By investing in capacity-building programmes for suppliers, businesses can build also resilience throughout their supply chains, creating long-term value for all stakeholders involved.
THE social impact of a company’s operations extends far beyond its immediate environment. As businesses recognise the critical importance of integrating social responsibility into their supply chain management, they are also drivers of positive change on a global scale.
Companies can use their supply chains to foster social responsibility, proven by examples of ethical sourcing policies, supplier diversity initiatives and capacity-building programmes.
However, there are still challenges despite best practices for managing social impacts across complex supply chains.
These best practices often emphasise collaboration with suppliers, non-governmental organisations (NGOs) and other stakeholders.
It’s important to examine how these strategies contribute to competitive advantage and future-proofing businesses.
Understanding social sustainability
Social sustainability is a key part of the triple bottom line (TBL), which balances business’s social, environmental and economic factors. Issues like human and labour rights violations, child labour, discrimination, low wages, poor health and safety and the safety of female workers are common in supply chain management.
Social sustainability addresses three key points: the well-being of people, society and consumer safety.
The human aspect includes skill development, poverty alleviation, narrowing inequality, respecting human rights, health and safety, welfare, non-discrimination and fair wages.
The societal aspect involves social values, preserving culture, community engagement, philanthropy, charity and hiring local people. Consumer safety is also essential, as product failures can endanger consumers and lead to significant litigation costs for businesses.
Tina thomas is head of eSG at Boardroom Group.
The core of social sustainability is people, with trust and a common understanding bridging the gap between employees and employers.
Ethical sourcing policies
Ethical sourcing ensures products are produced sustainably and responsibly. Companies like Starbucks and Patagonia set the standard in this area. Starbucks sources all its coffee through its Coffee and Farmer Equity (C.A.F.E.) Practices programme, ensuring farmers follow social, environmental and economic guidelines.
This programme emphasises fair wages, safe working conditions and sustainable farming practices, securing a high-quality coffee supply while improving farmer livelihoods.
Similarly, Patagonia is committed to environmental and social responsibility, partnering with various organisations to source sustainable and ethically produced materials.
Patagonia’s transparency and rigorous auditing process exemplify how ethical sourcing can lead to positive social and environmental outcomes, attracting a loyal customer base that values sustainability.Supplier diversity initiatives
Promoting supplier diversity is another strategy for driving social impact.
By partnering with minority-owned, women-owned and other underrepresented suppliers, companies can enhance economic inclusion and equity.
IBM has been a leader in this area for decades, integrating diverse suppliers into its supply chain and fostering economic empowerment, innovation and competitiveness.
Another example is how Walmart supports women-owned businesses through its Women’s Economic Empowerment initiative, pledging significant sourcing from these businesses.
This promotes gender equity and economic development while diversifying Walmart’s supply base, reducing its dependency on a limited number of suppliers.
Capacity-building programmes for suppliers
Investing in capacity-building programmes for suppliers enhances their capabilities and fosters long-term sustainability. For instance, Unilever’s Sustainable Living Plan focuses on capacity building for suppliers, providing training and support to smallholder farmers to improve agricultural practices, increase productivity and enhance livelihoods.
Nestle’s Farmer Connect program improves the livelihoods of farmers supplying raw materials like coffee, cocoa and milk.
By offering training, financial support and market access, Nestle helps farmers boost productivity and sustainability, ensuring a stable supply of high-quality raw materials and reinforcing its commitment to responsible sourcing.
Challenges and best practices for social impacts
Managing social impacts in complex global supply chains involves several challenges, including ensuring ethical compliance, addressing labour rights and maintaining transparency.
However, best practices and collaboration can help overcome these challenges.
Ensuring suppliers follow ethical standards and labour rights can be difficult, especially in regions with weak regulations.
Maintaining transparency throughout the supply chain is challenging, particularly with multiple supplier tiers. Implementing and monitoring ethical policies and programmes can be costly and resource-intensive.
Engaging with suppliers, NGOs and other stakeholders fosters sustainable supply chain practices, leveraging shared resources and knowledge.
Regular third-party audits ensure compliance with ethical standards and identify improvement areas.
Using technology, such as blockchain, for supply chain transparency enhances monitoring and reporting mechanisms.
Providing training and support helps suppliers implement ethical practices, leading to improved social outcomes.
Collaborative efforts for sustainability
Collaborative efforts with suppliers, NGOs and other stakeholders are essential for sustainable and socially responsible supply chain operations.
Participating in initiatives like the Ethical Trading Initiative or the Fair Labor Association offers access to resources and support networks.
Collaborating with NGOs helps address complex social issues within supply chains as partnerships with organisations can enhance a business’ efforts to improve labour rights and environmental sustainability.
Involving local communities in supply chain initiatives ensures interventions are culturally appropriate and beneficial to all stakeholders.
Integrating social responsibility into supply chain management is crucial for businesses seeking to drive positive social change and legitimise their operations.
Companies can enhance their social impact and build more sustainable supply chains by implementing ethical sourcing policies, supporting supplier diversity initiatives and investing in capacity-building programmes.
At the same time, addressing key challenges and adopting best practices, particularly through collaborative approaches, strengthens businesses’ ability to effectively create social impacts for underrepresented communities.
Companies prioritising social responsibility in their supply chains contribute to a more equitable and sustainable world and reinforce their legitimacy as responsible corporate citizens.
These strategies provide a competitive edge and future-proof businesses, ensuring they remain viable and resilient in an ever-evolving global market that values businesses that care.
Tina Thomas specialises in strategic planning and sustainable growth, with areas of interest in innovation and transformation. With over 15 years of experience in the energy industry, she has a global track record in crafting and implementing corporate strategies focused on sustainability.
The views expressed here are the writer’s own.
