A Strategic Vision for Leading in Socially Responsible Procurement Practices Summary Report University of Michigan President’s Advisory Committee on Labor Standards and Human Rights April 22, 2016 Project Research Assistants: Ian Hecker, BA 2017 Kristine Schantz, MBA/MS 2016 Project Advisors: Dr. Ravi Anupindi, Ross School of Business Kelsea Ballantyne, MBA/MS 2016 With Support From: Stacey Glemser, UM Procurement Services
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A Strategic Vision for Leading in
Socially Responsible Procurement Practices
Summary Report
University of Michigan
President’s Advisory Committee
on Labor Standards and Human Rights
April 22, 2016
Project Research Assistants:
Ian Hecker, BA 2017
Kristine Schantz, MBA/MS 2016
Project Advisors:
Dr. Ravi Anupindi, Ross School of Business
Kelsea Ballantyne, MBA/MS 2016
With Support From:
Stacey Glemser, UM Procurement Services
1
Overview
Context 2
Opportunity 2
Methodology 2
Licensed Goods 3
Procurement Services 3-4
Spend Analysis 4-6
Benchmarking 7
Student Voice 8-9
Path Forward 9-11
Next Steps 12
Appendix 1 13
Appendix 2 14
Appendix 3 15
References 16-17
2
Context
In fiscal year 2015, the University of Michigan (UM) procured $3.75 billion in goods and services from over
40,000 companies.1 These companies face diverse human rights challenges, made more complex through the
globalized nature of business today. Increased public awareness through consumer activism, advocacy
campaigns and social media places additional pressure on business to acknowledge and address human
rights impacts. Over time, expectations of businesses have also grown due to the development of voluntary
standards such as the United Nations Guiding Principles on Business and Human Rights, as well as the U.S.
Dodd Frank Section 1502, or “Conflict Minerals” law and the California Transparency in Supply Chains Act.
Opportunity
Michael Posner, Co-Director of the New York University Stern Center for Business and Human Rights, in a
2014 symposium hosted by UM, challenged universities to broaden human rights efforts beyond current
licensed goods efforts to also include procurement and investment. Posner offered a number of reasons to
support this. First, in addition to training students to lead ethically, UM and other universities must also
respect ethical principles in the way they operate. Second, universities are the thought leading institutions in
the U.S. and have a responsibility to drive forward the national dialogue on human rights. Third, the potential
for impact across university procurement (rough estimates place this national market at over $1 trillion)
greatly surpass that for collegiate licensed goods (approximately $4.6 billion nationally2).
UM has a unique opportunity to lead universities in upholding human rights standards in its procurement
practices. The case for UM’s leadership on this issue is rooted in four factors:
1. Leadership in practice: UM is committed to the principle of leadership, with “Leaders and Best” as its
motto. From the Anti-Apartheid movement of the 1970’s and 1980’s to current human rights in
licensed goods efforts, UM has embraced a leadership role in issues of societal importance.
2. Attract the best: Young people generally and UM students specifically care deeply about social
responsibility. In order to continue to attract the best students, UM must also operationalize its
ethics.
3. Proactive engagement: Institutions are frequently caught off guard by issues of human rights.
Through proactive engagement, UM will be better equipped to both prevent and manage human
rights impacts.
4. Human rights risks exist: Human rights impacts are a reality for virtually any company operating
today; exploring and acknowledging these risks is a necessary first step.
Methodology
The research project to create a strategic vision for UM’s leadership in socially responsible procurement
spanned January to April 2016, with four distinct phases:
1. Initial research and resource development
2. Stakeholder engagement
3. Analysis
4. Final product delivery
The information offered in this report and corresponding presentation is the result of: desk-based research,
stakeholder and expert interviews (Appendix 1), university and private sector benchmarking, a procurement
spend analysis and student focus groups and surveys. The Research Assistants (RA) met weekly with project
advisors, including a Procurement Services representative, to discuss progress.
3
Licensed Goods
Beginning in 1997, student activists through groups such as the United Students Against Sweatshops
demanded that universities uphold human rights in the production of licensed goods. UM responded by
developing a network of internal and external structures designed to establish licensee standards and
monitor licensee performance. Many lessons can be drawn from the licensed goods experience:
1. Positive engagement: UM’s President’s Advisory Committee on Labor Standards and Human Rights
(PACLSHR) serves as a model for positive student engagement. It directly integrates students into
the committee and sponsors research and action based learning opportunities.
2. Investment: Making progress on this issue requires investing in the resources and support necessary
to do meaningful work.
