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Emphasis on Corporate Social Responsibility

This year, the Gartner Supply Chain Top 25 revealed that retailers are placing an increased emphasis on corporate social responsibility. The average CSR score for the top 10 retailers in the report was 6.8 in 2017, compared with 5.8 last year. Furthermore, four companies (Inditex, H&M, Gap and Wesfarmers) scored a maximum of 10 this year, whereas the highest ranking by any company last year was nine, also achieved by four companies. -John Johnson, Senior Content Specialist, Gartner

Emphasis on Corporate Social Responsibility

CSR is a very broad topic that can be interpreted in different ways, and retailers focus on different elements depending on their strategic intent. For example:

  • H&M has three key focus areas: sustainability, workers' rights and reduction in material consumption through its participation in the United Nations' Better Than Cash Alliance initiative.
  •  Gap's CSR strategy is geared around four areas — factory working conditions, employees, environment and community. Each of these areas has measurable initiatives with targeted completion dates.
  • To Best Buy, achieving its CSR objectives means focusing on six areas — mining; manufacturing; transportation; multichannel operations; consumer use; and repair, recycle and trade-in.

Although some CSR efforts come down to good old-fashioned relationship management and negotiation and training, supply chain will likely need to embrace technologies that enable better visibility and traceability into the end-to-end supply chain as a way of upholding brand strength and mitigating risks. Success in CSR ultimately requires a lot of data collection, and it is imperative that retail supply chains become efficient at collecting and leveraging that data to deliver their programs.

Increasingly, CSR is being driven further into logistics and, for most logistics leaders, is fast becoming a must-have rather than a nice-to-have when selecting a third-party logistics (3PL) partner. When it comes to logistics, CSR is often anchored around the environmental impacts caused by physical transportation. According to the International Energy Agency (IEA), the logistics sector accounts for one-quarter of the world's CO2 emissions.

By 2021, 30 percent of large enterprises will make CSR as important as price and service in their selection of a 3PL partner.

There is also a growing interest in this topic by the investment community. Companies often come at CSR from the perspective of the customer and the regulator, and not investors, providing nonfinancial information to characterize progress.

Note the following:

  • Investors want to gain clarity on a retailer's CSR strategies so as to focus on how risks affect a firm's value rather than seeing it simply from the perspective of managing risk.
  • Investors recognize that companies are operating in a complex global environment that's exposing them to risks in a resource-constrained world. They are starting to realize that supply chain organizations are often not aware of this risk with little visibility into their exposure. Not knowing is no longer acceptable.
  • Bloomberg has added environmental social governance (ESG) data to its evaluation of company performance. The number of financial customers using this data has increased 800 percent since 2003.

Financial and investment institutions are now paying increased attention to CSR. The Dow Jones Sustainability Index (DJSI) is one indicator that is joining other financial measures for evaluating investments.

The Outlook

Chief supply chain officers should emphasize the importance of developing and delivering against corporate social responsibility (CSR) goals to meet consumer desires for environmentally responsive retailing, as well as the demands of investors and logistics providers.

CSR is a very broad topic that can be interpreted in different ways, and retailers focus on different elements depending on their strategic intent. For example:

  • H&M has three key focus areas: sustainability, workers' rights and reduction in material consumption through its participation in the United Nations' Better Than Cash Alliance initiative.
  •  Gap's CSR strategy is geared around four areas — factory working conditions, employees, environment and community. Each of these areas has measurable initiatives with targeted completion dates.
  • To Best Buy, achieving its CSR objectives means focusing on six areas — mining; manufacturing; transportation; multichannel operations; consumer use; and repair, recycle and trade-in.

Although some CSR efforts come down to good old-fashioned relationship management and negotiation and training, supply chain will likely need to embrace technologies that enable better visibility and traceability into the end-to-end supply chain as a way of upholding brand strength and mitigating risks. Success in CSR ultimately requires a lot of data collection, and it is imperative that retail supply chains become efficient at collecting and leveraging that data to deliver their programs.

Increasingly, CSR is being driven further into logistics and, for most logistics leaders, is fast becoming a must-have rather than a nice-to-have when selecting a third-party logistics (3PL) partner. When it comes to logistics, CSR is often anchored around the environmental impacts caused by physical transportation. According to the International Energy Agency (IEA), the logistics sector accounts for one-quarter of the world's CO2 emissions.

By 2021, 30 percent of large enterprises will make CSR as important as price and service in their selection of a 3PL partner.

There is also a growing interest in this topic by the investment community. Companies often come at CSR from the perspective of the customer and the regulator, and not investors, providing nonfinancial information to characterize progress.

Note the following:

  • Investors want to gain clarity on a retailer's CSR strategies so as to focus on how risks affect a firm's value rather than seeing it simply from the perspective of managing risk.
  • Investors recognize that companies are operating in a complex global environment that's exposing them to risks in a resource-constrained world. They are starting to realize that supply chain organizations are often not aware of this risk with little visibility into their exposure. Not knowing is no longer acceptable.
  • Bloomberg has added environmental social governance (ESG) data to its evaluation of company performance. The number of financial customers using this data has increased 800 percent since 2003.

Financial and investment institutions are now paying increased attention to CSR. The Dow Jones Sustainability Index (DJSI) is one indicator that is joining other financial measures for evaluating investments.

The Outlook

Chief supply chain officers should emphasize the importance of developing and delivering against corporate social responsibility (CSR) goals to meet consumer desires for environmentally responsive retailing, as well as the demands of investors and logistics providers.

Emphasis on Corporate Social Responsibility