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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Transformative guidance for putting responsible sourcing at the heart of your supply chain strategy In Certifiable: How Businesses Operationalize Responsible Sourcing, supply chain and corporate social responsibility expert Chris van Bergen delivers a practical and incisive discussion of how to create, implement, and audit transformative socially responsible sourcing practices that create a permanent competitive advantage for your firm. In the book, you'll find start-to-finish guidance on doing the hard work and creative problem solving required to put responsibly sourced products on store shelves. Drawing on his own experience creating the groundbreaking Ethical Handcraft program at non-profit organization Nest, as well as many other real-world case studies, the author shows you exactly how to navigate the complex arena of global supply chains without falling victim to the common pitfalls presented by typical factory auditing systems. You'll also find: * Expansive discussions of the impact of corporate finance, Covid-19, shifting consumer attitudes and demographics, and information sharing policies on supply chain transparency * Interviews with recognized business leaders in a variety of industries that address the challenges you're likely to face and the solutions you need to overcome them * Examples of contemporary businesses that have made corporate social responsibility a central plank of their company's business model and the benefits they've realized as a result An engaging and rigorously supported exploration of the real-world implementation of supply chain transparency and corporate social responsibility, Certifiable belongs on the bookshelves of managers, executives, directors, operations and sourcing professionals, and other business leaders seeking transformative change.
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Veröffentlichungsjahr: 2023
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Table of Contents
Cover
Title Page
Copyright
Dedication
Foreword
1 Down the Dusty Road: The Complexity of Supply Chains in the Age of Globalization
The Opportunities and Challenges of Responsible Sourcing
Nest and the World of Handcraft
Laurie, the Personification of a Global Supply Chain
An Unexpected Question from Laurie
The Journey This Book Will Take
A Successful Trip
Notes
2 Globalization and a Corporate Crisis
Who Is to Blame?
The Rise of Globalization
The Role of Government in Globalization
Nike's Crisis: A Turning Point in Corporate Responsibility
Nike Creates a Shift in the Industry
The Role of the Consumer
Notes
3 The Power Pathway: External and Internal Pressures on Global Supply Chains
Consumers
Investors
The C‐Suite and the Board
The Design Team
Production/Sourcing
The Merchandizing Team
Responsible Sourcing/CSR
Other Teams
The Role of Incentives
The Role of Producers
How to Address the Complexity of Global Sourcing
Notes
4 Pulling Back the Curtain: The Basics of Standard‐Setting and Auditing to Increase Transparency
Who Is the Responsible Sourcing Team?
Standards: The Rule Book to Follow
Setting the Standard
Auditing
The Impact of Assessments
The Educational Benefit of Compliance
Ongoing Challenges and Evolution
Shifting to Root Causes and Shared Ownership
Notes
5 Wake‐Up Calls: The Dual Disasters of Rana Plaza and COVID‐19
The Tragedy at Rana Plaza
Why Bangladesh?
