Brand reputation and customer loyalty are proven external benefits of a corporate ESG program, but internal employee benefits could turn out to be even more impactful in the post-pandemic talent crunch. Leading ESG-focused companies show improved employee retention, increased productivity and shorter recruiting cycles.
Following are six steps that companies can take now to make their supply chains more socially responsible:
Create a long-term commitment. Begin by mapping your supply chain and using key social issue indicators such as labor laws, wage assessments, child and forced labor statistics, gender equality metrics and human health to assess the social issues within your industry, supplier regions, and extended network. Identify your suppliers, both current and potential, as well as their suppliers, and measure them against your social profile. Begin by creating a roadmap for action and improvement, while avoiding the use of nonspecific or vague goals in defining the desired impact. Decide the level of external transparency and communication for your program, and ensure that you have senior leadership commitment. Most importantly, begin the conversation and cultural shift toward social responsibility.
Collect and use the data that’s available. Develop scorecards and dashboards to qualify and monitor your supplier network. Use data that’s available both publicly and within your systems to ensure a thorough profile, then validate it. Invest in technology to help bridge data gaps or inconsistencies. Look for alternative suppliers that meet your long-term objectives. Make sure that you’re value-tracking as you build your program, considering both short-term financial effects as well as long-term revenue growth, cost reduction, risk mitigation and brand equity. Break down long-term goals into incremental steps that can be managed and executed against.
Focus on partnerships and visibility. Strengthen your supplier relationships by sharing data and information with your network. Share your commitment and plan with suppliers, and work collaboratively to meet mutual goals. Focus on minority-owned suppliers that can grow with your business and support. (You may not be able to find the scale you need today, but your efforts can work to build a future network by helping smaller partners with program efforts around training, financing, and creative contracting.)
Develop training and capability-building programs. Help your internal employees and extended network understand the tools, regulations and processes involved in building a socially responsible supply chain. Programs that teach inclusion, empathy and relationship building help your current talent identify opportunities for improvement. You must then enable your employees to communicate challenges and concerns, make changes and ultimately help the company reach social goals. In-house tactical and job-specific skill training may be greatly beneficial to your diverse and minority-owned suppliers, so share these programs to build the strength of your overall network.
Hold yourself and your partners accountable. Share your scorecards, dashboards and expectations with your partners. Openly discuss efforts that you’re taking to improve your social responsibility and ask for feedback; share ideas and programs. When mistakes are made, own them and create mitigation and response plans. Create incentives for partners to meet and exceed your goals, then build them into contracts and share successes publicly. Celebrate the small improvements, knowing that sustainable change takes time.
Build a culture of social responsibility. When thinking of social responsibility within supply chains, many focus on developing or conflict-ridden countries. Sometimes, however, the most meaningful social impact can happen within company headquarters. Building a culture of trust and respect, where people feel valued, is the most important success factor in sustaining any program. Social objectives and goals can’t be met by a single individual or leadership team; daily decisions and incremental improvements will be the deciding factor in a social program’s success.
Social and environmental responsibility falls on the entire organization, and can’t be limited to one or two swift actions. To make an impact in the world, many hands and minds must participate. The creation of such programs presents amazing opportunities for strengthening your culture and internal community. Supply chain networks have been hit especially hard in the past few years, and this time of rebuilding is your opportunity to create something the promotes the human element across the industry.
Melissa Hadhazy is senior partner at Korn Ferry.
Read more of SupplyChainBrain's 2022 Supply Chain ESG Guide here.
Timely, incisive articles delivered directly to your inbox.