Global supply chains: voluntary standards analysed

Best practice: good examples analysed in detail

Be it textiles, soya or gold – it is not uncommon for products and resources to come from countries where environmental and social standards fail to meet EU or German requirements. Many countries also fall short in governance and in state enforcement of health and safety standards or environmental protection laws. A new in-house project by the Oeko-Institut has looked at the contribution that voluntary private-sector initiatives make to improving social and environmental standards. The study systematises the various approaches and profiles their mode of operation by analysing examples of best practice.

A multitude of private-sector initiatives with different focuses

The Oeko-Institut working paper shows that there is a multitude of these private-sector initiatives, all focussing on very different things. For example, they set out the codes of practice that suppliers must adhere to. These are either in the form of general guidelines for sustainable corporate management, such as the OECD Guidelines for Multinational Enterprises, or they focus on specific issues, such as the ILO core labour standards for worker protection. Some of the initiatives apply across a range of issues in certain sectors, like mining or the textile industry; others have a cross-sector approach to dealing with a specific issue such as forced labour.

“Basically, there is a degree of tension between the extent of the demands and the number of participating companies”, Dr Nele Kampffmeyer, director of the Oeko-Institut project, explains. “As a rule, the more stringent the standard, the fewer companies apply for certification and accordingly it remains a niche initiative, like Fairtrade, for instance. It is different with more lenient standards, such as the United Nations Global Compact, which are used by very many more companies. However, the terms of these are often much less binding.”

Best practice: good examples analysed in detail

In terms of the major challenges of supply chain management, the working paper identifies instances of best practice that have an exemplary approach to the problems described. For example, the Accord on Fire and Building Safety in Bangladesh is mentioned as an example of improvement in government institutions. In this initiative, textile companies, workers’ organisations and government stakeholders are collaborating in order to improve conditions in the Bangladeshi textile industry. Their principal objective is to exert pressure on the government of Bangladesh to make lasting improvements in the legislation on safety at work and buildings safety, and to support the country in implementing these laws.

Transparency is another major problem for sustainable supply chain management. The authors cite Fair Wear Foundation as a good example of high standards of transparency. It publishes audit results and assigns them to individual buyer companies. Documents relating to further action are also available for inspection. These describe how both the buyer company and the producer have reacted to complaints and what measures have been taken to resolve the problem.

“Our analysis shows that voluntary initiatives are already helping to improve health and safety, and to protect the environment”, says Kampffmeyer by way of summary, “but comprehensive measures by governments in the industrial countries are urgently needed to make them more than just ‘niche’ initiatives”. So, for example, consideration must be given to greater coherence in foreign trade policy, such as in the conclusion of trade agreements, and to social and environmental standards in public-sector procurement.

Oeko-Institut working paper “Brennpunkt globale Lieferketten: Herausforderungen und Lösungsstrategien” (Focus on global supply chains: challenges and strategies for meeting them – in German only)