Illegal Subcontracting
Weaknesses Exposed, and What to Do About Them
Collaboration as a Force for Good
Wake‐Up Call #2: COVID‐19
COVID‐19 in Supply Chains
Opportunity out of Crisis
Supply Chain Resiliency and Diversity
What's Next
Notes
6 Walking Further Together: Partnership and Innovation
What Forms a Strong Partnership
Other NGO Partnerships
Risks to Consider in Nonprofit Partnerships
An Example of a Great NGO Partnership: Warby Parker and VisionSpring
Innovative Collaborations
Brand‐to‐Brand Collaboration
Game‐Changing Technologies
The Business Case for Innovation
Notes
7 Rays of Sunshine: Stories of Brand Success
Patagonia
How Patagonia Makes It Work
Some Challenges with the Patagonia Model
Unilever
Polman's Vision: The Unilever Sustainable Living Plan
The Ingredients of Unilever's Success
Targeting Emerging Economies for Growth
Not All Sunshine and Rainbows
Next Steps
Patagonia and Unilever Are Not Alone
Notes
8 Let Me Tell You a Story: The Responsible Marketing of Responsible Sourcing
The Basics of Product Marketing and Brand Value Messaging
Impact Natives versus Impact Immigrants
Marketing Impact: Key Considerations
The Nine Deadly Sins of Greenwashing
How Greenwashing Happens, and How to Avoid It
The Next Frontier: Woke Washing
Aligning Values with Action
Notes
9 Convincing the Money Folks: Business Finance for Sustainability and Impact
The Basics of Supply Chain Finance
Innovations in Supply Chain Finance
Other Finance Innovations
Convincing Skeptics through Metrics
Putting the Pieces of the Puzzle Together
Notes
10 On Your Own Path
Where We Are Going
From the Corporation to the Individual: Power, Politics, and How to Make Change
Now, It Is Up to You
Notes
Acknowledgments
About the Author
Index
End User License Agreement
Guide
Cover Page
Title Page
Copyright
Dedication
Foreword
Table of Contents
Begin Reading
Acknowledgments
About the Author
Index
Wiley End User License Agreement
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FOREWORD BY REBECCA VAN BERGEN,FOUNDER AND EXECUTIVE DIRECTOR OF NESTCHRIS VAN BERGEN
CERTIFIABLE
HOW BUSINESSES OPERATIONALIZE RESPONSIBLE SOURCING
Copyright © 2023 by John Wiley & Sons, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750‐8400, fax (978) 750‐4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748‐6011, fax (201) 748‐6008, or online at http://www.wiley.com/go/permission.
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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Library of Congress Cataloging‐in‐Publication Data is Available:
ISBN 9781119890294 (Cloth)
ISBN 9781119890300 (ePub)
ISBN 9781119890317 (ePDF)
Cover Design: Chris Wallace
Cover Images: Cardboard Texture © kyoshino / Getty Images,Environmental Icons © lborg / Getty Images, Core ValuesIcons © ‐VICTOR‐ / Getty Images
Author Photo: courtesy of Chris Van Bergen
This book is dedicated to all those who are willing to ask the right questions and do the work to seek the answers: whether you are a consumer looking to make choices that align with your values, a student seeking to understand the future of business, or someone who is working from inside a firm to make change, I hope you see this book as an open doorway leading to your individual pursuit of impact.
Foreword
In early 2020, as businesses and borders began shutting down in response to the COVID‐19 pandemic, my team at Nest began receiving panicked phone calls from around the world. Retailers, who were reeling from government‐mandated store closures and the impending shock to their bottom lines, were cancelling orders from the factories and production partners who relied on them for revenue. As a result, the home‐based craft workers and independent artisans we work with—workers who make up an essential but often invisible part of the global supply chain—had lost their primary source of income. Since many of these workers live paycheck‐to‐paycheck in the same developing (i.e. poor) countries that COVID hit the hardest, this disruption was not just a nuisance, but a potential catastrophe for them and their families.
Our goal at Nest has always been to support these workers by giving them the tools and resources necessary to improve their quality of life. We do that, in part, by connecting them directly with the brands who source their products. In this way, the people responsible for making sourcing decisions gain a deeper understanding of the impact they have on individual workers—often women who use their wages to supplement their family's meager income—on the other side of the world.
Now that these brands were facing massive budget shortfalls, where could we find the capital necessary to keep our homeworkers solvent? Even the most socially conscious brands couldn't afford to keep their short‐term commitments without risking their long‐term business model. There was no way to know how consumers would respond or when stores could reopen. We needed a creative solution, and fast.
