This month, Collective Responsibility was invited to take part in a supplier CSR forum with Groupe Rocher, the French cosmetics firm. An event where our founder, Rich Brubaker, spoke about CSR trends in China, and where Charlie Mathews, Director of Corporate Advisory, moderated a workshop. Suppliers from across China and South Korea attended, with a diverse range of knowledge and application of sustainability practices in their supply chains. One of the overarching lessons taken from the discussion was the importance of engaging suppliers when attempting to drive sustainability. However this cannot just be achieved through a simple mindset change at the top or an implementation of legislation, it is a far more complex interaction that must be well managed if you hope to achieve success through the supply process. Here we present 5 areas of emphasis that we think must be considered when engaging suppliers and successfully implementing a sustainable strategy and values.
They don’t work only with you
Factory managers have a number of different customers, often from a wide range of countries, each with their own compliance and CSR/sustainability expectations. As a result, they may have a number of compliance issues and regulations for exactly the same thing. This is illustrated through the well-known story of the factory with 3 fire extinguishers at different heights on the wall; in this case, 3 separate companies made 3 different requests and as a result, 3 different actions resulted. A crude example that can become far more complex in other situations.
You need to find a common language
When presented for the first or even fifth time, “CSR” as a concept can be too big and too overwhelming for many suppliers to comprehend, let alone know how to implement; therefore any “CSR” or sustainability program needs to have definitions and frameworks that are understood at all levels.
Understand the factory managers mindset
Factory managers, not unlike many top executives, have a tendency to think in the short-term. You must understand this fact and ask yourself key questions when engaging. How will your program benefit them in the next year? Why should they bother to spend time/effort on this now if it’s not even mandatory? Managers are also constantly thinking about profit margins, again, in the short term. Yes, this project or capacity building may save them money and benefit the well being of their labor force, but the up-front investment costs will take 5 years to pay back and that will cut profits this year. It is therefore vital that you best communicate the long-term vision of the project, make strong long-term commitments to them and they will to you. Develop relationships that will allow for greater trust and as a result longer-term success.
Understand (and respect) the worker’s mindset
Workers are usually not loyal to any company or factory, they work for whoever can pay the most per hour and has available working hours on the timesheet. Attitudes can also differ widely from country to country. For example in Cambodia, workers are well known for working up to a certain level of income and then stopping, as it provides sufficient earnings to enjoy their local lives. However, in China, workers want to do overtime, to earn as much as they physically can to provide for themselves and their families. This can cause issues for companies attempting to align their social responsibility policies across borders and regions. There is no one fix approach, CSR should be considered and understand these intricate differences.
Don’t expect them to do it for free!
If suppliers don’t have to do it by law, they’re not going to pay for it, and to expect them to pay for it is a failure on the brand itself and more often than not leads to a crisis.
Conclusion
Based on these lessons, there are five ways we feel firms can do (better) to engage suppliers and promote sustainability/CSR initiatives throughout their value chain.
- The first step is to understand your supply chain and suppliers, assess their current knowledge base, their current practices, and the sustainability risks they already or expect to face (water, energy, labor health, wage increases)
- Secondly, remove sustainability jargon, and use a common language to communicate to them your company’s sustainability goals and how they relate to your business, and therefore their business. Make the business case, not the eco-scientific or even moral case, and use real examples.
- Create a step-by-step process to achieve tangible results – start small, and celebrate each success together. This may differ for each supplier based on the initial assessment.
- Support suppliers/factories through training and capacity building to ensure personnel has the ability to accomplish the steps and continue the process.
- As they are not willing to pay and are driven by profit, create financial incentives or even provide attractive financial loans to enable capital investments for efficiency improvements.
Finally, if you are interested in working with Collective Responsibility to engage your own suppliers in China or Asia on sustainability and CSR, please get in touch!