Responsible Sourcing with David McClintock from EcoVadis
What do you think responsible sourcing is?
Sustainable sourcing is the integration of social, ethical and environmental performance factors into the supplier selection process. As a general rule, when selecting new suppliers, it is important for companies to clarify their sustainability expectations during initial engagements. Sourcing teams should set minimum eligibility requirements where potential suppliers must provide an indicator of their sustainability commitment so that they can gain an understanding of sustainability performance.
How important is transparency?
Sourcing should have an overview of the maturity of the supplier’s management system on key sustainability topics, including environment, labor and human rights, ethics and sustainable sourcing, as well as its desire to improve over time. This overview will involve not only collecting and validating data, but also monitoring multiple data sources to ensure the reliability of the data provided, provide a cross-check of the supplier’s sustainability transparency, reporting practices and continuous performance. Suppliers who respond and commit to sustainability assessment and improvement send a strong signal that they are ready to build sustainability into a long-term relationship.
When it comes to human rights in the supply chain, what should organizations be aware of and act on?
They need to be aware for several reasons, not just risk management (e.g. to comply with new regulations) due to stakeholder scrutiny, to ensure resilience (e.g. to avoid disruption) and long-term value creation.
Comprehensive international standards are available to guide business approaches to human rights, including the UN Guiding Principles on Business and Human Rights and the OECD Due Diligence Guidance for Responsible Business Conduct. In addition to these standards, it is important for companies to be aware of legislative changes that may affect current business operations and practices. Over the past decade, various due diligence laws have emerged, such as the Modern Slavery Act 2015 in the UK, the Transparency in Supply Chains Act in California, and the Disclosure Act in Australia.
Businesses can move forward by better understanding their supply chain and determining where they stand in terms of managing human rights risks. Working now on your existing supplier relationships will allow you to leverage those relationships and react to changing requirements with more flexibility once you are mandated to do so. By focusing on better understanding the current supply chain due diligence landscape, companies can explore strategies to react to existing and future requirements.
What is the biggest responsible sourcing challenge?
Beyond the initial selection process, setting expectations at the start of the supplier relationship, and ongoing monitoring, companies need to engage suppliers on a journey of continuous improvement. No supplier (or buyer) is perfect on any sustainability topic. Switching suppliers (eg stopping a supplier with a low sustainability score and selecting and onboarding a new supplier) is expensive and should be an exception. Long-term relationships with suppliers who are committed to advancing the journey are often a more reliable route, even if they don’t have outstanding performance or scores to begin with.
What is the biggest change you predict in responsible sourcing over the next 12-18 months?
There could be a coming “shakeup” in the shopping sustainability tech space. There have never been so many technologies and tools supposed to help procurement teams collect data – such as sustainability metrics – from suppliers. But many of them are not moving the needle down the sustainability path to positive impacts, like their predecessors; Do-it-yourself programs that companies traditionally tried to run internally using spreadsheets and email.