That solution came not from the well‐resourced, MBA‐trained executives at our corporate brand partners but from the homeworker community itself. I called Ming‐Ming Tung‐Edelman, founder of the Refugee Artisan Initiative (RAI) in Seattle and one of Nest's longtime artisan partners, to see how she was faring in the midst of this unprecedented crisis. RAI helps refugee women start home‐based businesses and earn a living wage by using the craft skills they've brought from their home countries. Typically, these women make piecework textiles—things like tote bags, napkins, and garments—that RAI's corporate partners commission directly. Within days of Seattle announcing its city‐wide shutdowns, they had pivoted to making masks for use in city hospitals and government agencies. The dozen women RAI employed were working as quickly as they could, but they could never meet the demand on their own. That's when a light bulb went off. What if we could find a way to pay our network of craft workers—many of whom were skilled sewers and were used to working in the safety of their own homes—to fill this gap?
We organized meetings with some of our key brand partners, and within three weeks Nest had raised more than $1 million. Over the next three months this money would fund the production of hand‐sewn PPE for essential workers in 18 countries, 92 hospitals, and 47 community organizations, including the United States Postal Service and New York City Housing Authority. All told, the effort saved 4,580 artisan jobs.
As I write this, exactly three years later, I realize the lessons we learned from this experience are just as, if not more, applicable today. COVID‐19 reshaped the way we think about a lot of things: how we work, how we take care of ourselves and one another, how we interact, how reliable our governments and institutions are in times of crisis, and how we spend our time. For many, it also revealed something we at Nest have known for the almost two decades we've been around: the importance of reliable, sustainable, and agile supply chains for maintaining our way of life.
While production has mostly returned to pre‐pandemic levels, disruptions to the supply chain have only become more frequent and noticeable. In the past three years, consumers have found themselves, at various points, unable to access baby formula, tampons, eggs, gasoline, vaccines, electronics (due to a shortage in the raw materials used to make the microchips that power them), and other items they once took for granted. Globalization has made our economy more dependent on complex and diffuse supply chains without providing the systems necessary to ensure transparency, accountability, and resilience within them. Without this capacity, the global economy remains vulnerable—to pandemics, to political turmoil, to environmental disasters, and to any other forces outside our control.
Corporations and governments are finally waking up to the need to address these insecurities. But because they have, for decades, largely ceded responsibility for this issue to those who work closer to the source, they often lack the insight and resources necessary to know where to start. We at Nest are proud to work with these organizations by getting them to do a conceptually simple but practically radical thing: talk to the individuals who actually make their products. By connecting them with the home‐based independent artisan craft workers—whether they're RAI's refugee workers in Seattle, rug weavers in India, or brass casters in Kenya—we help them better understand the role they play, not just in their own organizations, but in the global economy as a whole. The result is not just a feel‐good story of interpersonal connection and humanitarian perspective but a shift toward a more socially conscious and environmentally sustainable way of thinking that considers the impact of a business's decisions well beyond its bottom line.
My husband and business partner's book is an attempt to bring the experience we create for our partners at Nest to the largest audience possible. It shows exactly how supply chains have evolved—for better and worse—since the industrial age and examines both the challenges and the opportunities companies face when deciding how to move forward in our intricate, ever‐changing, and uncertain world. It forces leaders to reckon with the choices they make and ask themselves what sort of legacy they want to have. Do they want to be known for record‐breaking profits or technological innovation? Or do they want to consider how their decisions affect people they may never meet in places they may never visit? Is it possible they could be known for both?
The beauty in Chris's book is in how it makes the case that businesses no longer have to choose. Sustainability, responsible sourcing, and ethical business practices are no longer in conflict with profitability and competitive advantage. If anything, they are imperative to it. I hope that, by reading this book, you will walk away both educated and inspired, ready to use your voice or your power, both within your organization or as a consumer, to help us build a more prosperous and resilient future for all.
—Rebecca van Bergen
Found and Executive Director, Nest
March 2023
1Down the Dusty Road: The Complexity of Supply Chains in the Age of Globalization
“…Two roads diverged in a wood, and I—I took the one less traveled by, And that has made all the difference.”
