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This is a repost from March 7, 2019. Original article available here.
EcoVadis Releases UN Global Compact Performance Report
Study finds that organizations that have committed to the UNGC’s ten principles perform significantly better on sustainability measures throughout supply chains
PARIS and NEW YORK — (March 6, 2019) — EcoVadis, the world’s most trusted provider of business sustainability ratings, has published a new report on sustainability performance comparisons between organizations who have committed to the UN Global Compact principles vs. those that have not. Taking a deep dive into performance across key themes of Environment, Labor and Human Rights, Business Ethics and Sustainable Procurement, EcoVadis found that committed companies perform better across their supply chains.
“We assess nearly 20,000 companies a year on their sustainability performance and this report specifically explores the link between the adoption of the Ten Principles of the UN Global Compact and advanced sustainability performance,” said Sylvain Guyoton, SVP of Research at EcoVadis. “We found encouraging evidence that companies who adopted the UN Global Compact Principles are stepping up to the challenge — mitigating CSR risks within their operations and moving the needle to a more sustainable future.”
The report’s major takeaway:
Companies committed to the UN Global Compact principles have on average better sustainability performance: The findings demonstrate a clear correlation between advanced CSR performance and UN Global Compact participation. That said, participation in the UN Global Compact does not lead to advanced CSR performance in and of itself;
Among UN Global Compact participants, small and medium-sized companies demonstrate better performance compared to large ones. This may be due to the fact that small- and medium-sized companies can act faster when addressing CSR issues.
Companies perform significantly better in labor & human rights and environmental themes, compared with the ethics and sustainable procurement themes.
Sustainable Procurement and environment themes have the greatest gaps between UN Global Compact participants and nonparticipants. This gap may be linked to the need for explicit executive level commitment to make investment in environmental and sustainable procurement programs. Such commitment is a clear and deliberate part in UN Global Compact participation, and thus explains the higher performance of UN Global Compact participants.
“We must achieve the Sustainable Development Goals — for our own sake and for future generations,” said the CEO and & Executive Director of the UN Global Compact Lise Kingo. “More and more businesses are supporting the Global Goals, and now we must drive for the tipping points that will make sustainability a mainstream reality for small and large businesses everywhere. It is encouraging to see that our Ten Principles on human rights, labor, environment and anti-corruption are helping companies to improve their sustainability performance.”
To learn more about the UN Global Compact and their various signatories, download the full report.
This is a repost from November 28, 2017. Original article available here.
On November 20, 2017, New Windsor authorities say two explosions and a fire at a contract manufacturer in the Hudson Valley about an hour north of New York City left multiple people injured, including firefighters caught in the second blast. As of November 21, the tally was one man dead and 125 hurt after the deadly explosions.
Working in the sustainable procurement field, I try not to focus too heavily on sharing these horror stories. In fact, one of my favourite supplier sustainability stories revolves around another New York state contract manufacturer in the consumer goods space that avoided any such catastrophe, going from “Zero to Hero” in terms of their Environmental Health and Safety in a few short years. As I write this post from my company’s New York office, however, the avoidability of this tragedy and needless loss of life strikes frustratingly close to home and I feel compelled to share my views on this horrific disaster. When I first heard of this event, the questions that sprung to mind were:
1) Were any of the Supplier’s B2B customers aware of the level of risk to the factory workers?
2) If not, why not?
3) If so, why didn’t they act?
This event was brought to my attention because the company I work for, EcoVadis, provides corporate social responsibility ratings and monitoring of legal entities (most often ‘Suppliers’) on their environmental, social, ethics and supply-chain performance. In other words, EcoVadis could have picked up some of this particular plant’s gaps in management systems, or at bare minimum, the supplier’s 19 OSHA violations, had a client requested it.
“This tragedy could have been avoided, if only one of their B2B customers had used EcoVadis…”
Upon learning of the explosion and resulting fire, my first instinct was to share a quick one sentence post or tweet, with a link to the article, saying something like, “This tragedy could have been avoided, if only one of their B2B customers had used EcoVadis…”, but an opportunistic plug for my employer would have been missing the point entirely… Assessments don’t save lives, action does… While an EcoVadis assessment could have told the Supplier (and their B2B customer) what the problems were and what the Supplier could have done to improve, in the case of this particular Supplier, they were already well aware of what the problems were (19 OSHA violations and fines of totalling $60,421 are a testament to this). Ultimately the risk/reward was such that, for whatever reason, the Supplier chose not to act. Saving lives requires action, and if there was anyone who could have saved lives in this scenario, it was their B2B customers. $60k in fines may not have moved the needle with this Supplier, but I bet millions of dollars in potential lost revenue could have.
So where is Procurement in this tragedy? Did they have the resources at their disposal to drive tangible improvement in working conditions and yet choose not to use them? What would have been Procurement’s motivation to look into this supplier in the first place? We may never know. By now their customers have likely already hit the ‘panic button’, scrambled to find an alternate/interim supplier, cut their losses and moved on. Perhaps the Supplier’s B2B customers had the resources to drive improvements, but chose instead to focus their attention on other suppliers perceived to be of higher risk…
companies take responsible sourcing seriously – but only in developing countries
As more and more production is moved offshore to countries like China, the focus of supplier vetting and due diligence tends to be offshored as well. Scandals involving product quality, environmental impacts, and modern slavery ensure companies take responsible sourcing seriously – but only in developing countries. In North America, it seems, the law of the land is seen as ample protection from supply-chain disruption, and as such, North American suppliers are being treated as ‘low-risk’, which ultimately leaves them off the hook in global responsible sourcing programs.
