BUILDING WORKER FIRST SUPPLY CHAINS: MODEL,...
18
BUILDING WORKER FIRST SUPPLY CHAINS: IT’S THE BUSINESS MODEL, STUPID! WHY? Despite efforts to improve labour rights, worker exploitation has worsened over the past 20 years, perpetuated by a relentless demand for cheap, readily available goods. However, businesses can reverse this trend by taking innovative approaches that: Transform the structures of their supply chain Provide the tools to reduce exploitation Share value more equally. WHAT WE DISCUSSED We considered why today’s business models and complex supply chains often rely on the mass exploitation of the most vulnerable stakeholders in the chain – workers. Importantly, we explored potential alternatives to ‘business as usual’, drawing on the experiences of diverse speakers from business, finance and NGO backgrounds. Speakers Luke Smitham, Impactt Stefanie Kneer, Bridges Fund Management Charlie Bradshaw, Matrix Erinch Sahan, Oxfam Worker ambassador Stefan Borisov Stephanie Kneer: “We as investors should make sure we channel capital effectively.” Erinch Sahan: “At the moment, all we’re seeing is incremental improvements. It’s like shuffling the deckchairs on the Titanic.” “We’re living in a world where just eight men own as much as 3.6bn people.” “Where a responsible business model works, it will do most of the heavy-lifting that responsible sourcing teams are facing right now.”
Transcript of BUILDING WORKER FIRST SUPPLY CHAINS: MODEL,...
BUILDING WORKER FIRST SUPPLY CHAINS: IT’S THE BUSINESS
MODEL, STUPID!
WHY?
Despite efforts to improve labour rights, worker exploitation has worsened over the past 20 years,
perpetuated by a relentless demand for cheap, readily available goods. However, businesses can
reverse this trend by taking innovative approaches that:
Transform the structures of their supply chain
Provide the tools to reduce exploitation
Share value more equally.
WHAT WE DISCUSSED
We considered why today’s business models and complex supply chains often rely on the mass
exploitation of the most vulnerable stakeholders in the chain – workers. Importantly, we explored
potential alternatives to ‘business as usual’, drawing on the experiences of diverse speakers from
business, finance and NGO backgrounds.
Speakers
Luke Smitham, Impactt
Stefanie Kneer, Bridges Fund Management
Charlie Bradshaw, Matrix
Erinch Sahan, Oxfam
Worker ambassador
Stefan Borisov
Stephanie Kneer: “We as investors should make sure we channel capital effectively.”
Erinch Sahan: “At the moment, all we’re seeing is incremental improvements. It’s like shuffling the deckchairs on the Titanic.” “We’re living in a world where just eight men own as much as 3.6bn people.” “Where a responsible business model works, it will do most of the heavy-lifting that responsible sourcing teams are facing right now.”
Charlie Bradshaw: “Don’t be afraid of finding problems – that’s where the real impact gains are.” “I realised that the people making our stuff were trapped in poverty. These people were my team.” “The commercial side of business is at the root of all the human rights abuses we see in global supply chains.” “Why do we focus on labour rights? Because it is the right thing to do and it works for my business.” Stefan Borisov: “Employers must build trust among workers, listen to their needs and recognise their potential.”
TOP TAKEAWAYS
1. Businesses must remember that they’re operating in a system in which everyone and
everything – people, planet, policymakers, investors, fund managers, companies and asset
owners – are connected.
2. Building a greater understanding of how and to what extent people are impacted by specific
investments – and measuring social impact in a standardised way – is vital. This will also
encourage more investors to support progressive businesses and initiatives.
3. Turning current business structures on their head is the key to raising labour standards,
particularly where a reliance on flexible, low cost production currently results in a ‘race to
the bottom’. Potential alternatives could be:
o Sharing more of the value of the product with suppliers through whole or part-
ownership models (e.g. supplier-owned co-operatives, dividends).
o Enabling suppliers to gain a voice at management or board level within your
company (e.g. Café Direct is partly owned by producers and one of the producers
sits on its board).
o Building inclusive, long-term partnerships with suppliers and engaging in ongoing
dialogue.
