Unchaining ValueCorporate responsibility through the value chain

Unchaining ValueCorporate responsibility through the value chainWorkshop 31 October 2007

1 Background and objectives

2 Describing global value chains

3 ICT sector overview and key challenges

4 Food and beverage sector overview and key challenges

5 Issues in common

6 Small group discussions

Value chainsBackground ICT sector F&B sector Issues Small groups

Value chainsBackground ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainBackground and objectives

― To understand challenges explore best practice

― To understand capacity building within suppliers to address environmental and social issues in the supply chain

― To explore scope for a multi-sector initiative on sustainable supply chains

Value chainsBackground ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainBackground and objectives

― Fit with existing UNEP initiatives

― Partnership with UNGC

― Cross-sector or multi-sector?

Value chainsBackground ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainInterviews and research

ICT

– OEMs/operators: Nokia, O2, Deutsche Telekom, HP, Panasonic

– Contract Manufacturers: Delta Electronics*

– Academia: Wuppertal Institute, Öko-Institute, Yale University

– Networks/Consultants: GRI, BSR, Verité, sustainabilityagents

– NGOs: Good Electronics, ASK, TEAN

– Unions: Unite the Union

Food

– Manufacturers: SAB Miller, Unilever

– Retailers: Carrefour, Marks & Spencer

– Fast food: McDonald’s, Starbucks

– Consultants: McKinsey

– Multistakeholder initiatives & certifications: Business Social Compliance Initiative Food Module, Common Code for the Coffee Community, Fairtrade UK, Rainforest Alliance, SAI Platform, World Cocoa Foundation

– NGOs/Think Tanks: Food Ethics Council, International Institute for Environment & Development, Oxfam

*agreed to participate, results still outstanding

Value chainsBackground ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainDescribing global value chains

Raw Materials Refinement SuppliersSuppliers Manufac-turing

Manufac-turing

Testing

Testing

PackagingPackagingTransport & DistributionTransport & Distribution

Retail Customer

End Consumer

Upstream Suppliers

Potential Re-Use or Recycle

Information Management

Tier 2+ suppliers

Outsourcing

Outsourcing

Suppliers

Outsourcing

Outsourcing

R&D

Value chainsBackground ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainICT sector overview and key challenges

Background F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainICT sector overview and key challenges

ICT sectorValue chains

Value chainsBackground ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainICT sector overview and key challenges

Background F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainICT sector overview and key challenges

ICT sector characteristics:

– OEMs aim for strategic long-term partnerships with suppliers of high-end components and products

– Impacts (environmental/social; across sourcing, manufacturing, use, disposal) often determined in the design phase

– Performance affected by infrastructure, education, incentives, culture, ability to reach out to workers, available technology, etc.

– Overall price pressure, outsourcing and offshoring

ICT sectorValue chains

Background F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainICT sector overview and key challenges

ICT sector responses:

– Industry-wide efforts to set minimum standards and facilitate uptake among suppliers, notably Electronic Industries Code of Conduct (EICC) and the Global e-Sustainability Initiative (GeSI)

– Minimal uptake among contract manufacturers– Interest in product labelling, though no significant activity

ICT sectorValue chains

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainFood sector overview and key challenges

Value chains

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainFood sector overview and key challenges

Breeder Producer

Middlemen/ Market

Middlemen / Market

Slaughterers

Distributors / Market

Processors

Restaurants

Supermarkets

Wet market

Value chains

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainFood sector overview and key challenges

Value chains

Food sector characteristics:

– Wide range of growers, from huge agri-business to smallholders, family and community farms

– Supply and distribution across processors, manufacturers, distributors, retailers, middlemen

– Size and volatility of world commodity markets– Increasing demands for traceability– Variability of supply and demand

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainFood sector overview and key challenges

Value chains

Food sector responses:

– Commodity-specific, e.g. coffee, soya, palm oil– Monitoring focused on raising performance, not compliance– Broad commitments that leverage corporate distribution and

buying power via business-NGO partnerships – Focus on benefits to suppliers, beyond cost savings and

efficiency

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainFood sector overview and key challenges

Value chains

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainIssues in common

Value chains

– Role of consumers: how important?

– Product labelling may present important opportunities

– The business case for suppliers is critical

– Collective action, partnering and free riders

– Burden of review and documentation

– Challenges in partnering upstream and downstream, e.g. planning, processing of information, coordination, training

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainThree-stage model:

Drivers

Value chains

Phase 1: Comply Risk management: Product safety, regulatory compliance, reputationBusiness value: Short-term viability, reliability and quality of supply

Heavy focus on supplier standardsCost minimisation and ‘policing’ approach to auditing

Phase 2: Compete Business value: cost savings (e.g. energy or material use reduction); improved productivity; strengthened demand from customers or consumers

Capacity-building e.g. Training programs, technical assistanceSupplier engagement in developing standards and approachesGuidelines and learningPhilanthropy

Phase 3: Lead Business value: New market creation; brand enhancement; long-term viability of supply; premium quality supplyCreating value and innovation, e.g. developing livelihoods; shaping demand and loyalty

Innovative partnerships / chain networksMultistakeholder collaboration to raise the level of the entire industryInstitutional capacity buildingEfforts to measure outcomes (rather than inputs)

Actions

Background ICT sector F&B sector Issues Small groups

Unchaining ValueCorporate responsibility through the value chainSmall group discussions

Value chains

– Part one: Major challenges within sectors; solutions needed; moving through the three phases

– Lunch break

– Part two: Highlighting good practices; evaluating success; scope for multistakeholder

initiatives