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Responsible sourcing strategies to build a sustainable supply chain

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Responsible sourcing strategies to build a sustainable supply chain

With customers shifting towards sustainably produced products and services, consumer-centric companies are making the pivot also. According to the report ‘Integrating Sustainability into India Supply Chains' by CII( Confederation of Indian Industry) -ITC Centre of Excellence for Sustainable Development and Sedex, stakeholders (including investors, the government and consumers) expect businesses to conduct business responsibly, the key to which is implementing responsible sourcing practices. Speaking about the report, Seema Arora, Deputy Director General, Confederation of Indian Industry, says, “It aims to provide actionable guidance to companies on the integration of sustainability within their supply chains. It also brings to the fore the business case for investing in sustainable supply chains by looking at key drivers, key risks, and key challenges faced by Indian businesses in their supply chains.”

The COVID-19 pandemic has necessitated the need to reconfigure global supply chains and build resilience in them. Through responsible sourcing, companies can mitigate risk and improve their sustainability performance while focusing on business ethics, environmental concerns, and health and safety of labour.

We look at key strategic issues that companies are working on when it comes to responsible sourcing.

1. Commitment to social issues and upliftment of workers in the supply chain:

India's fashion and textile industry accounts for 17% of the export income and 2% of its GDP; employing over 45 million people of which women constitute more than 60% of the workforce. Out of this statistic, a staggering 80% are engaged in the informal and unorganised sector and are facing poor working conditions, exploitation and low career prospects.

In 2013, the Rana Plaza disaster in Dhaka was a wake-up call for the fashion industry, especially fast fashion. The collapse of the building, home to five garment factories, led to the death of over 1,100 people while injuring more than 2,500. The Rana Plaza collapse triggered decisive action on the part of international brands to remove toxicity from supply chains and taking responsibility for the health, fundamental rights, personal safety of the community.

For fashion conglomerate Inditex, behind brands such as Zara, Pull & Bear and Massimo Dutti, women hold most of the production jobs across their supply chain. Inditex is ensuring that women enjoy the same opportunities as their male counterparts, in line with the UN Sustainability Development Goal of Gender Equality and empowering women and girls. Working on initiatives covering health, protection and empowerment, Inditex has launched Sakhi Health, Sakhi Gender Equity and the Sowbhagyam project in India. These programmes hold workshops on reproductive health and improve factory management, promote zero tolerance policies of violence at the factory level and encourage suppliers to develop and implement diversity and gender policies, among other practices.

2. Responsibly sourcing raw materials: With global sourcing chains becoming increasingly complex and opaque, responsible sourcing guidelines of ingredients is integral. FMCG major Nestlé India has sourcing guidelines in place for several categories in the country, such as dairy and palm oil, cocoa, coffee, paper and board. With a thrust on responsible farming and production cross Coorg, Karnataka and in Waynad, Kerala, it is implementing 4C practices based on high standards of production and processing. This has led to the establishment of sustainable and ethical coffee supply chains in these regions and Nestlé India is sourcing about 12% of its net coffee procurement from here.

3. Increasing efficiency through digitisation: By digitally transforming the supply-chain, a company can reduce costs, better its services and become more agile. AB InBev, the world's leading brewer, in pursuit of its 2025 sustainability goals of Smart Agriculture, Water Stewardship, Circular Packaging and Climate Action, is introducing new technologies including Internet of Things, blockchain, artificial intelligence, and machine learning in its value chain. By capturing real-time data and gleaning impactful and timely insights, the company is agile to respond to a crisis and improve its business performance.

To improve crop viability, AB InBev has partnered with General Aeronautics which provides affordable and reliable drones to tackle inefficiencies in spraying pesticides. It also has engaged the Kisan Hub platform to help digitally monitor the progress of crops, manage inventories, set quality thresholds and manage distribution. By supporting decision making and automating its supply chain, AB InBev has achieved operational excellence and is moving closer towards its sustainability goals.

4. Building brand value through ethical decisions: With customers concerned about the ethical production of goods and services and responsible business practices, an agile company can build brand value through an appropriate response. Conscious beauty brand The Body Shop, taking cognisance of India's plastic waste crisis, partnered with Bengaluru-based for-profit organisation Plastics for Change that works with local NGOs and a community of waste pickers, to source community traded recycled plastic. This plastic is ultimately converted into 250ml shampoo and conditioner bottles for their product packaging. Taking this a step further, customers can donate to Project NARI (meaning nutrition, ability, retraining and inclusion), which The Body Shop launched with Plastics for Change, to support female waste pickers through donations that provide their families with meals, PPE kits, financial support and training.

Upstream and downstream supply chains are becoming increasingly interconnected, a significant shift from the linear supply chains of the past. By sustainable sourcing, a brand can mitigate supply chain shocks caused by environmental, economic and social causes. It will be poised to take advantage of the future boom in customer spending, which will favour responsible companies focused on the triple bottom-line.

Bibliography

https://sustainabledevelopment.in/wp-content/uploads/2020/09/Integrating-Sustainability-Into-Indian-Supply-Chains-CII-and-Sedex-FINAL.pdf

https://www.openglobalrights.org/hardship-to-hope-women-migrant-workers-in-the-indian-ready-made-garment-industry/

https://www.inditex.com/our-commitment-to-people/our-suppliers/workers-at-the-center/womens-empowerment

https://www.nestle.in/csv/communities/responsible-sourcing

https://www.sustainability100plus.com/msite/abinbev-article-page/agents-of-change-three-startups-that-are-helping-build-a-sustainable-future-6581211.html

https://www.thebodyshop.in/community-trade-recycled-plastic