Ethical Performance
inside intelligence for responsible business


Good companies keep good company

March 2013

So many horses, so little time. Companies face a credibility gap on the horsemeat issue, which raises sustainability questions around accountability, stewardship and, above all, purpose. With complexity and diversity comes the risk of reputational damage, and accountability needs to be owned somewhere. But where?

Global companies face major challenges in maintaining just-in-time and value-for-money offers to their customers. The wider you source, the more problems you encounter, the more stakeholders you must manage. In the past 18 months, we have seen supply chain and human rights issues arise across industries, from mining and electronics to clothing, and now food. The challenge companies face, particularly in the food sector, is in finding the balance between provenance and scale on one hand, and traceability and cost on the other. If your business has not started understanding and challenging its supply chain, it’s time to begin. This is a key risk that companies must approach head on.

What is most alarming about the horsemeat scandal is the level of infiltration. It’s a wake-up call which has focused the public on supply chain transparency and the devilish complexity that modern global organisations manage to produce their goods.

Audit is part of the solution and a key scrutiny mechanism, but companies must embrace organisational responsibility as a continuous way of improving their business. The global leaders in supply chain management are increasingly at the cutting edge as they seek to ensure their supply chains act with integrity. And this is not only about the provenance of food, it is also about sourcing generally, and the protection of workers and business integrity. There has been a worldwide boom in supply chain assessment, as companies work to ensure they protect their reputation and raise standards.

Organisations are increasingly applying supply chain due diligence, and many examine their business partners before working with them by using bespoke code of conduct assessments or other globally recognised frameworks. To tackle the growing challenges around sustainability, we will see deeper penetration and examination of supply chains, especially as we move towards globally recognised sourcing and traceability standards.

At its very heart, though, what we are really seeing is the emergence of purpose in supply chains. As they grow longer and more complex, stakeholders are looking to global businesses to understand their social purpose and how this will shape how they approach business. We want them to act with honesty, we want to trust them. Within this, we will see companies seeking to improve by looking at their social and environmental impacts. And they will come to ask what their purpose is and how they can really get there in a sustainable way by enhancing life.

It will be a long road, but this story tells us that companies need to care more about these issues than ever before. Ultimately, each company in the supply chain needs to be accountable if it wants to stay in business. After all, good companies keep good company.

Dr Colin Morgan is global product manager – social responsibility at SGS

SGS | UK & NI Ireland | Supply Chain Management

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