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CHAPTER 17
Corporate social responsibility
Objectives of this chapter
• To understand the concept of corporate social responsibility and how it relates to the
organisation as a whole
• To examine various best practice structures and how these impact on the procurement
activity
• To examine the issues of compliance and business drivers for CSR
• To appreciate the importance of organisations such as the Ethical Trading Initiative,
Fairtrade and the International Labour Organisation
• To consider the Social Accountability Standards
• To consider the ‘Three Pillars of CSR’
List of Cases, Research Boxes and Figures in this chapter
Mini Case Studies
• Diageo cures audit fatigue
• Top Shop
• Wal-Mart
• FTSE4GOOD
• Tesco and CSR
• BAT
• O2
• TR Fastenings
• Marks & Spencer
• Dell considers linking buyers to new standards
Best Practice Boxes
• What buyers can do to improve labour conditions
Figures
• Figure 17.1 Hierarchy of CSR responsibilities
• Figure 1 The nine dimensions model
• Figure 2 The ritual principle
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Best practice – what buyers can do to improve labour conditions:
• Avoid putting undue pressure on suppliers that might impact on workers – for example,
changing an order at the last minute or shortening lead times, which could mean workers are
forced to do overtime.
• Think about the effect of the prices you set – insist suppliers comply with the ETI base
code.
• Give reasonable time scales for suppliers to address areas of non-compliance and provide
support to help them improve, such as education and training.
• Help your major suppliers to share good practice by developing benchmarking groups
where they can get together to exchange ideas about how to overcome specific issues in
their region or industry.
Also the next section from page 383:
Six steps to responsible buying
1. Establish good relationships with suppliers to ensure long-term, stable, risk-sharing
connections.
2. Make sure your communications are clear and timely, so suppliers know the terms of the
trade, have information about expectations and are able to give feedback.
3. Establish sustainable pricing so the supplier, buy and those further down the chain benefit
from the relationship.
4. Give clear lead times and payments.
5. Show respect for human rights in the supply chain. Buyers should give preference to
suppliers who demonstrate they are improving social and environmental conditions.
6. Offer continued support for small-scale producers and home workers. Buyers should find
out who their suppliers are and if they include smallholders, home workers and those in
disadvantaged areas, they should be careful not to change that.
If you want to be sure of conditions you need to know the extended supply chain.
Finally, students should be apprised of the important roles of the following:
• Social Accountability 8000 (SA8000)
• Ethical Trading Initiative (ETI)
• International Labour Organisation (ILO)
• Fairtrade.
CSR Sustainability Index
CIPS has introduced an online sustainable procurement index. The tool, a joint initiative of
PRGX, CIPS and the University of the West of England, allows suppliers to answer questions
concerning their sustainability credentials, which are then assessed and rated, providing a
benchmark against which suppliers can be easily measured.
Instructor’s Manual
The CIPS Sustainability Index is designed to reduce time taken for suppliers to provide
sustainability information. It also reduces the time buyers spend evaluating lengthy
questionnaires sent out to suppliers as part of the prequalification process and ongoing supplier
relationship management. Suppliers answer questions online that are validated by a team of
experts. Assessment is conducted in a consistent way to provide a rating for each of the three
pillars of sustainability:
• Economic,
• Social
• Environmental
The index can help buyers ensure suppliers are financially stable, have implemented
environmental policies and conduct business ethically. This allows buying companies to make
more informed purchasing decisions and can highlight where potential risks might exist in the
supply chain.
Three Pillars of CSR
The Triple Bottom Line Concept – People, Profit Planet
The well documented concept of the ‘Triple Bottom Line’ is an integral part of any
Sustainability process. The ‘Three Pillars of Social Responsibility’ – People, Profit and Planet –
focus on the key components necessary to ensure genuine and effective policy is established
throughout the organisation.
The model is invaluable in its simplicity, yet stops short of highlighting the specific needs and
areas of focus necessary to develop a truly effective sustainable strategy. In short, each Pillar
needs more definition; by expanding the scope of each Pillar it allows a more detailed analysis
of the core components of a manageable and effective Corporate Social Responsibility policy.
