As we wrap up this three-part series, our guests explain what companies stand to gain by working more intentionally and in partnership with small businesses in their supply chains. These partnerships may look different within a single supply chain or specific sector, but many share similar elements.

The experts we spoke with highlight the best partnership examples from the corporate world in Part 3 of Voices on Supply Chains.

 

Jacques Leslie.

"What really is needed is a change of consciousness; a kind of a paradigm shift so that everyone in the world takes seriously how monumental this issue is. And if that happens, then we can also begin to address the ways in which the last 200 years, and the dominance of capitalism and western civilization, have really let the led the planet down a path which is...disastrous and catastrophic."

Jacques Leslie, Contributing Opinion Writer, LA Times & Writer, YaleEnvironment360

 

When you have a forest fire, the landscape fire not only affects the forests, it affects the houses, it affects the animals, affects the farmers, the foresters, and the urban centers no? And when you have a common enemy then you can start to collaborate more, so I am hopeful that this crisis will allow us to see more collaboration around the actors of the value chains, that they will become more resilient and then we will change for sure, no?

Rene Zamora, Restoration Policy Senior Manager, WRI

 

Sheri Hinish.

Living wage and fair living wage are not the same, I just want to start there...I do want to pull that out; a fair living wage is going beyond the ability to meet basic needs. You're going to have that 10% to 15% percent emergency and discretionary income. And also it's distributed in the same way where if, you know, a woman in the Global South is doing a role, she is being fairly and justly compensated for her equivalent in another part of the world, potentially in the [Global] North or the Northeast of the states where I live, for that same job. And that simply doesn't happen.

Sheri Hinish, Global Sustainable Supply Chain Leader, Ernst & Young (EY) & Podcast Host, Supply Chain Revolution

 

Transcript

Daniel Baker (WRI) 0:06: Welcome to WRI’s Big Ideas Into Action podcast, You are listening to the final episode of Voices on Supply Chains. I’m Daniel Baker, communications manager at WRI and the host and producer of this podcast. I really appreciate you taking time to tune in.

In episode 2, you heard about the ways in which corporations can forge strong partnerships – founded on trust, transparency, and fair contracts -- with their SMEs to create more resilient supply chains.

Brian Lipinski (10x20x30 Initiative Project Manager, WRI) 0:38: My name is Brian Lipinski. I work in the food program here at World Resources Institute. Actually some of the investments that would help to reduce food loss and waste would also boost incomes, would boost livelihoods, would cut down on hunger, and would result in a lot of very positive life changes.

But in many of those cases the small holder farmer may not have resources available to make the sort of investments that are needed. They might not have access to things like the cold chain that helps them to keep food fresh for longer or proper storage. Or they might just not be aware of some of the changes that they can make.

Making sure that small holders are not left out of this equation. Make sure that it's not just the big companies that are seeing the benefits, but that these benefits are being spread all the way back to the farms where our food is grown. 

Daniel Baker (WRI) 1:35: The good thing for corporations is that not only are most setting targets that align with the UN’s Sustainable Development Goals or SDGs, but the lead firms are already documenting their progress.

Sheri Hinish (EY & Supply Chain Revolution Podcast) 1:48: Hi, my name is Sheri Hinish. I currently work at EY as their global sustainability tech + ecosystems leader and global sustainable supply chain leader. I also have a podcast, the Supply Chain Revolution. Most of these companies actually do publish commitments around the SDGs, the most material SDGs in their annual impact report or their annual ESG reports. But to your point, it is often divorced from operational performance and enterprise ESG reporting, which is disappointing because if you double click on the SDGs, it's an integrated vision for equitable and responsible prosperity.

It evangelizes a new economy. It's super pragmatic too, which most folks don't know, and that if you double click, you're getting very pragmatic targets indicators and methodology supported by ISO standards and if anyone is listening to this and they work in supply chains, they know what ISO means; the International Standards Organization -- so across production, quality manufacturing, I mean all of procurement, you know it's there.

