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TÜV Rheinland: Assuming Responsibility Through Social Standards

12-02-19Greater China

Companies’ supply chains are becoming increasingly complex, as they expand around the globe, and in part into completely new markets. In today’s fast-moving retail world, factors such as fair working conditions and environmental awareness are playing an important role, both from the point of view of consumers and commercial partners. “Therefore, monitoring the supply chain is key to attaining business success for international companies,” explains Vincent Chen, Vice General Manager “Supply Chain” for Greater China at TÜV Rheinland. However, there are industries in which companies tend to control their supply chains less on aspects such as climate change or gender justice, even though consumer pressure is growing and the call for social and sustainable products is becoming louder.

Customers do not just look for value for money

Pressure from buyers is growing, especially for companies that manufacture consumer goods. Many customers no longer just want to buy cheap goods. They want to know under which conditions the items are produced. “Customers have become more demanding,” sums up Chen.

“When companies monitor their supply chains, they can also protect their brand,” adds Chen. For example, it would mean that counterfeits are detected before it is too late and promises made to consumers could be better kept. Ideally, this will lead to an increase in consumer confidence in the brand.

Not only the end consumers, but also national governments have turned up the pressure on companies when it comes to sustainability. The United Nations (UN) has set 17 Sustainable Development Goals (SDGs) on its 2030 Agenda ranging from eradicating poverty and hunger to health, education, gender equality, and sustainable consumption.

The UN website states: “We envisage a world in which every country enjoys sustained, inclusive, and sustainable economic growth and decent work for all. A world in which consumption and production patterns and use of all natural resources – from air to land, from rivers, lakes, and aquifers to oceans and seas – are sustainable.” And it goes on: “Decoupling economic growth from resource use is one of the most critical and complex challenges facing humanity today. Doing so effectively will require policies that create a conducive environment for such change, social and physical infrastructure and markets, and a profound transformation of business practices along global value chains.”

Focus on labor rights

But how do these demands play out in reality? Researchers at Stanford University, Stanford Graduate School of Business, and Université catholique de Louvain in Belgium discovered that many companies focus on labor rights and compliance with national laws. They surveyed publicly listed companies in the food, textile, and wood-products sectors with annual reports in English and held them up to the 17 UN goals, examining the sustainability of the standards, codes of conduct, and training (sustainable-sourcing practices, or SSPs in short) used. The result: 235 of the 449 companies surveyed (52 percent) use some form of SSP within their supply chain. The methods range from the certification of production standards defined by non-governmental organizations to training suppliers on the basis of social or environmental criteria. However, the study also shows that most SSPs are only aimed at first-tier suppliers. However, if sub-suppliers are not included in supply chain management and violations are not punished, this can have far-reaching consequences – for the company image as well as for the aspired sustainability goals.

According to the researchers, only 15 percent of companies address health, energy and infrastructure, climate change, education, gender, or poverty in the supply chain directly.

amfori BSCI, RBA, SMETA etc.

Today, there are a whole range of possibilities for specialization in supply chain management. Important and globally recognized standards are amfori Business Social Compliance Initiative (BSCI), RBA (Responsible Business Alliance), SA8000 (Social Accountability), WRAP (Worldwide Responsible Accredited Production), PSCI (Pharmaceutical Supply Chain Initiative), SMETA (Sedex Members Ethical Trade Audit). In addition, companies can also implement and certify management systems according to current ISO standards such as ISO 9001 (quality management system), ISO 14001 (environmental management system), and ISO 45001 (occupational health and safety).

TÜV Rheinland, as an independent TIC service provider, provides support to its customers on their way to sustainable and holistic supply chain management. The company has proven itself in numerous important sectors and industries, including being the world’s leading service provider for amfori BSCI audits.

Hung Simon
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