The GRI Global Action Network for Transparency in the Supply Chain

While the complexity and diversity of global supply chains used by many multinationals continues to expand, supply chains do have leaders—the ultimate retailers or brand owners. These leaders increasingly find themselves under pressure from consumers, governments and other stakeholders to take responsibility for what happens throughout the chain.

In June of this year, the low-cost U.K. clothing chain Primark faced criticism from civil society organizations and the media after the BBC’s flagship current affairs program, Panorama, alleged that Primark had contracted with a factory employing children who were working in “sweatshop” conditions for “poverty pay.” Charity War on Want, an organization dedicated to fighting poverty in developing countries, then staged a protest outside the retailer’s flagship store, condemning it for terminating contracts with the factory after being presented with Panorama’s allegations.

At around the same time, Japanese car giant Toyota was accused by the U.S. National Labor Committee of having a supply chain “riddled with sweatshop abuse, including the trafficking of foreign guest workers.” Toyota is currently investigating the allegations.

It is sometimes a challenge for multinational enterprise (MNE) buyers to understand and improve their sustainability impact outside their in-house operations. However, improving this impact is often where they can make the most significant changes toward a more sustainable world. In order to work on these external sustainability impacts, MNEs have to actively collaborate with small and medium-sized enterprises (SMEs) in their supply chain and help them to understand, measure, improve and report their sustainability performance.

Although individually small in size, SMEs (employing up to 200 – 250 employees, depending on regional definitions) cumulatively account for approximately 90 percent of businesses worldwide, and are responsible for 50 – 60 percent of employment globally.

While there are those in the SME field who are front-runners in sustainability and transparency through reporting their sustainability performance publicly – by the end of 2007, GRI was notified of over 100 SMEs who had issued sustainability reports – often the resources required to measuring key sustainability indicators are off-putting to SMEs.

The recent project Transparency in the Supply Chain, in which GRI partnered with German development agency Deutsche Gesellschaft für Technische Zusammenarbeit GmbH (GTZ), and the German Federal Ministry for Economic Cooperation and Development (BMZ), four MNEs and a dozen SMEs globally, was a great success in identifying the key challenges faced by companies in implementing transparency and sustain-ability throughout the supply chain.

The four MNEs at the heart of the project each selected three suppliers to participate in training in sustainability reporting procedures. Telefónica of Spain supported firms in its supply chain in Chile while Daimler supported suppliers in India. Puma did so in South Africa, and the Otto Group supported suppliers in China, Thailand and Turkey.

The project was a success, with ten reports being produced out of the 12 original suppliers participating and one report that will come out in the near future.

Based on the success of the ongoing GRI / GTZ project and lessons learned, GRI recently announced the launch of the GRI Global Action Network for Transparency in the Supply Chain. Thus, GRI is calling on multinational firms to take up the gauntlet to promote sustainability throughout their supply chains by building capacity for sustainability reporting within their supplier firms.

The Global Action Network will bring more companies together to ensure their suppliers get the support and guidance they need to implement a sustainability reporting framework similar to that which has proven so useful in the GRI / GTZ project. These leading reporting companies are being asked to demonstrate their commitment to sustainability and transparency in their supply chains by participating in the collaboration.

LEADERS INCREASINGLY FIND THEMSELVES UNDER PRESSURE FROM CONSUMERS, GOVERNMENTS AND OTHER STAKEHOLDERS TO TAKE RESPONSIBILITY FOR WHAT HAPPENS THROUGHOUT THE SUPPLY CHAIN.

Supporting SMEs in supply chains through training, workshops and resources will build capacity for SMEs to initiate and continue a reporting process, and improve sustainability management and performance. The participating MNEs will act as mentors to the suppliers.

One of the key features for global network members will be the opportunity for MNEs to nominate between five and ten of their supplier firms to receive GRI-certified training with the possibility of further coaching from their GRI local network. Thus membership in the network will help multinationals engage with their suppliers on sustainability issues.

The Global Action Network will be supported by other stakeholders as well, including governments, international and national NGOs, foundations and academic institutions, which will help GRI-certified training partners create specialized training and coaching strategies.

IT IS SOMETIMES A CHALLENGE FOR MULTINATIONAL ENTERPRISE (MNE) BUYERS TO UNDERSTAND AND IMPROVE THEIR SUSTAINABILITY IMPACT OUTSIDE THEIR

Participating supplier companies will receive assistance in improving their internal processes, enabling them to prepare a GRI report and to tell their own story about how they deal with sustainability issues. Membership in the network will thus prove invaluable in helping MNEs engage with their suppliers on sustainability.

GRI aims to bring the network together annually in order to exchange ideas and views on how to make their supply chain more transparent and engage with other companies in the field.

As consumers, voters, employees and other stakeholders continue to press MNEs on transparency in their economic, environmental and social impacts, the pressure to manage impacts throughout their sphere of influence in the supply chain will only increase.

Through encouraging suppliers to measure, manage and improve their sustainability performance, MNEs can not only reap the benefits of improved public perception, but can also help to bring about greater transparency and positive change in both society and the wider environment.

Scott McAusland is the Press Relations Manager for Global Reporting Initiative.