“There are good suppliers in ‘risky’ countries and risky suppliers in ‘good’ countries”
As cases like this highlight, however, assuming North American suppliers are “safe” and Chinese suppliers are ‘risky’ is not a sustainable long-term approach. As a Responsible Sourcing professional once told me, “There are good suppliers in ‘risky’ countries and risky suppliers in ‘good’ countries”. In other words, a supplier’s factory’s geographic location is not a proxy for risk. Due diligence must be undertaken by procurement with all suppliers on an ongoing basis – regardless of geographic location – and those suppliers need to know that buyers truly care about the safety of factory workers and want to see their continuous improvement!
Care (and duty thereof) is the key here, because to mitigate the likelihood of avoidable disasters and tangibly improve the environmental health and safety of workers, it’s going to require that CPOs genuinely care about their Suppliers’ CSR & Sustainability on the front-end (not after-the-fact), and stop treating it like a ‘check the box’ exercise for geographically ‘at-risk’ suppliers.
In Summary
This tragedy was avoidable.
CPOs need to take ‘responsible sourcing’ and ‘sustainable supply-chain’ initiatives seriously and globally (and ‘globally’ includes North America).
Category Managers must put non-financial performance as the first KPI on the list (above Cost, Quality, and On-Time Delivery).
Sourcing Directors must include Corporate Social Responsibility in RFPs and ensure suppliers are incentivized to improve on an ongoing basis.
As US Federal regulations drop like Fall leaves, it’s up to Procurement to fill the due diligence void left behind by motivating suppliers to maintain the highest of standards, benchmarking their suppliers against global best practice, and rewarding those suppliers that go ‘beyond-compliance’. Corporate-led multi-stakeholder industry initiatives may also help (such as the Responsible Beauty Initiative that launched in November 14, 2017). While due diligence with suppliers in emerging markets will always be a necessity, it should never be at the expense of the wellbeing of workers and their families in the buyer’s backyard.
This is a repost from August 14, 2017. Original article can be found here.
I was honored to have the opportunity to speak at the United Nations Headquarters recently. To be invited into the hallowed halls of the UN, walking past portraits of global leaders and heroes, you get a sense of the seriousness of the institution and the gravity of what is at stake.
Inside what seemed like a “War Room“, with business, government and non-government organizations well represented, the tone was at times fittingly combative.
The day kicked-off with an (unintentionally intense) introduction from Nikhil Seth Executive Director of UNITAR and Paloma Duran Director of the SDG Fund. After cordially introducing the day’s events, the floor was open for a few questions from the attendees, (typically reserved for obligatory house-keeping questions, or a few soft open-ended questions about the state of “international progress”). The invitation for questions resulted in a European government representative challenging the sustainability (and therefore integrity) of the intergovernmental organization’s funding sources, leaving the panelists to calmly refer the attendee to anecdotal evidence of the vetting process for accepting funds from corporations. Good to know, but not exactly the “we can do this” kind of attendee engagement anyone was expecting.
The moderator for the second session, Stephen J. DonofrioSenior Advisor for Supply Change atForest Trends Initiative, promised a more interactive session featuring suppliers discussing “how to initiate and sustain internal processes and initiatives”. The panel featured two distinctly different perspectives, with Tonye ColeCEO of the Sahara Group, a large Nigerian private energy company, and Cindy Bush Director of Environmental Health and Safety and Sustainability at Tessy Plastics Corporation, a family owned and operated contract manufacturer headquartered in central New York.
Mid-way through the presentation, it was apparent that doing business in both the energy and the plastics sectors are inherently challenging, with some attendees wasting no time shedding light on some of those challenges – asking how the panelists intend to tackle regional social issues, what they are doing to drive eco-friendly initiatives and how they navigate volatile political climates while maintaining corporate and social integrity.
While Donofrio was able to calmly collate the various (and sometimes lengthy) questions into succinct inquiries that Tonye Cole and Cindy Bush could deftly navigate, it started to seem like the attendees may be left with more questions than answers, and the task of figuring out how businesses can save the world from environmental and social disaster, was at best looking elusive.
Then somewhere near the end of the session, Cindy Bush answered a question which inadvertently provided a master-class in storytelling, while allowing the attendees the opportunity to pivot from “Us & Them” to simply “Us”.
Cindy was asked to comment on a major barrier to businesses leading the way: Large companies are often hesitant to roll-out supply chain sustainability programs because they think small suppliers are either unprepared or unwilling to participate.
“… I really didn’t know what I was doing five years ago… But, failing their survey was one of best things to EVER happen to our company.” – Cindy Bush, Tessy Plastics
What are we talking about?