Daniel Baker (WRI) 2:57: During the last two episodes, you’ve heard experts detail the challenges facing supply chains. Now it’s time to share some of the solutions that they’ve pioneered through their own work, proving that benefits really can reach all the way upstream to the SMEs at the start of most supply chains.

Dan Viederman (Working Capital Fund) 3:15: I’m Dan Viederman, and I’m a partner at a venture capital fund that’s trying to support and build equity in supply chains; mostly focused on marginalized workers around the world. The name of our fund is the Working Capital Fund.

There is a well-developed set of principles and standards that is called the Better Buying Principles created ,by the Better Buying Institute, that very clearly lays out the playbook for buyers not only to present and partner with suppliers on sustainability goals or targets, but to enable them. One of which is visibility to the buyers’ practices for the suppliers, so a sort of mutual visibility. The second of which is stability, you know, not making changes after the order is placed. The third is time. Is there enough time to make the good, and produce it, and get it to the warehouse or to the store? Is there a fair financial arrangement? Is the buyer paying enough for the garment to enable the supplier to provide it in a sustainable way? Finally, is there a shared responsibility? Is there a sort of partnership that exists?

Adel Guitouni (University of Victoria) 4:14: My name is Adel Guitouni and I am an Associate Professor with the School of Business at the University of Victoria.

If we go back to before actually the deregulation movement and the Chicago School of Economics, and go back to models of economics that integrate the society and the environment, where we now subordinate the finance to the economy and society and not really the finance becomes the goal.

If we start really using other ways to trade-off, I think the future of supply chain could be this harmony where we can build a supply chain that can be part of the cycle of life that can be empowering for people.

Finance can also help move this faster than everything else. So this fund is created, it's called the Regenerative Capital Fund and it's created to buy companies who are extractive in their behavior and transition them to become more regenerative in their behavior. 

Daniel Baker (WRI) 5:20: And there are some tools made specifically for SMEs themselves.

Lydia Elliott (SME Climate Hub) 5:24: Hi, my name is Lydia Elliott. I work in an organization called the We Mean Business Coalition. My official title is Deputy Director of Supply Chain Decarbonization. And as part of that I work a lot on the SME Climate Hub and also on the tools that SMEs need to take climate action, and how we can digitally deliver those in the right way.

The SME Climate Hub aims to be a kind of one stop shop for SMEs to take climate action. At its core, it's a digital platform and that digital platform delivers a few things for SMEs.

So it's a place where they can learn more about climate action. Sign up to a newsletter start learning about it, start thinking about it. It's a place where we have lots of tools. So we have, you know, an emissions calculator. We have action guides if you want to look at renewable electricity here's, here’s two pages on how you should think about that.

The kind of other core of the SME climate hub is a net-zero commitment where SMEs commit to be net-zero by 2030, 2040, or 2050. They commit to halve their emissions and to report annually, and that commitment is a route into the race to 0. So it's designed to be, you know, a way where any small business can access the kind of credibility that a bigger business could, but can do it for free. And that is aiming to thread a very fine needle which is: How do we create something that is appropriate for an SME, in terms of the number of questions and in terms of level of detail, but is something that a big multinational or bank would look at and say, ‘This is a credible amount of information and I'm happy with it.’

From a big corporate perspective, I think that they see it as a resource that they can send SMEs to, especially as a way to get small businesses started on the climate journey.

Daniel Baker (WRI) 7:22: There are some promising examples in the corporate world.

Taj Eldridge (Jobs For the Future) 7:24: I’m Taj Eldridge. I am the Managing Director for Climate Innovations at JFF [Jobs For the Future] Labs.

Patagonia is a perfect example of an organization that understands both their role in the climate space and climate having a climate friendly future, as well as their suppliers in that space as well that come into the supply chain.

