Executive Briefings

Two-Thirds of Corporations Ignore Corruption in Their Supply Chains

A recent report by the Economist Intelligence Unit has revealed a significant shortfall in the ethical performance of major corporations in supply chain management.

Two-Thirds of Corporations Ignore Corruption in Their Supply Chains

Fewer than a third looked to address corruption and bribery issues with their suppliers. This was despite respondents high regard as to their company's sustainability policies.

The research surveyed 800 supply chain executives most of whom were based in the major industrial economies. It was a thorough report, eliciting the views of practitioners, academics and consultants.

Nearly four-fifths of respondents believed that ‘my company has a responsible supply chain’. When explored closer, the performance of these organizations fell away. Twenty-three percent addressed climate change and carbon footprints, and 22 percent addressed child labor issues.

The precise meaning of ‘address’ is unclear. Within Procurement Leaders’ own research we find that there is a wide degree of variance on supply chain action. At its lightest level, companies may use only contracts. For example, the inclusion of a provision mandating suppliers signing up to ethical code of conducts may be seen advanced practice for some, but should be considered as the most rudimentary measure. Indeed, there is limited assurance that one can glean from a signed document. The most effective way to ‘address’ supply chain ethics is direct enforcement through clear and transparent measurement alongside routine verification.

Since the previous survey, five years ago, the EIU records a drop in concern in developing a responsible supply chain. Thirty percent of the sample reduced their focus on ethical issues.

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Fewer than a third looked to address corruption and bribery issues with their suppliers. This was despite respondents high regard as to their company's sustainability policies.

The research surveyed 800 supply chain executives most of whom were based in the major industrial economies. It was a thorough report, eliciting the views of practitioners, academics and consultants.

Nearly four-fifths of respondents believed that ‘my company has a responsible supply chain’. When explored closer, the performance of these organizations fell away. Twenty-three percent addressed climate change and carbon footprints, and 22 percent addressed child labor issues.

The precise meaning of ‘address’ is unclear. Within Procurement Leaders’ own research we find that there is a wide degree of variance on supply chain action. At its lightest level, companies may use only contracts. For example, the inclusion of a provision mandating suppliers signing up to ethical code of conducts may be seen advanced practice for some, but should be considered as the most rudimentary measure. Indeed, there is limited assurance that one can glean from a signed document. The most effective way to ‘address’ supply chain ethics is direct enforcement through clear and transparent measurement alongside routine verification.

Since the previous survey, five years ago, the EIU records a drop in concern in developing a responsible supply chain. Thirty percent of the sample reduced their focus on ethical issues.

Read Full Article

Two-Thirds of Corporations Ignore Corruption in Their Supply Chains