Cindy started by clearing the air and explaining the topic, “sustainable procurement”, and what it means, as it relates to her customers, “…We’re a tier one supplier for large OEMs, and they have some requirements for their suppliers, (and they articulate them quite well), and our duty, as a supplier, is to try to figure out how to take their aspirations, and put them into practical day-to-day operations and actions.”
Then she clarified what sustainable procurement means in the context of her own supply base, “… because we know what is required and what our customers are asking of us… one of the key things that we’ve learned… is how to take take what’s been required of us, and then turn around and “softly” require it of others… “
Make it Personal
With the topic crystal-clear to everyone, Cindy humanized the challenge faced by many organizations, dispelling any potential cynicism toward her sincerity, by sharing an unguarded moment: “[J&J] gave us the EcoVadis assessment and survey, which has served as a guide-post for the development of our program… I actually find myself getting choked up when I think about it because… I really didn’t know what I was doing five years ago. I told you the truth right? But failing their survey was one of best things to EVER happen to our company.”
Back it up with Data
Many speakers before and after had fantastic data, and solid business cases, but the reason Cindy was so persuasive is that she kept the data in her pocket until the audience was ready. Only once the attendees were fully-engaged, did Cindy hit them with the hard facts. Explaining why failing the assessment was the best thing to ever happen to her company, she continued, “… and here’s how I know it to be true. [At] the same time that we did not do well on our first EcoVadis score, we were only 300,000 square feet, we barely had 400 employees and profit sharing in a quarter was fifty dollars.”
“[Five years on,] now we’re 1.5 million square feet, we deal with some of the largest OEMs in the world, and we have tripled, (if not more), our profitability. All [while] at the same time, (which is not lost on all of you), we kept our eye on the prize – We got real about our responsibilities, we understood how to make and have less impact on the environment, the world, and have a positive impact on our employees.”
The Result
Cindy’s response blew everyone away – In a few short minutes she managed to eloquently demonstrate the important role her customer, Johnson & Johnson, played by inviting Tessy Plastics to participate in a Sustainability Rating program, the significant business benefits Tessy received by participating, the correlation between sustainability and profitability, and the positive flow-on effects corporate social responsibility can have when applied to the context of a multi-tier supply chain.
Cindy’s response was authentic, engaging, and relatable, but it also had the unintended effect of refocusing and uniting the attendees. There was a palpable enthusiasm and freedom to be authentic, which gave attendees and panelists liberty to openly communicate on challenges and successes alike.
In the space of one session, (and arguably the length of one story), the atmosphere had transformed from a combative collective of competing interests, to that of a collaborative group of diverse stakeholders ready to tackle the world’s biggest challenges.
(My view during Training Session 3 SDGs and the role of the Supply Chain)
By the time I was called upon to introduce the “Closing – Inspirational Recap” speakers, Evan Harvey Global Head of Sustainability at NASDAQ,Patricia Chaves Senior Sustainable Development Officer at the United Nations Division for Sustainable Development (UNDESA), and myself, it was almost impossible to bring order to the group, as they were (dare I say) having too much “fun”. Maybe that’s a stretch, but there was definitely “collective excitement”, with attendees sharing ideas with their newly acquainted peers. Certainly not a bad level of engagement for 6PM on a weekday, after spending an entire day locked in a bunker.
The wrap-up session provided Evan Harvey an opportunity to show why he is a sought-after sustainability thought leader, effortlessly relaying relatable case studies of SDG-inspired sustainability success. Patricia Chaves took the opportunity to challenge the attendees to take the SDGs back to their workplace, stay engaged throughout the coming 12 months, and return with stories of progress. Finally, I challenged the attendees to be “translators” of the SDGs, and was happy to provide an answer to the last tricky question of the day, as it gave me an opportunity to talk about a topic I care about a great deal.
All told, I found this to be a truly inspiring event, thanks in no small part to the story relayed by Cindy Bush, which set off a chain reaction of compelling discussion (that we’ll all be striving to ensure leads to progressive action).
This is a repost from July 10, 2017. Original post can be found here.
This is the smartest marketing campaign I’ve seen recently. Effortlessly combining Mission, Education, Call to Action, and Sale is no easy task, and The Economist has managed to pull it off with flair.
I think this image of me holding my new copy of the weekly magazine, along with a “free” Moleskine® inspired notebook, speaks volumes about how The Economist has managed to corner a significant demographic (Manhattan-based New Yorkers, hungry enough to eat anything from a street-vendor, and willing to listen to a sales-pitch for free food).
However, a quick search of the campaign hashtag #feedingthefuture on LinkedIn revealed a more eloquent summary of the marketing genius at play: This campaign, while not, it seems, aligned with any non-profit or charitable organization, promotes education, through common experience (i.e., eating food, drinking coffee), of an issue that warrants substantially greater public attention. How can the public learn more about the staggering cost of food waste, both economically and environmentally? By reading things like The Economist. It works. – Daniel DioGuardi
In any case, the half-burger was great, and while not enough to satisfy, (thank you eatsa for providing the rest of my lunch), I am now interested to learn more about plant-based protein, and meat-alternatives… plus I’m a now subscriber to The Economist for at least the next 12 weeks.
Daniel Ross Perry 