that supply chains should be structured and managed to reduce environmental impact and build climate resilience and to ensure that jobs and economic benefits generated by supply chains will support inclusive growth and poverty reduction.

To achieve this vision, BSR and others have long engaged in collaborative initiatives to harness the collective insights and lessons of the private sector and their stakeholders. In fact, collaboration in supply chains has become ubiquitous, with a boom of initiatives in the last couple of decades. From 1990-2015, several organizations with missions grounded in private-sector collaboration have been established, including BSR, as well as the Ethical Trading Initiative, Fair Labor Association, Forest Stewardship Council, SEDEX, and many more. Specialized supply chain collaborations have included the Electronics Industry Citizenship Coalition (EICC), the International Labour Organization’s (ILO) Better Work, the Roundtable for Sustainable Palm Oil, and the Sustainable Apparel Coalition.

Amid this proliferation of initiatives, we asked ourselves how to increase the impact of supply chain collaborations—and avoid duplicating efforts and collaboration fatigue. Through research, we identified four characteristics that can drive impact in a collaborative initiative: multistakeholder governance, accountability for all members, transparent reporting and information sharing, and a focus on impact and measurable improvements.

Is Collaboration Truly Impactful?

To begin, we asked whether collaboration is really the way forward, if our goal is to maximize both sustainability impacts and business returns across supply chains. BSR’s work on sustainable supply chains includes both consulting engagements with individual companies and the launch, facilitation, and support of collaborative initiatives across industries and geographies.

Therefore, to understand the best opportunity for impact in supply chains, we turned inward. Using a structured interview process, we consulted 15 BSR colleagues about 28 supply chain projects that BSR led between 2009 and 2014. BSR staff members judged that 82 percent of those projects would have generated greater impact on supply chain sustainability if they had entailed some form of collaboration, whether that was efforts among multiple companies or among companies and stakeholders, to work toward a joint sustainability objective in the supply chain. This finding corroborates the conclusions of other studies that collaboration can offer significant paybacks, both in terms of sustainability impact, and by allowing supply chain partners to combine efforts and improve business performance.

Four Attributes for Impactful Collaborations

We then asked: If collaboration is so valuable, what attributes do successful collaborative initiatives share, and how can we apply these attributes to both new and existing collaborations? BSR reviewed 45 well-established global supply chain sustainability initiatives, ranging from the Accord to ZDHC, and drew upon our own experience in leading and facilitating some of them over the years, to assess what it takes to make a collaboration impactful. By “impactful,” we mean tangibly improving the social, environmental, and governance performance of global supply chains, without negative long-term effects on the bottom line. From the review, we found that impactful supply chain collaborative initiatives have one or more of the following attributes.

1. Multistakeholder Governance: Ensuring Equal Representation for All Actors

We found that collaborations that structurally include relevant business, civil society, and government actors put themselves in a better position to generate tangible impact. When stakeholders on all sides of the key issues have an equal influence in the governance of the initiative and are held equally accountable to its vision and mission, they are more likely to buy into action.

Examples of multistakeholder governance include:

• The collaboration strives for equal and inclusive representation of vulnerable elements of the supply chain, such as workers, smallholders, and those who can represent environmental concerns.
• All those in governance are held accountable for the desired impact of the organization—this means that an NGO “advisory board” may not be enough. Non-business members should have equal power to review objectives and deliberate on executive decisions.
• The group embraces the tough discussions, and conflict is expected and welcome, since negotiation can ensure stronger and buy-in throughout the supply chain.

The Accord on Fire and Building Safety in Bangladesh, which focuses on the light-manufacturing sector (and garments in particular), demonstrates how a collaboration can shift toward more direct multistakeholder governance. Signatories to the Accord include more than 150 sourcing and manufacturing corporations from 20 countries on four continents, two global trade unions, and numerous Bangladeshi unions. Additionally, Clean Clothes Campaign, Workers’ Rights Consortium, International Labor Rights Forum, and Maquila Solidarity Network are nongovernmental-organization witnesses to the Accord, and the ILO acts as the independent chair.

While the comprehensive representation of signatories to the Accord is by itself remarkable, the Accord’s success beyond previous “voluntary” initiatives can be attributed to its legal enforcement: The collaboration’s outcomes can be enforced in a court of law. Multistakeholder governance contributed to the establishment of this accountability mechanism and continues to monitor it.

2. Accountability: Requiring Action from Members

We found that the most impactful collaborations evolve from platforms for learning and sharing to more action-oriented initiatives that focus on achieving specific outcomes. And accountability turns “talk shops” toward action. While a precursor to accountability is a basic level of common understanding, trust, and internal alignment among members, specific mechanisms should be put in place to ensure that all collaboration members agree to fulfill their roles, in line with the vision and mission of the group. This ensures that every participant’s efforts are geared toward the collaboration’s objectives and impact goals.

Examples of successful accountability include:

• The collaboration has clearly determined its vision, mission, and the impact it wants to have, and these statements specifically address accountability.
• Membership is contingent upon commitment and follow-through toward the vision and mission.
• All stakeholders are held accountable for their roles. These roles can be established, for example, via “tiered” membership, which has different commitments for different functions.