Becca Coughlan (Remake) 7:45: My name is Becca Coughlan, and I am the Senior Advocacy Manager at Remake. Remake is an advocacy organization fighting for fair pay and climate justice in the fashion industry.

The Scandinavian brand, Ghani, adopted a buyer code of conduct, so it introduced some of those responsible contracting principles into their own contracts with their suppliers.

Dan Viederman (Working Capital Fund) 8:06: A really good example is SAP’s commitment. It’s called 5 by 5 by ‘25, where they commit to direct 5% of their total addressable spend -- so their procurement dollars – to social enterprises and 5% to diverse businesses by 2025.

Brian Lipinski (10x20x30 Initiative Project Manager, WRI) 8:24: Tesco, which is a UK based retailer, and so Tesco actually was the first large retailer to start disclosing their own food waste data, which was a huge step; no other company their size had done that. And then what they started doing is they started asking their suppliers to do the same, and so they've been partnering with their suppliers to encourage them to report food waste data publicly; to commit to ambitious targets to reduce that food waste; so that’s a really exciting example.

And what they've been doing is now they've been going even further upstream and they've partnered with some other organizations some other NGOs to do research at the farm-level of trying to understand more about what the extent of food loss and waste on the farm is, what some are some of the barriers to addressing that? It turns out, it's a much more significant issue than we globally had previously thought, so I would say that's an example of a company that's really understanding that you can't just stop at one stage and say, ‘Well we did our part.’ 

Daniel Baker (WRI) 9:30: And next, you’ll hear from Vicky Sins, at the World Benchmarking Alliance. Vicky leads the work examining the credibility of decarbonization and energy transition plans for some of the worlds biggest companies in the highest-emitting sectors.

Vicky Sins (World Benchmarking Alliance) 9:45 : In Spain, there are some really good examples about companies who have entered into tripartite agreements between companies, labor unions, and then with the government to really look at how does then upscaling or reskilling and also relocating people and jobs to different regions; What does that look like and what type of support is needed from and from other stakeholders other than the companies themselves?

Sheri Hinish (EY & Supply Chain Revolution Podcast) 10:10: A coffee brand decided that they wanted to lead with purpose and use innovation. Specifically in blockchain and in B-2-B payments to not only give customers that transparency -- so if they scan a QR code, they can see, in-app the source of their morning Joe -- and the life cycle of that bean of coffee. And what was interesting, it wasn't just the journey, it was the ability in-app to go all the way upstream and actually thank your farmer.  

We have over, what, 25,000,000 small holders globally and that ability to feel like you're connected to, you know, the first mile of a supply chain. The other innovation was being able to tip your farmer and donate to a community-based project that was anchored in a sustainable development goal (SDG). So it could have been quality education (SDG 4) where they were trying to build a school with this specific brand and for the source community, or if they wanted clean water initiatives (SDG 6). There are a lot of different programs that were pre-populated for someone like you or I, with a few clicks, within a twenty-second cycle, we could very quickly feel connected also to that source community [to drive impact].

Daniel Baker (WRI) 11:41: Partnership is more than a link between a single corporation and their SMEs. Sometimes the most effective partnerships equip an entire sector.

Lydia Elliott (SME Climate Hub) 11:51: A lot of the tools have been funded by a big corporation or a big corporate foundation, who've come and said, ‘Okay we want to support you [the SME Climate Hub] to create a net zero course. We want to support you to create a sector-specific tool. We want to support you to create these action guides for our suppliers and beyond. And I think that's a really nice attitude to take, that it's almost like saying okay in this sector we need to have a solution to the uptake of EVs, let's actually say, ‘I don't care if it's my supplier or if it’s someone else's supplier, but I want all the supplies in this sector to have an uptake of EVs and I am going to go out and fund a course to do that.

So I've seen a lot of that, and that I think has worked very well and is quite a nice attitude to take, that it's not just your suppliers, but it is just, you know, you want the whole of your sector supply chains to get better.