3. External support: The licensed goods work involves a variety of external partners, from the Worker
Rights Consortium (representing the worker voice), Fair Labor Association (monitoring and
accrediting licensees) and the Collegiate Licensing Company (licensee contracting and leader of a
1 University of Michigan, Procurement Services Data 2 Collegiate Licensing Company, About CLC: https://www.clc.com/About-CLC.aspx 3 University of Michigan Procurement Services, About Us: http://procurement.umich.edu/about-us 4 Pricewaterhouse Coopers, Offshoring in the Manufacturing Industry:
products.pdf 7 U.S. Department of Commerce Economics and Statistics Administration, Made in America: Petroleum and
Coal Products: http://esa.doc.gov/sites/default/files/petroleum-and-coal-products-manufacturing-profile.pdf 8 Consumer Reports, Are generic drugs like Apotex medications made in India safe:
http://www.consumerreports.org/cro/news/2014/04/are-generic-drugs-made-in-india-safe/index.htm 9 U.S. Department of Commerce Economics and Statistics Administration, Made in America: Food, Beverages,
and Tobacco Products: http://www.esa.gov/sites/default/files/foodbeveragetobaccoindustryprofile_1.pdf 10 Social Hotspots Database, “Manufacturing” Industry search: http://socialhotspot.org/ 11 Kendyl Salcito, Chris Wielga & Burton H. Singer, Corporate human rights commitments and the Psychology
of business acceptance of human rights duties: a multi-industry analysis, The International Journal of Human
Rights, 19:6, 673-696, DOI:10.1080/13642987.2015.1029284: http://dx.doi.org/10.1080/13642987.2015.1029284 12 United Nations, UN Guiding Principles on Business and Human Rights:
http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf 13 Banktrack, Banking with Principles? Benchmarking Banks Against the UN Guiding Principles on Business
china.html?_r=0 15 Human Rights Watch, India: Mining Industry Out of Control:
https://www.hrw.org/report/2012/06/14/out-control/mining-regulatory-failure-and-human-rights-india 16 International Human Rights Clinic, The Price of Steel: https://www.escr-
net.org/sites/default/files/11271400/The%20Price%20Of%20Steel%20-%20Full%20(English).pdf 17 Polaris, Human Trafficking and the Hotel Industry:
https://polarisproject.org/resources/human-trafficking-and-hotel-industry 18 Washington Times, GE machines used to break law:
http://www.washingtontimes.com/news/2007/feb/28/20070228-113751-7882r/?page=all 19 The Wall Street Journal, India’s Skewed Sex Ratio Puts GE Sales in Spotlight:
http://www.wsj.com/articles/SB117683530238872926 20 General Electric, Promoting Ethical Ultrasound Use in India:
http://files.gecompany.com/gecom/citizenship/pdfs/ge_ethical_ultrasound_use_india_casestudy.pdf 21 Business and Human Rights Resource Centre, Turner Construction: http://business-
humanrights.org/en/turner-construction 22 Discover Magazine, The 9/11 Cover-Up: http://discovermagazine.com/2007/oct/the-9-11-cover-up
marriott-renovation/iIRlNeRovG05Dkbta3rOTI/story.html 28 Dou, Eva, Wall Street Journal, China’s Tech Factories Turn to Student Labor:
http://www.wsj.com/articles/chinas-tech-factories-turn-to-student-labor-1411572448 29 Business for Social Responsibility, Four Human Rights Issues Every Food and Agriculture Company Needs
to Understand: http://www.bsr.org/en/our-insights/blog-view/four-human-rights-issues-every-food-and-
agriculture-company-needs-to-unders 30 Stumberg, Robert; Ramasastry Anita; Roggensack Meg, International Corporate Accountability Roundtable,
Turning a Blind Eye? Respecting Human Rights in Government Purchasing: http://icar.ngo/wp-
content/uploads/2014/09/Procurement-Report-FINAL.pdf 31 Student/Farmworker Alliance, University of Michigan adopts Wendy’s boycott as students sweep the nation
with dozens of actions: http://www.sfalliance.org/news/2015/4/29/university-of-michigan-adopts-wendys-
boycott-as-students-sweep-the-nation-with-dozens-of-wendys-actions 32 The Economist, The road from principles to practice: http://www.economistinsights.com/business-
strategy/analysis/road-principles-practice 33 Triple Pundit, How to use CSR to Attract and Retain Top Talent in 2016,
http://www.triplepundit.com/2015/12/use-csr-attract-retain-top-talent-2016/# 34 The Economist, The road from principles to practice: http://www.economistinsights.com/business-