The EICC, which focuses on supporting the rights and well-being of workers and communities affected by the global electronics supply chain, took steps in 2011 to create requirements for members through its “membership compliance program.” This program defines administrative and reporting requirements, from the basic, such as publicly committing to the EICC Code of Conduct, to the complex, such as identifying and conducting audits of high-risk facilities in a member’s supply chain, as well as reporting on and implementing corrective action plans for any priority findings at high-risk suppliers.

Through these requirements, the EICC has achieved numerous successes, including continuous improvement of member companies’ practices, through actions based on the findings of a strict validated auditing process, as well as commitments from certain members to ensure their electronics components are free of conflict http://www.bsr.org/en/topics/all-channels/Conflict-Mineralsminerals. The accountability requirements of the group have helped stimulate individual company action, both because members must adhere to the requirements of membership, and also because the requirements create healthy competition among members, which drives performance.

3. Transparency: Sharing Information for Credibility and Understanding

We found that transparent collaborations are considered credible and make the most significant contributions to global supply chain sustainability. As supply chain collaborations rely on so many different players acting together to affect change, transparent initiatives are more likely to inspire trust and action. Transparency also contributes to better global data on the state of sustainability in supply chains, which can better identify where effort is most needed.   

Examples of transparency include:

• The collaboration provides consistently updated information about governance structures, financial structures, funding sources, and on-the-ground implementation.
• Reporting is simple, honest, and easily accessible, and demonstrates an understanding of the initiative’s role and progress.
• The initiative conducts ongoing reviews of how to increase its credibility, which drives further action and engagement.

The Maritime Anti-Corruption Network (MACN), of which BSR is the secretariat, is a global business network working toward its vision of a maritime industry free of corruption that enables fair trade to the benefit of society at large. Transparency has ensured the accountability of MACN’s membership, as well as progress on advancing collective action work in countries where corruption is prevalent in the maritime industry. Once they join, participating companies sign the MACN Anti-Corruption Principles and commit to communicating their annual progress on implementation of the principles. The initiative also gathers information on corruption challenges, which helps identify systemic risks in the operating environment and drives effective engagement with stakeholders, including governments, authorities, and international organizations. This helps MACN and stakeholders develop localized solutions to tackling corruption risks in specific countries. In this case, the transparent availability of data from companies provides relevant stakeholders the information they need to tackle the root causes of corruption and co-create context-appropriate solutions.

4. Impact Focus: Driving Significant, Measureable Improvements

We found that successful collaborations make efforts to demonstrate how they are driving impact. Reports from many collaborative initiatives tend to focus on outcomes and process: the number of members, the number of facilities audited or certified, events that they have held, partnerships they have undertaken, and tools they have released. These are important, but they do not offer a sense of the collaborations’ impacts on improving global supply chains, both in their immediate domains and in relation to other global supply chain initiatives.

Examples of an impact focus include:

• The collaboration not only has determined its vision, mission, and the impact it wants to have, but is also able to articulate a clear and realistic strategy, with concrete steps of how to get there.
• Impact goals are translated into clearly understandable quantitative and qualitative key performance indicators (KPIs), and these are reported against regularly.
• The initiative provides context for the KPIs and demonstrates what its performance means among global efforts to systemically improve supply chain sustainability.

Bonsucro, which focuses on sustainability in the sugarcane sector, has an “In Numbers” section on its website to share measurable improvements. The numbers include the percentage of global sugarcane land area certified to Bonsucro standards—in this case, 4 percent of global sugarcane crops. The webpage tracks the initiative’s progress against a clear and defined numerical KPI (their goal is to have a 20 percent penetration by 2017). The page also illustrates the collaboration’s impact in the global context.

Going Beyond the Four Attributes

At this point, we must note that only about 20 percent of the initiatives that we examined could be considered in possession of all four characteristics. Even then, very few among that 20 percent were unequivocally strong on all four. While collaboration offers the best opportunity to tackle sustainability issues in global supply chains, there is no hiding that it is difficult.

There are many reasons for this, but the most frequent ones include problems related to internal buy-in at member companies. For example, the legal department might not readily accept multistakeholder governance, or the communications department might judge transparency as tricky, reputation-wise. Sometimes, the collaborations are not provided with enough resources to move from process to action, and other times, companies spread themselves too thinly across too many collaborations.

Despite all these difficulties, collaborations can ensure they are on a path toward impact if they regularly ask themselves how are they faring vis-à-vis the four attributes we have identified. And while we recognize that the adoption of all four might not be feasible in the short run, collaborative initiatives members can start by asking these types of questions:

• Are there any nonbusiness actors who are not in our current governance model but that should be included to enhance accountability toward our vision and mission?
• How can we build an accountability model that will respect different actors’ levels of responsibility and impact and encourage continued participation?
• Have we translated our vision and mission into measureable KPIs relating to the impact we are having on supply chains, and are we transparently and regularly reporting against those?

We encourage members of collaborative initiatives dedicated to supply chain sustainability, whether they are a part of BSR’s collaborations or not, to start a dialogue in their initiatives on how to drive more tangible impact. Our hope is that by focusing on the four attributes of multistakeholder governance, accountability, transparency, and a focus on impact, we can drive progress in supply chains globally, making noticeable and sustainable improvements on the ground, together.