The Future of Responsible Supply Chains

By Sanchita Saxena and Nancy Reyes Mullins

Responsible supply chain strategies have delivered important gains over the last twenty years but evolving global crises and structural shifts call for a renewed commitment to resilient supply chains—ensuring that worker protections remain a central pillar of corporate strategy. As international standards rise and harden, we believe companies have an opportunity to build on the progress that has been made and create new systems and new ways of sourcing responsibly. Companies in all industries have opportunities to lead in creating responsible and resilient supply chains.

To advance corporate Responsible Supply Chain Strategies, Article One has developed tools and methodologies that help our clients meet three main objectives: strengthen human rights and environmental due diligence; build mutually beneficial partnerships with suppliers; and engage workers throughout the responsible sourcing process.

The first objective is to strengthen human rights and environmental due diligence to align with rising regulatory requirements to understand and mitigate risks early on. This includes improving the capacity of suppliers to effectively manage human rights and environmental risks. Strengthening due diligence will lead to a more resilient supply chain capable of withstanding external shocks, optimizing resource use, improving labor conditions, and enhancing workforce productivity. For example, Article One has been working with a client to build their internal capacity to conduct ongoing human rights due diligence across their global operations and business relationships. This has involved training members of the company’s team on the HRIA process, including identifying high-risk sourcing markets, mapping potential risks, conducting in-country consultation with rightsholders, and developing strategies to address risks.

The second objective is to create mutually beneficial partnerships with suppliers grounded in shared responsibility to develop an understanding of the needs, capacity, and constraints of suppliers, incentivize suppliers to align with regulatory requirements and corporate policies, and to ensure the cost of production enables rights-respecting conditions. This requires a shift from supplier-buyer relationships that are transactional and prioritize short-term outcomes. While this may be difficult to scale initially, this model can be implemented with a small group of Tier 1 suppliers and then rolled out further down the supply chain over time. For companies just starting on this path and seeking to learn more about what a shared-responsibility approach can look like, the Responsible Contracting Project (RCP), a non-profit initiative housed within Rutgers Law School’s Center for Corporate Law and Governance, is a great knowledge hub. We have found RCP to be a collaborative stakeholder and directed clients to their publicly available resources, such as the RCP Toolkit, which includes model contract clauses, a responsible purchasing code of conduct, implementation guidance, and policy analysis.

The third objective is to engage workers in meaningful ways throughout various stages of the sourcing process. Direct consultation with workers on their experiences allows companies to better understand how their sourcing practices and their suppliers’ policies and processes address the needs, challenges, and constraints facing workers. It can enable them to recognize and leverage the value of workers’ insights to inform solutions, as well as to forecast and mitigate potential adverse impacts before they become actual human rights violations. Engaging workers more intentionally can build trust in due diligence and social compliance programs and help surface solutions that benefit all stakeholders, from companies to suppliers to the workers themselves. Over the long term, more robust worker engagement has the potential to reduce the number of adverse human rights impacts companies need to address through their social compliance programs.

In a series of country-level human rights impact assessments we conducted for a multinational client, in-person focus groups with workers at transport and logistics suppliers across a diverse range of geographies and backgrounds helped the company better understand the reach and effectiveness of its global policies and local implementation. The focus groups surfaced some globally consistent challenges that were shared by workers across geographies, such as the impact of inefficient distribution routes on shift length, as well local impacts at specific facilities, such as managing extreme temperatures in warehouses, that could be addressed quickly in collaboration with suppliers.

At Article One, we are proud to partner with leading companies across sectors to design and implement effective supply chain due diligence approaches, build trust with key suppliers through mutually beneficial partnerships, and directly consult with workers in their supply chains to inform continuous improvement.

If you have any questions or would like to learn more about these and other steps you can take to ensure a responsible and resilient supply chain, please contact hello@articleoneadvisors.com or visit Responsible Supply Chains.