BSR Conference 2012: Fast Forward / October 23-26 / New York

Hot Spots: Identifying Future Issues in the Global Supply Chain

One-Hour Conversation Session / October 24, 2012

Speakers

  • Amy Hargroves, Director, Corporate Responsibility, Sprint
  • Helena Helmersson, Head of Sustainability, H & M Hennes & Mauritz AB
  • Tara Norton, Director, Advisory Services, BSR (Moderator)

Highlights

  • Stakeholder dialogue is a great approach to identify sustainability issues in the supply chain and enables companies to show greater transparency.
  • Using company executives to reach out to suppliers to reiterate expectations can have a tremendous impact on supplier compliance.
  • Giving suppliers a way to compare performance to other suppliers instills healthy competition, even when sustainability performance is not directly included in their contracts.

Memorable Quotes

“The need to be ever responsive to such a wide range of issues [in the supply chain] can strap the ability for businesses to take a longer-term view, to focus on where they can really make an impact, and can impede on the good work being done to meet very difficult issues that can take a long time to actually address.” —Tara Norton, BSR

“The key success factor to enable H & M to be able to tackle issues [in the supply chain] and have an impact is collaboration.” —Helena Helmersson, H & M Hennes & Mauritz AB

“For the most part, future supply chain issues are fairly well-known, as there will be a continuous iteration on the same themes, such as labor issues.” —Amy Hargroves, Sprint Nextel

Overview

Norton began the session by introducing Sprint Nextel and H & M, two consumer-facing brands that, despite different approaches to CSR, are likely to face similar challenges. Norton asked the panelists to describe their companies’ approaches to sustainability issues and identifying hot spots.

Helmersson first presented a few facts about H & M’s sustainability department, which is in charge of developing a stable and flexible platform that can be used across departments and topics. Helmersson then introduced H & M’s three approaches to identify sustainability issues and hot spots. The first relies on internal knowledge and presence: With hundreds of people working on sustainability issues in the supply chain and a strong presence in factories, H & M is able to more easily identify and address on-the-ground problems.

Helmersson then explained H & M’s development of systematic approaches and tools, such as business intelligence tools, materiality analyses, and stakeholder dialogues. Those tools, as well as membership in organizations such as the Fair Labor Association, have helped H & M identify issues.

The third approach consists of identifying topics that can help H & M secure long-term growth and profitability. Through this last approach, H & M worked on issues, such as natural resources management and public advocacy on wages in Bangladesh, that will affect supply chain stability.

Hargroves then discussed Sprint Nextel’s sustainability program, which employs one fully dedicated staff member in a company of 41,000. According to Hargroves, Sprint Nextel struggles with issues identification due to limited resources and the absence of obviously apparent issues. Sprint Nextel’s deeper involvement with CSR, Hargroves explained, resulted from the company wanting to understand its supply chain opportunities and issues that could affect business.

Sprint Nextel developed a risk-assessment model based on a materiality assessment and then expanded supplier requirements, including a set of sustainability criteria and a scoring process. However, Hargroves underlined that despite the use of these risk-assessment tools, some issues are unavoidable, and it is important for companies to have robust management processes.

Norton then asked how stakeholders, suppliers, and NGOs can help companies identify hot spots and shape their sustainability approaches.

Hargroves mentioned Sprint Nextel’s work with BSR which, she said, helped identify materiality issues. She explained that her company worked with NGOs and external experts and set up a stakeholder oversight panel.

Helmersson pointed out that H & M has formal stakeholder dialogues, and she stressed the importance of her company’s work with its suppliers. Helmersson explained that H & M has a supplier relationship management system that ensures that large suppliers are stable and can deliver on time, quality, and sustainability. This approach also includes a reward system for suppliers who demonstrate good sustainability performance.

Finally, Norton asked the panelists what they see as future hot spots in supply chains.

Helmersson first mentioned the development of more holistic approaches to sustainability. When looking at water issues or chemical use, for instance, it will become increasingly important to take into account the impact on the community at large.

According to Hargroves, the same issues present in the supply chain will continue to repeat themselves. Hargroves cited the specific example of the mineral supply chain, where she anticipated that future hot spots will be related to the conditions of tin, cobalt, and gold mining, as well as the consequences of their limited availability.

In the question-and-answer session, a participant asked how to engage the supply chain team on sustainability issues. Hargroves explained that she gained legitimacy with her company’s supply chain team by developing a code of conduct in collaboration with the legal department. The use of a supplier scorecard system with clear indicators and a rating system was also helpful in getting the supply chain team on board.

When asked how to make rewards equally successful for both long-term, strategic suppliers and short-term, seasonal suppliers, Helmersson emphasized that H & M works with all of its suppliers equally to ensure compliance with its code of conduct, measure improvements, and promote transparency. These elements constitute the base requirements to work with H & M.

Hargroves explained that Sprint Nextel conducts quarterly performance reviews based on sustainability criteria scorecards for its long-term suppliers. Suppliers are very responsive to these scores, Hargroves explained, which trigger healthy competition. She concluded that most suppliers want to do better when customers demonstrate that they care about performance.



Thank You, Sponsors

Executive Sponsors

Cisco Hitachi PwC Target UL Responsible Sourcing

Associate Sponsors

Anheuser-Busch InBev

Supporting Sponsors

Adobe AT&T ExxonMobil Green Mountain Coffee Roasters, Inc.

Participating Sponsors

American Express Baker & McKenzie LLP Best Buy BNY Mellon Ford Hyatt Hotels Corporation The Walt Disney Company UPS Vale

Contributing Sponsors

Chevron icix Levi Strauss & Co.

Convening Media

Bloomberg Business Week Weber Shandwick

Marketing and Media

3BL Media BEF Caixin Media Corporate Knights Globescan GreenBiz Group Inc. Hemlock Responsible-Investor Sina Stanford Social Innovation Review (SSIR) Tomorrow Partners