—From “The Road Not Taken” by Robert Frost
It has already been a long day—rewarding, but exhausting—by the time we arrive for our last interview. As I get out of the car, my shirt sticks to my back with sweat, a result of the afternoon heat and humidity in this part of the Philippines. I'm in the Pampanga Province, an area northwest of Manila, outside a simple cinderblock home with a corrugated metal roof. I survey the landscape around me. Chickens saunter slowly across the dirt road, and I can hear a goat bleating from somewhere within the courtyard of the home I'm about to enter. Subsistence crops grow to one side; wildflowers grow on the other. My job has taken me on countless trips just like this one all around the world, and yet I take a moment to appreciate why I'm here. Within that courtyard, next to the noisy goat and perhaps a scurrying cat or two, sits one of the world's hundreds of millions of home‐based workers. The woman I am about to visit makes products that will wind up on the shelves of stores in the United States and across Europe before finding their way into the homes of consumers who may not even know she exists.
In the more than 10 years I have worked within and observed global supply chains, I've conducted hundreds of interviews like the ones we are doing today. My two travel companions, however, are still new to these sorts of environments. They are here to represent their employer, a large, publicly traded, multi‐billion‐dollar brand with thousands of stores across the United States known for its commitment to accessible price points for its customers. Sourcing the thousands of products that appear on store shelves is not an easy road to navigate, which is why we're here. My companions work for the team responsible for making sure the products owned by the brand (i.e. not purchased from an outside company such as Johnson & Johnson or PepsiCo) are produced and sourced in line with the company's supplier code of conduct. Does the production of this product have positive or negative impacts for the world at large? Are workers treated and compensated fairly at all points in the supply chain? What is the environmental impact of production? How does production impact the surrounding communities? My companions are the eyes and ears of the brand. They, like me, travel wherever production is happening and serve as a conduit of information and best practices to a multitude of other teams within the company whose hands help bring a product to market.
Most major brands have some type of supplier code—a set of broad, often vague, rules designed to articulate how the brand expects its suppliers to behave and how it intends to hold itself accountable. Unfortunately, they are not exactly an instruction manual, and it is behind these codes of conduct that the real work (and complexity) begins.
Retailers typically consider it sufficient for third‐party suppliers (such as Johnson & Johnson and PepsiCo) to show proof of various certifications or make specific commitments about their behavior. The retailer itself rarely looks further into those supply chains since they are the supplier's responsibility. However, with products that the brand or retailer fully owns themselves, such as the ones my travel buddies oversee, there is a lot more at stake: the brand designs and commissions these products, but they typically outsource production to a factory overseas. That means they don't have direct control over how their products are produced. For brands that pride themselves on being good corporate citizens and having a positive impact on their stakeholders, this poses a significant risk. When you're sourcing products from all corners of the globe, how do you ensure they're sourced responsibly? That is the central question of this book.
The Opportunities and Challenges of Responsible Sourcing
Throughout my career, I have had first‐hand experience in the work it takes to bring responsibly sourced products to market. For the past 11 years, I have worked as the chief financial and operations officer at Nest, a nonprofit founded in 2006 to help home‐based and artisan makers from around the world grow their businesses sustainably and ethically. As part of my role, I work closely with brands and corporations to help them navigate their complex global supply chains to ensure they are operating in line with their stated goals and values. The result? Companies are able to make better decisions that support the myriad actors throughout their supply chains: from the owner of a massive factory in Shandong Province, China, to the weaver in Huancayo, Peru, who works from their kitchen table. Combined with my experience teaching in some of the top business programs in the United States, I have witnessed the powerful impact created when brands prioritize ethical sourcing practices and get their strategy right.
But no matter how hard companies try to smooth out the kinks in their supply chains, there will always be something they miss or do not anticipate. Thanks to globalization and technology, supply chains have become so complex that it's harder than ever to really know what's going on at all levels. At the same time, consumer behavior and the rapid spread of information have made it even more important to pay attention to these things. If you do not, you could lose customers—and your actions could have disastrous ripple effects for the populations with whom you work. How do you try and prevent the problems? Whose responsibility is it? How should a brand react and address the issue? And how do they balance the expectations of all their stakeholders—their board and CEO, their managers and co‐workers, their customers, investors, and the production partners themselves? If you work within one of these firms, how can you increase the positive impacts that your company (or your career) is creating? As an investor or consumer, how do you evaluate the behavior or promises of your favorite companies when you do not actually know what it means to put those promises into action? What do all those little symbols and certifications printed on your favorite brand's labels and packaging really mean, anyway?