Adel Guitouni (University of Victoria) 12:45: IKEA, a few years ago they had the scandal of the rugs in the cotton and supply chain from India. This is a private company. There are no shareholders pushing them. But they decided, actually, to move to sustainability and they  created the Better Cotton Initiative which has now more than 2.4 million farmers around the world applying the same principle, where you're using the water consumption, where you're using the tilling, where you're reducing your carbon emissions, your own emissions and so on to have a more sustainable cotton. But not only that, they came with an agreement about how they share the value of these farmers, with WWF, investing in school investing in hospitals and so on and, lifting up huge villages out of poverty.

So now you can see how the supply chain became a force for good. But what they have done as well, they have reduced the risk of cotton as a commodity because now they have a dedicated supply chain of cotton. Maybe it's green washing. Maybe it's not, but the results are there, in how they were able to lift out of poverty. There are even farmers from that ecosystem, they patented new cotton.

Daniel Baker (WRI) 13:59: The idea of wages was a consistent theme during our interviews.

Becca Coughlan (Remake) 14:03: I keep coming back to this idea of a living wage. You know, workers in Bangladesh are not even paid enough to adequately nourish themselves and their families -- let alone rebuild time and time again, after back-to-back, you know, climate shocks. So, by raising wages and supporting governments raising minimum wages, brands can support workers in these endeavors as they fight to raise the minimum wage.

Sheri Hinish (EY & Supply Chain Revolution Podcast) 14:28: Living wage and fair living wage are not the same, I just want to start there. So living wage doesn't mean that people are being paid equitably and when sourcing from lower quality countries of origin, or countries where you can actually take advantage of communities, you can pin them against each other.  

So it's still that lowest cost, lowest price versus highest value and doing the right thing. I do want to pull that out; a fair living wage is going beyond the ability to meet basic needs. You're going to have that 10% to 15% percent emergency and discretionary income. And also it's distributed in the same way where if, you know, a woman in the Global South is performing a role, she is being fairly and justly compensated for her equivalent in another part of the world, potentially in the [Global] North or the Northeast of the states where I live, for that same job. And that simply doesn't happen. [And that’s where fair work, fair pay under the context of a global labor standards has to improve.]

Daniel Baker (WRI) 15:38: More than money, leading corporations invest in education and skills development for those working in their supply chain.

Dan Viederman (Working Capital Fund) 15:45: A good example, a good practice of a big company understanding and taking into account of the needs of the workers and its SME suppliers is Apple’s Supplier Employee Development Program. They made a $50 million commitment to provide workers in their supply chain with, essentially, skills-based and rights-based education, including digital education, so that those workers can become productive parts of their employer’s operations, so that those employers operate more productively with a happier and more consistent set of workers, ideally.

Adel Guitouni (University of Victoria) 16:16: It's education that got us in this mess, and it is the education that will get us out of this mess. So we need to start educating ourselves, educating the new generation, educating these business leaders to move, actually, to this direction.  And if you know a little bit about the total quality concepts of the Japanese and so on, and when they created the circles of quality and so on, and they empowered the workers to stop the production system when they detect there is a problem, right? So the same thing with this. You need to empower the workers that are there to stop the production system if they actually see there are problems with the supply chains.

Taj Eldridge (Jobs For the Future) 16:59: And I think yes, the wage is important because what that also does is that ensures that there's stability. There's the opportunity for those workers to stay at a company and to grow. But also, too, in addition to wages, I call a pathway to increased performance a pathway to job security where people are having opportunity to get other skills into this space.

Daniel Baker (WRI) 17:24: What does the future hold? We’re not sure. But that didn’t stop us from asking the experts to predict what supply chains might look like in the year 2100.

Jason Judd (Global Labor Institute at Cornell University) 17:34: I’m Jason Judd. I'm the Executive Director of the Global Labor Institute at Cornell University in New York.

