A3: Finally, let’s not forget the role of traditional CSR – or perhaps more to the point, non-traditional CSR. Rather than focusing purely on philanthropy, lead firms should leverage their grant-making to create testing grounds for new approaches. Especially now, in a world where so much is uncertain, quickly engaging with experts including NGOs and specialist firms to develop new ideas – then share the results as widely as possible – will be vital in building back better. Let’s not miss our opportunity to create value chains and supply chains that are fair, resilient and sustainable.
2 Likes
The importance of finding capable partners maybe? Initiatives often waste valuable resource and time in working through potential model iterations with lower capacity (but maybe willing) businesses.
That’s one of the lessons from the Yapasa project in Zambia
Yapasa put out a public call for proposals to find traders to scale-up the model during the second year and find new, innovative ideas in both the soybean and aquaculture sectors. When the proposals came in, the results were disappointing; the majority of proposals asked for grants to deliver short-term, band-aid solutions. The businesses saw Yapasa as financier rather than an innovation partner and most lacked the operational or financial capacity to deliver on new, sustainable initiatives.
Sometimes a key leverage point within a company is to forge a personal connection with the supply chain. Taking the board of directors to meet people working in their supply chain can having a lasting effect and help promote action towards responsible sourcing. In some countries, for example Bangladesh, which is a more regulated market, we have found it possible to work with government organisations to include decent work in communities.
2 Likes
There are fundamentally 2 questions to ask, and 3 levels at which to answer each question. The two questions are:
- How can we motivate more ethical business models?
- How can we enable more ethical business models?
If we seek to answer these questions at an individual, social, and structural level then we will uncover opportunities to change. If we can look under the hood and fully understand what are the core influences and drivers of behaviour, then we have a better chance to create targeted change programmes driving better business models forward.
1 Like
A lesson learned from our Value Chain Development team at the ILO is to always find partners who already have a strong business incentive to try new models. Possessing the ‘will’ to change is much more important than the ‘skill’, as capacities can always be built – but it is much harder to shift motivations.
Fully concur with putting farmers first. Symrise believes that unless you empower farmers to improve their incomes you will NOT be able to encourage them to change their behaviours. We are successfully increasing farming household incomes AND simultaneously stopping negative consequences for the environment. We encourage direct farmer engagement, we respect the farmers’ voices and by doing so, they listen to and respect us. You have to give that respect initially AND continuously, if you want your supply chain efforts to earn respect.
1 Like
Q3: It’s a little scrutinized topic, but it’s worth looking at the way economic infrastructure is developing. So as employment fragments, labor markets are becoming aggressively for-profit (Uber, Postmates, Deliveroo, Doordash, etc.).
These services are creating a pool of cheapened, disempowered, workers. That undermines companies with commitments to treat workers well, if their competitors are slashing labor costs it’s hard to buck that trend.
The solution to this is for public agencies to get back into ensuring fair markets: www.ModernMarketsforAll.org
Hamish - Sounds interesting often though the farmers rely on local amalgamators to bulk produce and get it to market - these transport functions often reap unfair profits. Interstingly it is this critical function that has been most disrupted by unthought-out local Governments stopping the movement of trucks. The disaster in East africa with police road blocks basically stopping long distance transport needs to be a LESSON LEARNT from CV-19 and something that needs an emergency plan (or training and capacity building) for the future.
In addition to the CSR Directive Implementation Act - Link), the German Federal Minister of Labor and the BMZ are discussing a “supply chain law”, incl. with the EU. The law shall propose new rules on mandatory human rights and environmental due diligence in EU companies’ global supply chain. The perspective of German business associations is, that enterprises are insufficiently prepared to persuade their direct and sub-suppliers to be more sustainable in their production processes.
Smart mix approach – a combination of voluntary and mandatory measures fostering corporate sustainability and human rights along supply chains; voluntary initiatives to be supported by mandatory frameworks, nationally and internationally, to level the playing field.
1 Like
Yes and a lot of this is driven by disclosure imperatives of course and the kind of indicators we are using. https://shiftproject.org/resource/the-problem-with-how-we-measure-business-respect-for-human-rights-2/
A lot of the work that we do (both as Symrise and with my consultancy colleagues) is based on a Risk/Opportunity Heatmap approach which looks to identify the vulnerabilities and potential improvement opportunities for the different stakeholders throughout the value chain (NEVER forgetting that the Planet is a key stakeholder).
“Build back better” needs to be a call-to-action to reflect, consider and re-empower smart initiatives towards socio-economic and environmental change because the interlinkages have never been clearer.
For us, business models for decent work are where commercial and sustainability incentives are fully aligned. But often, this isn’t the case (see a quote below from the auto industry). One potential solution may be more partnership models – between buyers and suppliers; or companies and workers. Is this something that needs to happen industry-wide to shift to a ‘new normal’?