Nest and the World of Handcraft
This trip to Pampanga is the first stop in a two‐week jaunt across Southeast Asia and offers a glimpse into some of the challenges and opportunities brands face when it comes to ethical sourcing. I'm here as part of the pilot for Nest's revolutionary supply chain transparency program,1 which we designed as a way for our corporate partners to gain greater understanding of and appreciation for the complexity inherent in sourcing handmade, artisan products from around the globe. Around the world, millions of artisans and craft workers—most of them women—produce handmade goods—often from within their homes—that are then sold to brands and, eventually, consumers. Our work at Nest involves bringing brands into contact with these craft workers, often for the first time, so that all parties in the supply chain can better understand their roles and responsibilities to one another. This is really important since this is not currently typical in the industry. According to a sequence of surveys issued by Nest alongside GLG (Gerson Lehrman Group), only 4% of brands report that they are always conducting home visits when it comes to assessing work beyond the factory,2 so very few are getting complete transparency to the individuals in their homes who are performing handwork, thus stunting their knowledge base—and ultimately their ability to create solutions. This visit to the Philippines is a big moment for the program. I am here to assess how well a production vendor has been able to stand up a viable compliance program that reaches their homeworkers based on the training and resources Nest has previously provided. It is a task made even larger considering that this particular supply chain employs hundreds, if not thousands, of basket weavers over multiple islands in the region.
Basket weaving, as it is with most craft businesses, grew out of necessity and ingenuity. In Pampanga, locals started weaving baskets from vines commonly found in nearby jungles as a way to store things in their own homes. Over time, the practice expanded as the baskets became an exportable, mass‐produced, handmade product and, eventually, a booming business in the Philippines, Indonesia, and China, as well as many regions in Africa such as Rwanda, Uganda, Ghana, and Kenya. Skills, techniques, designs, and materials vary from region to region and sometimes from weaver to weaver. If you buy a handmade basket from your local home goods store, chances are, it was produced in a similar place to the one we are about to enter. Not a factory but a home. Not made by machine but crafted by skilled hands working at lightning speed even during this hot afternoon. (And even when that basket is from a low‐cost retailer where the goods might all appear to be machine‐made!)
In the distance we can still hear faint strains of the cacophony of the central square in the main town we drove through a few minutes before. There, street vendors sell their wares in the shadow of an old Spanish cathedral. Cars and motorbikes zig this way and that through the bustling streets. Out here, it is quiet. I can hear a rooster in the yard and music coming from somewhere behind the house. We open the gate and walk through, making our way into a courtyard where we find the source of the music. On the far side of the courtyard stands a newer building with cement floors. A woman sits next to it, listening to a radio as she deftly weaves a basket through her expert fingers. Wire frames, the skeleton for this type of basket, sit on one side of the building. Completed baskets sit on the other. The woman looks up and smiles. She's been expecting us ever since her point of contact at the production company let her know we were going to stop by sometime today.