4. ‘Early adopters’ will need to invest in progressive business models to light the way for others
and prove that re-thinking business delivers commercially. Constructive policy-making and
responsible investment could also help to catalyse this change.
5. Overcoming resistance to transformative change will be fundamental to success. In
particular, it will be critical to help commercial decision-makers understand the effects of
today’s business models on workers.
How business can take action
There must be a strong vision, purpose and values at the highest levels of your company
before you can genuinely achieve change.
Develop a deep understanding of the factors keeping workers trapped in poverty, including
your own business model. Visit factories to experience workers’ challenges and work
environment first hand.
Identify how you could share profit and risk more fairly with your suppliers, and determine
how workers will see the benefit of any profit-sharing or part-ownership decisions (in their
pay).
Encourage suppliers to understand that treating workers fairly leads directly to improved
performance and productivity.
Collaborate with stakeholders to achieve systemic change.
Consider how technology can help – how could digitisation help you to build a database of
production capacity?
HOW IMPACTT CAN HELP
We can help you build robust ethical trade strategies with clear commercial objectives. We tailor
our recommendations to your specific challenges and identify tangible, measurable steps that you can
take now and in the future. Importantly, we ensure that the strategy we propose complements your
overall business and sustainability aims.
Through in-depth research, we can help you explore the ethical issues in your sourcing countries
and understand the impacts of your business model on workers’ pay and labour conditions. We help
to bridge the gap between your diverse stakeholders, convening constructive roundtables to explore
collaborative pathways to change.
Ultimately, we can help you ensure that ‘ethical trade’ becomes simply ‘trade’ - business as usual.
For more information, visit www.impacttlimited.com, contact us by email at
[email protected] or call us on 0207 242 6777.
impactmanagementproject.com
This work is licensed under the Creative Commons Attribution-NoDerivatives 4.0 International License that allows the copying and distribution of this material as long as no changes are made and credit is given to the authors.
Managing our impact
September 2017
IMPACTMANAGEMENT PROJECT
2
impa
ctm
anag
emen
tpro
ject
.com
IMPACT MANAGEMENT
AN ONGOING PROCESS OF LEARNING AND IMPROVING
3
impa
ctm
anag
emen
tpro
ject
.com
RATIONALE
MOST OF US OPERATE AND THEREFORE MANAGE OUR IMPACT IN
CHAINS
4
impa
ctm
anag
emen
tpro
ject
.com
CONTRIBUTING AUTHORSADVISORS
FACILITATED BY
700+ practitioners have been building consensus about how we talk about
impact – and therefore our goals & performance
A SHARED CONVENTION
5
impa
ctm
anag
emen
tpro
ject
.com
UNDERSTANDING EXPERIENCE OF PEOPLE AND PLANET
.
In global focus groups, we sought to understand people’s experiences when they are buying from, or engaging with, products or services that they feel they need. A series of related hypotheses were tested; a sample of which are shown here.
6
impa
ctm
anag
emen
tpro
ject
.com
UNDERSTANDING EXPERIENCE
AN ENTERPRISE’S IMPACT IS THE COMBINATION OF ITS MATERIAL
EFFECTS ON PEOPLE AND PLANET, POSITIVE AND NEGATIVE
We understand which effects are material by considering five dimensions:.
7
impa
ctm
anag
emen
tpro
ject
.com
SETTING GOALS
.
Erinch Sahan Head of Future of Business Initiative
Oxfam GB
It’s the business model, stupid
who’s in your supply chains?
Inequality on the march
Declining value
ADC & Kate Spade
Who is in your supply chain?
Governance
Business model
Ownership
Identifying equitable structures
Ownership • Dividends and profit share
Governance • Dialogue, voice and power in
management/board
• Inter-dependence
Business Model
• Long-term partnership and embeddedness in community
Thank you!
