Supply Chain
Building Better Supply Chains Requires Better Data

Supply chains are making headlines once again — and for all the wrong reasons. Over the past year, we’ve seen stories about rampant health and labor violations concerning an Apple supplier in China, the exploitation of workers in Panasonic’s Malaysian supply chain, and allegations of child labor and unsafe working conditions at Samsung suppliers in South Korea.

Against this backdrop, it can be hard to believe that there has been any progress in making global supply chains — particularly in the tech industry — more ethical.

But the truth is rather the contrary — real progress has been made across industries to address issues surrounding labor practices, conflict materials, environmental impacts and more. The problem is that supply chains are, by nature, complex and assessing progress is a challenge.

The ultimate goal is to ensure that workers around the world are treated fairly, paid a living wage and have access to safe working conditions. But to do this, we need more information to understand where systemic problems in global supply chains lie.

One organization working to fill this information gap is EcoVadis, a French company whose innovative platform provides sustainability ratings and performance improvement tools for supply chains. Since its founding in 2007, the company has gathered data on more than 20,000 organizations around the world, ranging from large multinationals to small and medium enterprises. In December 2017, EcoVadis released its first Global CSR Risk and Performance Index, which analyzes 800,000 data points across 2015 and 2016. The Index is one of the first comprehensive benchmarks for understanding the state of vast, complex supply chains and industry-wise progress.

“We generate a lot of data, and we tried to put that into a public report to share our observations of the state of sustainability and CSR practices, including human rights and working conditions, in supply chains,” Sylvain Guyoton, SVP of Research at EcoVadis told Sustainable Brands.

The report divides global companies into 10 broad industry sectors. Technology companies fall under Manufacturing Advanced, and according to EcoVadis, there has been significant, industry-wide improvement in this sector among companies of all sizes and in all regions since 2015. Still, the average score was just under 50 on a scale of 0-100, meaning many companies are still at high risk of labor and human rights violations in their supply chains — which is exactly what we’ve seen recently with Apple.

“The news from Apple is sympathetic of other issues we find in this sector, especially in high-risk countries like China, India, and Taiwan,” said Guyoton.

Still, Guyoton believes the media attention that Apple, Samsung, Panasonic, and others are getting is a sign of progress. A decade ago, these stories were far rarer in the media, despite even worse conditions along many tech companies’ supply chains. The change? More attention is being given to the issue. Additionally, the work of advocacy groups to highlight the issue has intensified, forcing companies to react.

“There is public and stakeholder pressure and scrutiny in those supply chains,” said Guyoton. “We see, every day, news about human rights scandals or issues in supply chains for products that we buy, and this was not the case ten years ago. All this is pushing suppliers to implement better working conditions.”

Several non-profits deserve a lot of credit for putting suppliers’ feet to the fire. China Labor Watch has played a crucial role in helping shed light on working conditions in China, and has pushed companies such as Apple, Home Depot, Walmart, and Mattel to address issues in their supply chains. Similarly, **The Enough Project **has forced technology companies to address the use of conflict minerals.

EcoVadis’ report underlines what many in the CSR world believe — that we need to double down and implement better practices to build on the progress that has already been made. Guyoton believes that new technologies, such as direct engagement with workers via mobile phones — which is currently being pioneered by organizations such as Good World Solutions — can play a key role in increasing the quality of information about suppliers and empowering companies to better monitor their supply chains. This gives him hope for the future.

“The trend is positive,” said Guyoton. “There is global societal pressure on large organizations to implement better working conditions in their supply chains. It’s happening, probably too slowly, but it is happening.”

EcoVadis will continue to play an ongoing role in monitoring the state of supply chains in major industries across the world. It plans to expand the scope of its report next year to include more data points, more sectors and analysis of more regions, such as Africa.

The hope is that the report becomes a resource for understanding progress across all global industries and supply chains, and pushes more companies to be more proactive. For us to achieve the ultimate goal — 100 percent ethical, traceable, sustainable supply chains across the world — we’ll need all the data, information, and analysis we can get.