“According to one automotive supplier relations advisory firm, buyers “are not coming in and saying, ‘Hey, we’ve got to work together to get costs down,’. They’re saying, ‘You’ve got to give me a lower price. I don’t care if you have to cut your profit margin—that’s not my problem.’” Buyers lack the performance incentives to work on shared prosperity: “They’re not being told ‘if you don’t improve your supplier relations, you’re not going to get a raise.’
Question 3: Leverage points
- · Within companies: Companies need to carefully scrutinise whether and why operational-level interventions in favour of decent work have not worked – and seek to understand whether it is the business model that is creating a countervailing pressure. The current pandemic is a tipping point: both the vulnerabilities created by dominant business models and the business case for decent work have been have drawn mainstream attention. Investors and workers have shone a negative light on business models relying on precarious labor or that utilize just-in-time inventory models without appropriate mitigating measures to address impacts on people. Conversations that sustainability experts within companies have been trying to raise to executive level are making it there.
- o As top decision makers within businesses consider how best to return to productivity during this ongoing Covid-19 pandemic, they should consider:
(1) applying a lens of vulnerability to prioritize action, because those who are most at risk are in some way vulnerable to human rights impacts e.g. gig economy workers
(2) involving relevant stakeholders in critical decision making processes - The companies that are developing the best informed responses to COVID tend to be those that have relationships with organizations that represent the views and experiences of affected people
(3) using leverage with governments on policy responses
(4) communicating clearly about the company’s own actions and
(5) having honest discussions about risks that are baked into their business models
o Companies can also use their leverage with governments in advocating for decent work standards. Contributing to a regulatory environment that enables respect for rights: In 2014, eight apparel brands wrote to the Cambodian deputy prime minister and the chairman of the local Garment Manufacturers Association to say they were “ready to factor higher wages” into their pricing.
3 Likes
A key issue is to understand what is currently happening on the ground (so it is often very circumstantial) and what incentives and capabilities for change exist.
- get the analysis of the current value chains and business models right:
what are incentives (will) and capacity (skill) of actors in the value chain to change these business models as to make them more relevant to Decent Work and the poor?
‘Value Chain Development’
Hi Kevin, you’re right and we aim wherever possible to reduce the reliance on intermediaries who take, but do not add, value. In India we are establishing Farmer Producer Companies to allow the amalgamation to benefit the local farming communities; in Madagascar we deal direct with farmers and encourage the formation of Community Based Savings Groups which encourage local voices to be heard and acted upon; in the Philippines we will rely in part on GIZ’s Farmer Business School model so as farmers can earn the most from their own labor and efforts.
Q3
· Investors as leverage point: Investors have a key role to place in their engagement with companies – including by asking questions that force companies to scrutinise the way that risks to people may be baked into the business model. Investors can also amplify the voices of sustainability experts within companies.
1 Like
Hi Rebeca, thanks for raising this point. Personally, I believe that “truly responsible business models” are a question of structural organisation, first of all. A sustainable organisation is to me synonym of greater internal collaboration and understanding. I mean, oftentimes, even in firms that have an internal sustainability function, this can still be disconnected from other functions / units / departments. That means in practice that when it comes to labour issues, it can be tricky to define responsibility a/o alignment- collaboration points between HR / sustainability and other functions involved…Until “social sustainability” will not be clearly defined as including labour matters, the confusion will be there - I guess.
2 Likes
This is normal as their view is localised, whereas the market is global.
They just want to better compete with their current “neighbours”.
I believe your proposal need a platform to enable selection of the “best” competing localised solutions to allow the collective them (regional or country level) to capture the most value out of the supply chain.
We also need to understand how we can work with government organisations; especially where commodities are more regulated.
Q3:
· Finally , and more generally, as Shift’s President Caroline Rees points out in her Ethical Corporation article, we need to mainstream the business and human rights approach across the discourses (and resulting initiatives and regulation) on inequality, ESG, social and human capital and stakeholder capitalism, all of which are narratives for looking at today’s business models and have implications for decent work. For example, for decades mainstream businesses have cited profit maximisation and shareholder primacy as the core purposes of businesses. However in recent years we have seen business-led calls for “stakeholder capitalism” (e.g. the Business Roundtable ‘Statement on the Purpose of a Corporation’, August 2019) which highlights, among other things, the need to bring the interests of stakeholders other than shareholders – such as workers in the enterprise and its value chain - in the frame of business decision-making. Bringing in the lens of business and human rights sharpens the focus to those people who are most vulnerable to negative impacts in a given situation: the definition of stakeholders should be able to encompass nominally self-employed workers (rather than only formal employees) and supply chain workers (rather than merely management at supply chain companies) if we are serious abut addressing decent work.
2 Likes