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November 1998 Insights Issue #28Do codes of conduct deliver the goods?Companies adopt a range of ways and means to tackle ethical problems found within their supply chains, such as abuse of safety standards in factories in developing countries. Each approach has inherent strengths and pitfalls, yet each represents a step in a process of improving conditions. Companies most commonly start by adopting codes of conduct and internal monitoring systems. But are such steps enough? Experiences of the Pentland Group suggest that companies facing the difficult and complex demands of ethical trading will need more than formulaic codes or monitoring. A code can be an essential first step. It defines key principles and aspirations, and companies can often use their purchasing power to urge suppliers' compliance with it. Yet such leverage is limited in scope because:
A second, more progressive phase is where a company implements a code of conduct, either by imposing it on suppliers or by more collaborative means, then works to integrate the principals of the code into its own supply chain management and other management systems. The blending together of principals and actions is essential to sustainable ethical trading. Nonetheless, the roots of the problems and dilemmas found in manufacturing are too complex to be sorted out on a factory-by-factory basis. Tackling problems found in worker health and safety involves looking at external forces and conditions, such as the capacity of civic institutions to regulate, enforce and provide essential services to businesses and workers. The route to lasting improvement is to overcome contextual barriers, inefficiencies and inequalities commonly associated with underdevelopment, that impede sustainable change. Companies that seek to be a positive force for change need to take a developmental approach that is characterised by (although not limited to):
These values define a long-term strategy that fuses integrated management systems with partnership development. Traces of this method have been found traditionally within extractive industries. However, it is an option and an opportunity for companies of varying size and in all sectors. Strategic partnerships enable small companies to overcome vast resource requirements of a developmental approach by complementing partners' expertise and material contributions. Partnerships cannot be limited to suppliers and workers, but must include competitors, local and foreign governmental institutions and NGOs if they are to build a comprehensive strategy for change. Debate within ethical trading circles remains steeped in issues of how best to monitor and to evaluate company codes. As more companies develop codes, it is clear that codes represent only part of a process. Given the vast effort expended on monitoring, one must question whether resources might be better applied to treating the root causes of problems rather than to monitoring symptoms. Advocates for ethical trading must be aware of the risk of failing to see the forest for the trees. The challenge for corporations, nongovernmental organisations, unions, and governments is to develop viable, collaborative programs to root out the causes of human rights abuses and unsatisfactory working conditions What's that you're using? It's a primer....... Maureen Quigley F: +44 (0)181 970 2274 Email: mquigley@pentland.com |
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