There's long been a dream on the part of buyers, chiefly buyers, and suppliers that they can accelerate automation in their factories. So it may be that in 2100 factories are largely or fully automated. But it's still, now, a labor-intensive process. So you'd have to be in a place where affordable energy is abundant, and is not jacking up your emissions and that's a problem the industry hasn't solved. I'm not sure it's been solved anywhere.

Becca Coughlan (Remake) 18:12: And going back to the Cornell research, the financial implications of doing nothing, of companies doing nothing are so huge, that maybe -- even if it is sort of a profit driven change -- companies will sort of see the light.

Jacques Leslie (YaleEnvironment360) 18:28: My name is Jacuqes Leslie, I write frequently for YaleEnvironment360. What really is needed is a change of consciousness; a kind of a paradigm shift so that everyone in the world takes seriously how monumental this issue is. And if that happens, then we can also begin to address the ways in which the last 200 years, and the dominance of capitalism and western civilization, have really let the led the planet down a path which is...disastrous and catastrophic.

Brian Lipinski (10x20x30 Initiative Project Manager, WRI) 19:04: I think the food supply chain is going to only get more and more tangled, and interwoven and, frankly, messy. Climate impacts are really going to affect the way that food is grown and produced, and so we're not going to be able to rely on old models of where food is going to grow and what seasons it will grow in. So, I think there's going to be a lot more, sort of, vulnerability in that regard.

I think I have good reason to hope that we will see the entire supply chain working together much more closely in a way that, hopefully, doesn't leave anyone out it, is more equitable; we're getting food to the people who need it, in a way that gives them a healthy diet, a sufficient diet; and that we're hopefully not using as many resources to produce food that's not even going to get eaten.

Daniel Baker (WRI) 19:54: On our website – www.wri.org/CREST -- we’ll be looking more closely at supply chains in different sectors and sharing lessons learned from each.

Lydia Elliott (SME Climate Hub) 20:06: We shouldn't let anything delay supply chain action. Due to the severity of the problem and the need for action, it’s something that we need to all do now, rather than in five years time.

I’d like sustainability and climate to be just part of how everybody does business. Would love to see deeper longer-term relationships with suppliers. So fewer suppliers and more long-term relationships, partnerships, that kind of flow throughout supply chains.

Dan Viederman (Working Capital Fund) 20:35: The SDGs are [for] 2030. Companies are making 2035 commitments. We’re not going to get to the SDGs by 2030, but the stuff that we’re building, it’s ready, right? It’ll be at scale and cheaper in five years, than it is now, and therefore, ready to be adopted. It’s not a technological challenge and it’s not necessarily an invention challenge, it’s now an implementation challenge to get those across supply chains. And if they’re not in place by 2050, let alone 2100, it’s a deep human and political failure.

Rene Zamora (Restoration Policy Senior Manager, WRI) 21:03: Rene Zamora, and I’m a senior manager on restoration policy at the World Resources Institute. When you have a forest fire, the landscape fire not only affects the forests, it affects the houses affects, it affects the animals, affects the farmers, the foresters, and the urban centers no? And when you have a common enemy then you can start to collaborate more, so I am hopeful that this crisis will allow us to see more collaboration around the actors of the value chains, that they we will become more resilient and then we will change for sure, no?

Daniel Baker (WRI) 21:59: By now, we hope that you see the connection between the choices that corporations can make to support small businesses they work with to build global supply chains that are resilient enough to withstand the inevitable disruption of a drastically changing climate.

Thank you to our guests who lent us their expertise and insights for this edition of Voices on Supply Chains. The story continues at www.wri.org/CREST.

For all of us at WRI, my name is Daniel Baker – host and producer for the series. The series is part of a project which is funded by the Ares Charitable Foundation as part of their CREST Initiative; a 5-year career preparation and reskilling project that aims to close the gap between the demand for a skilled workforce for green jobs and the number of people prepared for these opportunities to build an equitable, low-carbon economy.

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