SupplyChainTalk: Ethical supply chains – ensuring integrity and responsibility, and reporting misconduct 

Views on news 

A TV advert by Red Tractor, the UK’s biggest certifier of farm products on supermarket shelves, has been banned for exaggerating the scheme’s environmental benefits and misleading the public.

 

The Advertising Standards Authority (ASA) ruled the organisation had provided "insufficient evidence" that its farms complied with basic environmental laws to substantiate the claims in its ad. Red Tractor defended itself by saying that the certificate is about food safety and doesn’t make any environment protection claims. Interestingly, supermarkets have also been reported to have similar misconceptions about Red Tractor’s mission. 

 

ASA probably wasn’t the right authority for the environmental group to turn to – about environmental issues they should have notified  environmental authorities, although they are bound to make more impact with this course of action. Discrepancies between certification claims and practice make it more challenging for supply chain professionals to make environmentally responsible decisions. 

 

Certifications, audits and technology 

Certifications, technology and audits are used in combination to verify ethical sourcing. Communicating sustainability efforts and schemes both externally and internally are key. Highly regulated industries tend to have a suppliers’ code of conduct with standards that their partners should meet, as well as audits involving human rights assessment experts to ensure that there is no modern day slavery within  their supply chains. Pre-conduct diligence must play a central role in the effort to avoid onboarding unethical suppliers.  

 

Beyond certificates and audits, however, businesses must also leverage technology to gain real-time data on their suppliers and traceability. Digital tools can support processes from buyer selection to contract performance.

 

To find the right tools, first businesses must establish what risks are material to their operation and check suppliers related to those with the most rigour. The action taken about a supplier should be in line with the nature and the severity of the problem that has surfaced – whether it’s a one-off when a second-tier supplier was let down by a third-tier one or it’s a systemic problem about a first-tier supplier.

 

Awareness to look out for and share ethical issues that come up at any point in the value chain should be part of a company’s corporate culture – it’s not only a procurement task but something that the whole organisation should be involved in.  

 

The panel’s advice 

• When you are given a red flag about a supplier, the first thing is to protect the whistleblower even before making a decision whether to drop the supplier.  
• Unless it’s a major issue, such as a sanctiones organisation in your supply chain or an evidenced case of forced labour – try to work towards collaborative corrective outcomes.  
• Don’t turn supplier assessment into an academic exercise – always factor in the realities of doing business.  
• Your motto with suppliers should be “trust but verify.”