The audit-dominated era of ethical supply chain management has been
declared dead by one of the most influential bodies in the field.
The Ethical Trading Initiative, a 17-year old alliance of dozens of
multinationals, trade unions and non-governmental organizations, claims
it has delivered the last rites to the current vogue for reliance on
auditing, and that its 38 corporate members have agreed a ‘new agenda’
that will radically shift their focus.
The ETI, most of whose corporate members are retailers, argues that all
parties have been guilty of ‘an over-emphasis on auditing’ their supply
chains, which has led to an ‘overly top-down’ approach. Now its members
will be placing much more emphasis on working in collaboration with
suppliers and workers, as opposed to simply auditing their behaviour.
Michael Kobori, vice president responsible for the global code of
conduct at Levi Strauss, an ETI member, expects the balance to shift
dramatically away from auditing and towards improving working
conditions. ‘As an industry, we have spent 80 per cent of our resources
on monitoring and 20 per cent on actually changing working conditions.
This needs to be reversed,’ he said.
ETI says that as a result companies are now likely to :
spend more time working with suppliers on corrective plans encourage workers at factories to become involved and make them more aware of their rights ensure suppliers include worker representatives in management structures train buyers on ethical matters.
Companies are also likely to bring social and environmental
considerations to bear on logistics and production processes. Nike is
attempting to do this using a ‘balanced scorecard’ approach to ordering
that puts environmental and social considerations on a par with price,
quality and delivery.
ETI, which counts Gap, Fyffes, Christian Aid, Oxfam, Tesco, WH Smith
and Spanish fashion retailer Inditex among its members, warns companies
to be ‘careful not to jettison supply chain auditing simply because of
its limitations’, as it has led to ‘real improvement’ and has raised
suppliers’ awareness of workers rights.
But it says companies needed ‘to get smarter at auditing’, seeking
workers’ views directly and making audits ‘about learning and not just
policing’.
ETI concedes ‘not everyone has bought into this new agenda’ but says
there was ‘violent agreement’ on it at its biennial conference this
year. It is to offer training sessions to assist companies making the
change.
