April 21, 2014

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Radical Transparency: Can Tech NGOs Improve Supply Chain Transparency?

Companies are using innovative new tools from NGOs to keep tabs on the ESG facts of their supply chains.

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By Kathrin Jansen

Despite Increasing Prosperity in Global South, Workers & Environment Lag

Over the past 10 years, millions of people in developing countries have experienced growing stability and security, along with economic development and empowerment that has lifted many of them out of poverty. Stronger national economies and improved governance supported sustained economic growth and poverty alleviation. The private sector, particularly large multinational corporations, has contributed to this development by fueling economic growth through investments, job creations, and bringing technological innovations.

Despite these encouraging economic developments, the reality for many workers in developing countries looks grim. Economic growth and wealth didn’t automatically translate into fair working conditions. Many men, women and children are without any kind of protection such as basic healthcare, fair pay, and reasonable working hours.

The pressure to compete with other suppliers is often immense. On the way to more economic development, natural resources— such as forests, water, and soil— have been depleted and polluted, adding to the stress the environment and the people developing countries are experiencing.

Are Companies Taking Adequate Measures?

To companies, this situation poses risks, as well as opportunities: If companies don’t respect human rights, provide workers with fair conditions and deplete natural resources, they are not only risking their brand reputation and come under scrutiny from NGOs and customers, they are also jeopardizing the very foundation of their supply chain. If natural resources become scarcer, they become more expensive and companies must find ways to either absorb these costs or develop more Rana Plazasustainable alternatives.

Many companies have implemented auditing programs and certifications to ensure compliance with social and environmental standards. But, as Heather Franzese from Good World Solutions points out, most audits give companies an insight only once a year.

In many cases, those attempts haven’t delivered the results corporations and activists have hoped for: the garment factory Rana Plaza in Bangladesh was audited before it collapsed, and more than 1,000 people were killed. An engineer, who was called after workers noticed cracks in the building, warned just a day before the incident that the building was not safe. The factory owner (who is now facing charges) ordered workers back into the building – it collapsed shortly thereafter.

After the disaster, the pressure on Western corporations to help to ensure better working conditions increased, but left many wondering: how?

How Corporations are Responding

At Future 500, we are seeing an emerging trend: corporations are increasingly using their supply chain power to protect natural resources and ensure fair working conditions. In our role as stakeholder engagement specialists, we recognize how corporations can leverage their supply chain power to achieve systemic solutions to social and environmental challenges.

The role of NGOs is invaluable in this process: they provide corporations with the necessary insights, tools and relationships. If we take these two forces together and apply them to urgent supply chain issues, real change can happen, as demonstrated in the following four examples.

Protecting Human Rights

Good World Solutions
Labor Link is a mobile platform developed by Good World Solutions, an NGO based in the San Francisco Bay Area. Using basic mobile phone technology, Labor Link is able to provide companies with real-time data from their supply chain.

Through interactive voice response (IVR) surveys and broadcasts, workers can give feedback on working conditions, job satisfaction, and worker needs can be measured and tracked. The system can also be used to distribute important (educational) information to workers. According to Heather Franzese, Labor Link offers two benefits: it serves as an early warning system and reduces supply chain risk, and it can support workerGiving-a-Voice-homepage education and training.

The British retailer Marks and Spencer is introducing the program to companies in Asia that produce clothing for the company. The surveys, which are suitable for people with few reading and writing skills, will reach over 22,500 workers in 30 factories in India, Sri Lanka, and Bangladesh. The company is hoping to “track progress on strategic issues” and to make better informed decisions.

LaborVoices
LaborVoices aims to leverage “market forces to bring about long-term, sustainable improvements in working conditions around the world.” The organization, based in Silicon Valley, California, built a communications platform that is accessible to workers around the world through their mobile phones.

LaborVoices uses the platform to send educational messages to workers (topics include local labor laws, human rights, safety or local services such as legal aid and healthcare). In reverse, LaborVoices gathers information from workers about working conditions inside the factories. The organization is hoping to create a virtual roundtable with all stakeholders involved.

Protecting Natural Resource

The Forest Trust
To bring more transparency to a complicated forestry supply chain, the NGO The Forest Trust (TFT) developed a monitoring tool that allows companies to convey real-time radical transparency in supply chains. The tool, piloted for Asia Pulp and Paper (APP), allows the company to display detailed data going beyond compliance and displaying implementation of sustainability commitments.

Earlier this year TFT started collaborating with APP, the second largest paper and pulping company in the world. The company has historically been targeted by NGOs for unsustainable business practices, but in February 2013 after working closely with leading NGOs, APP launched a new Forest Conservation Policy that included numerous commitments to sustainability.

The new commitments also include a comprehensive stakeholder engagement process, which includes collaborating with NGOs to ensure transparency, effectiveness and a policy on addressing grievances.

APP's pilot version of its online “dashboard” uses TFT’s technology and is accessible to the public. The dashboard details the company’s progress toward reaching its sustainability targets and provides real-time date on assessments occurring on the ground in their roughly 2.6 million hectares under concession management. APP consults with a range of stakeholders to improve the dashboard – interested parties can request a login and provide vital feedback for its improvement.

World Resources Institute
At the SXSWeco conference in October, Nigel Sizer from the World Resources Institute (WRI) presented the Global Forest Watch (GFW) initiative. The organization and its partners will combine “near-real-time satellite monitoring technology, forest management, and company concession maps, protected areas maps, mobile technology, crowd-sourced data, and on-the-ground networks to promote transparency in forests around the world.” In his presentation, Nigel Sizer shared with the audience that companies such as Nestle, Unilever, and Wilmar International have showed interest in using the technology.

The Power of Corporate Supply Chains

The examples above show that simple technologies combined with the power of corporate supply chains help to address social and environmental problems. Providing real-time data from (local) stakeholders and sharing this information with local (factory) managers, suppliers, NGOs, corporations, and consumers will help to demystify some of the on-the-ground issues that tend to cloud sustainable supply chain progress.

TFT’s and WRI’s technologies can potentially be used as a template for other problematic industries as well – palm oil would be a natural next step. In this way, technology could be used in the service of giving companies and stakeholders unique access to data, driving supply chain sustainability through transparency and accountability.

About the Author:

Kathrin Jansen, as a Senior Communications Manager, focuses on telling Future 500’s story on the website, social media channels and at conferences around the world. She is driving forward the conversation around how corporate-NGO engagement accelerates systemic solutions to sustainability challenges.

Kathrin’s education and work experiences have spanned across the globe. She received her M.A. in Political Science from the Westfalische Wilhelms-Universitat in Germany and her MBA in Sustainable Management from the Presidio Graduate School in San Francisco. Recent entrepreneurial initiatives include co-founding Do Good Lab, a community-based volunteer organization enabling hundreds of Bay Area residents to contribute their knowledge and skills in supporting grass-roots organizations in developing countries.

In Germany, Kathrin worked as a Program Manager for the Federal Agency for Civic Education and developed novel educational programs to introduce political participation opportunities. Past experiences in Africa include a position as a Project Assistant for the Konrad-Adenauer-Foundation in Uganda and as an advisor for ThinkImpact’s Social Innovation institute where she led a team of scholars in rural South Africa in building social enterprises.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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