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Unchaining ValueCorporate responsibility through the value chain

Unchaining ValueCorporate responsibility through the value chainWorkshop 31 October 2007

1 Background and objectives

2 Describing global value chains

3 ICT sector overview and key challenges

4 Food and beverage sector overview and key challenges

5 Issues in common

6 Small group discussions

Value chainsBackground ICT sector F&B sector Issues Small groups


Unchaining ValueCorporate responsibility through the value chainBackground and objectives

― To understand challenges explore best practice

― To understand capacity building within suppliers to address environmental and social issues in the supply chain

― To explore scope for a multi-sector initiative on sustainable supply chains


Unchaining ValueCorporate responsibility through the value chainBackground and objectives

― Fit with existing UNEP initiatives

― Partnership with UNGC

― Cross-sector or multi-sector?


Unchaining ValueCorporate responsibility through the value chainInterviews and research

ICT

– OEMs/operators: Nokia, O2, Deutsche Telekom, HP, Panasonic

– Contract Manufacturers: Delta Electronics*

– Academia: Wuppertal Institute, Öko-Institute, Yale University

– Networks/Consultants: GRI, BSR, Verité, sustainabilityagents

– NGOs: Good Electronics, ASK, TEAN

– Unions: Unite the Union

Food

– Manufacturers: SAB Miller, Unilever

– Retailers: Carrefour, Marks & Spencer

– Fast food: McDonald’s, Starbucks

– Consultants: McKinsey

– Multistakeholder initiatives & certifications: Business Social Compliance Initiative Food Module, Common Code for the Coffee Community, Fairtrade UK, Rainforest Alliance, SAI Platform, World Cocoa Foundation

– NGOs/Think Tanks: Food Ethics Council, International Institute for Environment & Development, Oxfam

*agreed to participate, results still outstanding


Unchaining ValueCorporate responsibility through the value chainDescribing global value chains

Raw Materials Refinement SuppliersSuppliers Manufac-turing

Manufac-turing

Testing

Testing

PackagingPackagingTransport & DistributionTransport & Distribution

Retail Customer

End Consumer

Upstream Suppliers

Potential Re-Use or Recycle

Information Management

Tier 2+ suppliers

Outsourcing

Outsourcing

Suppliers

Outsourcing

Outsourcing

R&D


Unchaining ValueCorporate responsibility through the value chainICT sector overview and key challenges

Background F&B sector Issues Small groups


ICT sectorValue chains





ICT sector characteristics:

– OEMs aim for strategic long-term partnerships with suppliers of high-end components and products

– Impacts (environmental/social; across sourcing, manufacturing, use, disposal) often determined in the design phase

– Performance affected by infrastructure, education, incentives, culture, ability to reach out to workers, available technology, etc.

– Overall price pressure, outsourcing and offshoring




ICT sector responses:

– Industry-wide efforts to set minimum standards and facilitate uptake among suppliers, notably Electronic Industries Code of Conduct (EICC) and the Global e-Sustainability Initiative (GeSI)

– Minimal uptake among contract manufacturers– Interest in product labelling, though no significant activity


Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainFood sector overview and key challenges

Value chains



Breeder Producer

Middlemen/ Market

Middlemen / Market

Slaughterers

Distributors / Market

Processors

Restaurants

Supermarkets

Wet market

Value chains



Value chains

Food sector characteristics:

– Wide range of growers, from huge agri-business to smallholders, family and community farms

– Supply and distribution across processors, manufacturers, distributors, retailers, middlemen

– Size and volatility of world commodity markets– Increasing demands for traceability– Variability of supply and demand



Value chains

Food sector responses:

– Commodity-specific, e.g. coffee, soya, palm oil– Monitoring focused on raising performance, not compliance– Broad commitments that leverage corporate distribution and

buying power via business-NGO partnerships – Focus on benefits to suppliers, beyond cost savings and

efficiency



Value chains


Unchaining ValueCorporate responsibility through the value chainIssues in common

Value chains

– Role of consumers: how important?

– Product labelling may present important opportunities

– The business case for suppliers is critical

– Collective action, partnering and free riders

– Burden of review and documentation

– Challenges in partnering upstream and downstream, e.g. planning, processing of information, coordination, training


Unchaining ValueCorporate responsibility through the value chainThree-stage model:

Drivers

Value chains

Phase 1: Comply Risk management: Product safety, regulatory compliance, reputationBusiness value: Short-term viability, reliability and quality of supply

Heavy focus on supplier standardsCost minimisation and ‘policing’ approach to auditing

Phase 2: Compete Business value: cost savings (e.g. energy or material use reduction); improved productivity; strengthened demand from customers or consumers

Capacity-building e.g. Training programs, technical assistanceSupplier engagement in developing standards and approachesGuidelines and learningPhilanthropy

Phase 3: Lead Business value: New market creation; brand enhancement; long-term viability of supply; premium quality supplyCreating value and innovation, e.g. developing livelihoods; shaping demand and loyalty

Innovative partnerships / chain networksMultistakeholder collaboration to raise the level of the entire industryInstitutional capacity buildingEfforts to measure outcomes (rather than inputs)

Actions


Unchaining ValueCorporate responsibility through the value chainSmall group discussions

Value chains

– Part one: Major challenges within sectors; solutions needed; moving through the three phases

– Lunch break

– Part two: Highlighting good practices; evaluating success; scope for multistakeholder

initiatives