Laurie, the Personification of a Global Supply Chain
We introduce ourselves to the woman and learn that her name is Laurie. As we talk, she never stops weaving, winding and tying a vine‐like rope around the wire frame. Laurie smiles and invites us to sit next to her on a few mismatched plastic chairs. My companions and I situate ourselves, and I begin the interview. Laurie tells us she has been weaving for more than 10 years, since her mid‐30s, and that we are standing in her workshop, which she built with part of her earnings. Before she became a basket weaver, she had been a domestic worker—a common occupation for many within her community—first in Singapore and then in Dubai. She returned to her community because she missed her family. She wanted to be close to raise her daughters and care for her elderly mother, and basket weaving has enabled her to do just that. Laurie had not really engaged in the craft when she was younger, but upon her return to the village other family members took her under their wing and trained her. Research has shown that when the women of a household earn income, they invariably use it to feed, clothe, and support their children and families.3 Laurie is no exception. In addition to building her workshop, Laurie has used her earnings to maintain her home and pay for her children to attend school. She beams with pride as she informs us that her daughter is about to start nursing school, making her the first in the family to earn an education beyond high school. Laurie is not the sole breadwinner. Her husband has a motorcycle and works as an occasional informal taxi driver for local travelers. As he naps on a hammock nearby, Laurie chuckles. “Now that I'm working and earning money on my own, I've become his boss!” she says. “He helps me make baskets. He's not as good as me, but I'm helping him get better.” It is very clear who is in charge here, and it is definitely not the man snoring in the hammock.
As we continue the interview, Laurie confirms the seemingly impossible journey her baskets take on their way to a shelf in the United States. She works with a local village leader, who distributes the work between Laurie and the other weavers in her community. Laurie is paid a set rate for each basket she completes—standard practice known as “piece‐rate” for this type of work as opposed to an hourly wage. Each week, the village leader picks up all the baskets from the various weavers and gets them ready for a subcontractor from the region. The subcontractor picks up the completed baskets (often tying them together 10 to 15 high on the back of a motorcycle) while dropping off the raw materials for the next week's orders. That subcontractor puts the full set of completed baskets on the back of a small truck, which makes its way to a finishing factory for final quality inspections, varnishing, and packaging. (It's at facilities like this one where brand representatives like the ones I'm traveling with usually start their inquiries into a supply chain.) From there, the baskets are taken by truck, then boat, to a distribution center in the United States where they wait for final delivery to the store and eventually into the homes of the consumer. We ask Laurie how she is treated by the village leader, and she tells us what we hoped. He treats her well, pays her on time, and has never harassed or abused her.
The interview is winding down, and I offer the brand team an opportunity to engage with Laurie directly. Up to this point they have been playing the role of observer on the trip, but they are clearly interested in interacting directly with a woman who represents part of the supply chain they have never been able to see before. Their work takes them onto the factory floor, but never to remote village communities such as this, or to workers with such an interesting story. They ask if Laurie knows where they are from, or where her baskets go when she is done with them. She laughs and says she's always wondered about that, though she's just happy to have the work. When one of the brand representatives tells her who they work for, her face lights up. “Do you mean to tell me that there are people in New York City who have my basket in their house?” Now it's the brand team member's turn to laugh. Turns out, she has that same basket in her own home. Laurie, with a gleam in her eye, says that if she saw a picture, she might be able to tell us if it was one of hers. “We all have our secret tricks,” she says. “Looking at a basket you can tell if the weaver was left‐handed or right‐handed.” The brand representative tells her she doesn't have a photo on her but will be sure to send an image of the basket once she returns home.
An Unexpected Question from Laurie
As our time with Laurie comes to an end, one of the brand reps asks if there is anything else Laurie would like the team to know. Laurie says this is the first time anyone has ever asked her these types of questions. It's certainly the first time she has ever met anyone from the brand that buys her product. She expresses her gratitude for the work and says she loves the thought of someone from the other side of the globe appreciating her craft. But then, for the first time since our arrival, Laurie's hands pause at her basket. She looks into the faces of the two brand representatives and asks, “Why has the price I get paid for this basket never gone up in 10 years? The cost of living has increased, and the minimum wage has gone up at least three times, but I get paid the same.” Later, after we've had time to assess the matter further, we learn that minimum wage in the region has actually gone up four times since Laurie started weaving, and the cost of living has increased over 3% on average each year during that same period.4 Yet Laurie still gets paid the same amount per basket that she did 10 years ago. This is the first time that a brand has heard directly from a worker like Laurie, and now they are learning about an issue they were not previously aware of but were inadvertently complicit in. Laure's inquiry raised a bigger question: What role does a brand play in creating downstream impacts (either positive or negative)? In this case, since the brand had not increased its cost per product in the last 10 years, it would stand to reason that worker wages would not have increased. In a traditional sourcing model, the brand and production vendor enter into business negotiations regarding how much they will pay for a finished piece, but the brand does not know how much of that price goes to the workers. Factory workers are usually salaried employees, not piece‐rate ones like Laurie and other homeworkers. As a result, brands can verify their vendors are paying at least minimum wage salaries in an audit. From the brand's perspective, any negotiation that takes place would therefore have little impact on worker wages and instead only affect the amount of margin each party takes per product. In fact, when brands renegotiate their contracts with existing vendors, they typically try to decrease the price they pay per unit, assuming the factories operate more efficiently at a larger scale. They fail to consider how this downward price pressure might impact workers like Laurie because these workers sit outside of the audited factory. And yet, the amount they pay to their factory partners directly impacts how much those partners can pay their subcontractors, and eventually home‐based workers, deeper into the supply chain.
