4th blog entry from a series on promoting OSH in the Supply Chain. First published by SHP Online
Supplier Engagement – Where to begin?
There are many reasons why promoting better OSH practices amongst suppliers might seem like a lot of hard work. The following are perhaps the most significant barriers:
• logistical complexity
• lack of accurate information and adequate communication throughout the supply chain
However, in the previous entries we touched upon why organisations could benefit from engaging with suppliers on OSH, and why OSH might be a good starting point for improving an organisation’s own sustainability credentials – given the existing internal know-how and experience with it.
Before considering possible strategies and the diverse instruments to influence supplier behaviour in relation to OSH, let’s consider some general points on supplier engagement. Approach will vary depending on the supplier – deep engagement, such as partnership, to broader engagement, such as assessment and evaluation or merely communicating sustainability expectations. The degree of engagement would depend on how a particular supplier is categorised. Does this supplier amount to a strategic partner? Is there a high level of dependence or can they easily be replaced? To find out a bit more about categorisation of suppliers, click here for a blog I wrote last year.
EU OSHA identifies two strategies in relation to suppliers, or, in other words, the primary network. These overlap to a certain extent and can be divided up into sub-strategies and instruments. They are as follows:
1. A risk management and performance approach to suppliers
2. Supply chain management through product-specific initiatives
For OSH to be effectively promoted in the supply chain an ongoing conversation with procurement is crucial. Although procurement is in the bargaining position to influence change amongst suppliers through contract, prior to that the department needs to understand what health and safety standards are to be used as a basis for selecting suppliers. In addition communication with and training of both procurement and supplier staff would improve both performance and relations. Other supplier related measures might include requiring:
• a management system/ code of conduct
• signed declarations of compliance
• periodic audits
Collaboration is also important because it builds trusts, but to build trust properly, focal companies, defined in previous entry here, must also lead by example. That is, have their own codes of conduct or policies in place as well as methodology for demonstrating compliance with sustainability requirements. The good news in the case of OSH is that all this should already be habitual.
On the question of risk:
Early detection of supply chain risks can be ensured by the following:
• desktop research
• advice from expert panels on different sustainability issues (eg latest OSH trends)
• contacting watchdog organisations or regulators
• careful drafting or scrutiny of legal documents such as supplier contracts
• sustained dialogue and collaboration with NGOs
• hiring expert consultants
Choosing the right approach:
Voluntary management standards, such as OHSAS 18001 for health and safety, can act as an important signal in a supplier evaluation, particularly if certified by an independent assurer. Requiring a standard is an easy way of streamlining the selection process. However, it does not always add the same value to a relationship or drive innovation in the same way a two-way conversation might, and there is always the risk of a tick-box approach having been adopted if the right checks are not in place.
Codes of conduct provide affirmation of organisations’ corporate values and set out guidelines, goals and objectives in relation to existing expectations. Although voluntary, most companies will have some kind of policy document, and most of these will require something along the lines of “safe and healthy working environments”. However, particularly in certain sectors, some delve much deeper into OSH matters. Codes of conduct are a means of identifying shared values with a supplier and need to be classified and scored as part of the selection process. This is often done according to compliance and specificity, where compliance can be demonstrated through clear monitoring systems (such as legal registers) and specificity is based on:
• how focused and comprehensive the code is;
• whether it references international guidance or any recognised standard; and
• the extent to which aspects of the code are measured
Industrial collaborations and international framework agreements are examples of multi-stakeholder partnerships which can be used as a platform to address sustainability objectives. These arrangements can help promote a convergence of practice in a given sector or amongst multinationals and be a way of sharing information and introducing stronger commitments relating to supply chains which might be difficult to tackle individually. Examples of industrial collaboration might be the Electronics Industry Citizenship Coalition (EICC) or ICTI-Care, which aims to ensure safe and humane working conditions for toy factory workers.
Sustainable production involves considering a product’s cumulative social and environmental impacts through the supply chain. Life cycle assessments of products are increasingly incorporating social aspects such as OSH practices.
Trade industry initiatives are a way to ensure collaboration on particular product chains and provide for an early warning system in relation to, for example, OSH risks amongst cooperating actors.
Other sources of guidance for focal companies:
Whatever processes are put in place, one should bear in mind guidance provided by the UN Global Compact, which states that incentives are much more effective than penalties. Some examples are:
• reducing audit frequency as performance improves consistently
• increasing business on the condition of improved performance
• providing recognition and awards, for example through the introduction of a sustainability performance index or a preferred supplier programme
• sharing resources for building capacity or the cost of improvements
• allowing participation in strategic buyer/supplier planning meetings
The OECD Guidelines for Multinationals also gives pointers on how multinational enterprises can engage effectively with their supply chain.
Respiro and Tosca are examples of projects who work to promote responsible procurement and provide guidance on how to work with different aspects of the supply chain on sustainability issues.
More practical tidbits still to come. However, I will be focusing more on the secondary network – that is, contractors.
For more detailed information on this topic, check out EU OSHA’s literature review on promoting occupational safety and health through the supply chain .