The World Resources Institute (WRI) and Crest – An Ares Charitable Foundation Initiative – have published a report, ‘Elephant in the Boardroom: People Are Missing in Corporate Supply Chain Goals,’ in which they present the findings of their assessment of more than 700 global companies’ sustainability goals.
Human Level’s Take:
- The report finds that there is an absence of “people-centred” goals in global company’s sustainability strategies – meaning the goals targeting small suppliers, workers and communities, as well as re-skilling workers, financing sustainability efforts and building long-term partnerships with suppliers. Only 12% of companies assessed were found to have at least one public people-centred sustainability goal.
- The report also finds that about 90% of corporate supply chain sustainability goals are designed to “push” or “pull” direct suppliers to comply, rather than create partnerships with mutual value. Without a partnership approach to sustainability, supplier resources needed to meet new sustainability requirements may come at the expense of alternative investments in working conditions or increasing wages.
- Companies will also struggle to achieve climate or nature goals without also engaging with suppliers and other people in the supply chains (including workers, farmers, miners and small suppliers), who are critical to the transition.
- When setting new targets or designing strategies, companies are invited to ask themselves: Who is most impacted by supply chain transitions? What is in it for them? Where can we invest for mutual benefit?
- https://www.wri.org/research/elephant-boardroom-people-are-missing-corporate-supply-chain-goals
Some key takeaways:
- Sustainability will be won or lost in supply chains. but suppliers are not prepared to meet customer expectations. Most of a company’s impact on people, nature and climate occurs in its supply chain, with 80–90% of emissions linked to supplier activities. Yet suppliers, especially SMEs, often lack the capacity or resources to transition to cleaner production or meet new environmental reporting demands. For instance, they may be unable to plan for or invest in transitions to cleaner production, especially since relationships with buying companies are cost-driven and efficiency-focused. Without external support from buying companies and other stakeholders, there is a risk that the burden of meeting buying companies’ sustainability goals will fall disproportionately on the smaller suppliers - pushing them out of business - or reduce resources directed to mitigating impacts on workers and local communities.
- Companies’ goals are not targeting people. While many large companies are setting ambitious supply chain goals around climate, forests, and water, only 12% of companies have people-centred goals, such as improving working conditions or supporting community well-being. Fewer companies, less than 3%, have goals specifically focused on re-skilling or workplace safety. In addition, when assessing whether large companies are setting goals that indicate their intent to partner with suppliers, the report found that approximately 90% of corporate supply chain sustainability goals are only designed to “push” or “pull” direct suppliers. “Push” goals are defined as those explicitly asking or requiring suppliers to make changes to help achieve a goal (e.g., net zero GHG emissions or zero deforestation). “Pull” goals are those that establish a policy or procurement condition that suppliers must meet. Instead, “partner” goals would be those designed support suppliers’ transitions.
- The challenge and opportunity: investing in people and partnerships. Transforming a supply chain is no small task. Large companies may have neither visibility of nor relationships with many or most of those suppliers. Companies even report that their sustainability efforts are “stalling” as they reach deeper into their supply chains, where there is less interest or ability to meet environmental goals. Prioritising goals that are also relevant to the people growing, mining, processing, and assembling products and making investments that lead to higher yields, better working conditions, new skills or fair wages can build financial capacity and resilience among suppliers as well as advance environmental progress. This requires companies shifting towards partnership-based approaches, and asking key questions such as: Who is most impacted by supply chain transitions? What is in it for them? And where can we invest for mutual benefit? Examples of how Tony’s Chocolonely, Mars and the Apparel Impact Institute are asking and answering these questions are described in the report. Their approaches combine technical support, financing, and innovative contracting that can help both large companies and smaller suppliers meet sustainability goals while safeguarding workers and communities.