Laurie's simple question perfectly highlights the challenges brands face when trying to behave responsibly. What can we learn when we look deeper into the supply chain? The issue of verifying fair wages alone is an important one. A surprising 79% of the supply chains we work with at Nest were not able to demonstrate that they meet minimum wage when we first start working together, yet nearly 40% have closed the gap within a year of participating in our Ethical Handcraft Program, and 65% have implemented measures to do so over the course of the next year. These findings highlight that third‐party accountability and standardization of wage‐setting processes are critical. In Laurie's case, giving her a voice created a dramatically positive ripple effect, as solutions for proper wages involve both the producer business and their partnering brand.
The Journey This Book Will Take
But this light bulb moment in the Philippines is just one example of what you can uncover when you start looking closer. Replace “baskets” with virtually any product from coffee to clothing to diamonds, and you will face the same issues that our brand partner did. As you work through this book, we will explore the shifting corporate philosophy and behavior regarding responsibility. We will explore the history of globalization and how increased complexity of the supply chain led to the increase in expectation around corporate behavior, looking at a few key moments that served as particular turning points. We will walk through the internal and external forces at play that impact decision making when it comes to responsible sourcing and how companies are rethinking the nature of their sourcing relationships in order to shift from a short‐term, combative mentality to a longer‐term, supportive one that enables collaboration and problem solving. As a result of the need for visibility and accountability, we will look at the world of compliance standards, certification systems, and auditing. We will look at how the auditing experience itself has changed for the better: no longer with vendors trying to hide issues out of fear of losing business but instead in uncovering the reasons why issues may be occurring in the first place. We will also look into what, tragically, can happen when that auditing and compliance system breaks down. We will explore the ways brands and corporations are investing in innovations to drive increased transparency and impact; the rise in authentic messaging to consumers, investors, and employees; the role of finance in this whole equation; and fundamentally how supply chain responsibility is leveraged both as a risk mitigation tool and a business driver for firms.
A Successful Trip
Our work in the Philippines was an all‐around success: the Nest program was able to help this basket‐weaving business establish strong compliance systems within their complicated supply chain, and through the process our brand partner established a closer linkage to the people making their product, which resulted in positive impacts for the wages of all the workers. But it also highlighted some of the challenges to sourcing products from the four corners of the world: there is always the potential to uncover a new issue. And it is this complexity, and opportunity, that this book is all about.
Welcome to corporate responsibility and sourcing in the 21st century.
Notes
1.
https://www.buildanest.org/the-nest-seal/ethicalhandcraft/
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2.
Nest State of the Handworker Economy Report, 2019.
https://www.buildanest.org/wp-content/uploads/2019/05/Nest-State-of-the-Handworker-Economy-Report-2019.pdf
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3.
UN Women, Commission on the Status of Women, 2012.
https://www.unwomen.org/en/news/in-focus/commission-on-the-status-of-women-2012/facts-and-figures
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4.
https://www.macrotrends.net/countries/PHL/philippines/inflation-rate-cpi
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