1 Framing the Issues Preparing for Implementation Assessing Impact Session 1: From Sustainable Development to Sustainable Supply Chains Session 2: Governance of Supply Chains I: From Compliance to Voluntary Standards Session 4: Sustainable Supply Chains as a Lever of Competitive Advantage Session 5: Integrating Sustainability into the Supply Chain Session 6: Managing Stakeholder Relations Session 7: Building Supply Chain Partnerships Session 8: Measuring and Communicating on Sustainable Supply Chain Performance Session 3: Governance of Supply Chains II: Introducing International Labour Standards Approach to Sustainable Supply Chain Management (SSCM): Overarching Framework
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Approach to Sustainable Supply Chain Management (SSCM): Overarching Framework
Approach to Sustainable Supply Chain Management (SSCM): Overarching Framework. Framing the Issues. Preparing for Implementation. Assessing Impact. Session 4: Sustainable Supply Chains as a Lever of Competitive Advantage. Session 1: From Sustainable Development to Sustainable Supply Chains. - PowerPoint PPT Presentation
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1
Framing the IssuesFraming the Issues Preparing for Implementation
Preparing for Implementation Assessing ImpactAssessing Impact
Session 1: From Sustainable Development
to Sustainable Supply Chains
Session 1: From Sustainable Development
to Sustainable Supply Chains
Session 2: Governance of Supply Chains I: From
Compliance to Voluntary Standards
Session 4: Sustainable Supply Chains as a Lever of Competitive Advantage
Session 5: Integrating Sustainability into the
Supply Chain
Session 6: Managing Stakeholder Relations
Session 7: Building Supply Chain Partnerships
Session 8: Measuring and Communicating on
Sustainable Supply Chain Performance
Session 3: Governance of Supply Chains II:
Introducing International Labour Standards
Approach to Sustainable Supply Chain Management (SSCM):
Overarching Framework
2
Introduce definitions of “sustainable development”, its evolution and key
concepts
Raise awareness for the global social, economic and environmental
development priorities that the public and private sector are
increasingly urged to address
Explore the impact of globalization in supply chains and implications for
businesses
Identify leading drivers for introducing sustainability practices in supply
chains
Session Objectives
3
Unit 1.1 State of Sustainable Development
Unit 1.2 A review of key concepts
Unit 1.3 Globalization and supply chain management:
competition and global production systems
Unit 1.4 Drivers of sustainability in supply chains
Unit 1.5 Case Discussion:
Michelin Green Gold Bahia Project
Session Outline
4
What are the most pressing environmental, social
and economic issues the world is facing today?
5
Environmental Issues: Human use of natural resources and the resulting
climate conditions are making our environment vulnerable and uncertain
Atmosphere Land use Oceans
10% of the world‘s population (600 million people) live in low lying areas vulnerable to sea level rise (3)
Since the Neolithic Revolution about 47% of the world‘s forests have been lost to human use (2)
The World Health Organization states that 2.4 million people die each year from causes directly attributable to air pollution (1)
Source: (1) "Estimated deaths & DALYs attributable to selected environmental risk factors, by WHO Member State, 2002". Retrieved 2010-08-29(2) World Resources Institute (1998). World Resources 1998–1999. Oxford: Oxford University Press(3) IWA WaterWiki 2010.
6
Environmental Issues: The excessive consumption and poor management
of key resources is contributing to a yet more vulnerable world
Energy Water Waste
In 2008, the EU-27 produced about 2 600 million tonnes of waste, of which 37% was hazardous. Relative to the size of the population, that averaged 5,300 kg per inhabitant (3)
Only half of the population of Africa has access to clean water leading to thousands of deaths per day (2)
To meet the energy demand of all households worldwide, energy supplies must double by 2050 (1)
Source: (1) “Deciding the Future: Energy Policy Scenarios to 2050” World Energy Council 2007, (2) Waterfacts. Water.org 2011, (3) European Commission’s Eurostat
7
Jobs and Labour
Hazardous work is increasing among older children, aged 15–17. Within four years, it jumped 20 per cent – from 52 million to 62 million. Boys outnumber girls by two to one in this age group1
Peace, security and social justice
Social disruptions like war, crime and corruption divert resources from areas of greatest human need, damage the capacity of societies to plan for the future, and threaten human well-being and the environment 2
Sources: (1) ILO’s Hazardous Child Labour Report 2011, (2) Blewitt (2008), (3) UNESCO’s Education For All Progress Monitoring Report 2010
Education
Conflict has far-reaching consequences in education. While Liberia now has peace and stability, 447,000 of its children were out of school in 2008 – an increase of almost 180,000 over 19993
Social Issues: Child labour and lack of access to education remain
strong blockers of economic and human development in many regions
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Food
In 2010, FAO estimated there were 925 million hungry people in the world, 62% concentrated in Asia and the Pacific and 25% in Africa (2)
Poverty
Six million children die of hunger every year - 17,000 every day (3)
Population
According to UN projections, world population will peak at 9.22 billion in 2075 (1)
Source: (1) “ World population to 2300” Economic and social affairs. United Nations 2004, (2) FAO, The Stae of Food Security 2010, (3) http://edition.cnn.com/2009/WORLD/europe/11/17/italy.food.summit/, (4) ILO, 2009, Gender Equality at the heart of decent work.
Economic Issues: The projected growth in population is likely to
accentuate poverty and famine
Women and girls disproportionately affected – 829 million (vs 522 million for males) living at below $1.25 per day (4)
National Geographic Magazine Cover, May 2011 Edition
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The poorest 40 percent of the world’s population accounts for 5
percent of global income, while the richest 20 percent accounts
for 75 percent
Source: 2008. UN Human Development Report
Population Living on Less than 1 Dollar per Day
11
Evolution of the global sustainable development agenda
19601960
19701970
19801980
19901990
20002000
1962« Silent Spring » Rachel Carson
1962« Silent Spring » Rachel Carson
1965United Nations Development Programme
1965United Nations Development Programme
1969United Nations
Population Fund
1969United Nations
Population Fund
1968« Population Bomb »
Paul Ehrlich
1968« Population Bomb »
Paul Ehrlich
1971« Polluter pays » Principle (OECD)
1971« Polluter pays » Principle (OECD)
1973« Small is Beautiful : Economics as if People Mattered » - E. F. Schumacher
1973« Small is Beautiful : Economics as if People Mattered » - E. F. Schumacher
1972« Limits to Growth »
Club of Rome
1972« Limits to Growth »
Club of Rome
UN Conference on Human
Environment
UN Conference on Human
Environment
UNEPUNEP
1979World Climate Conference
1979World Climate Conference
1980World
Conservation Strategy, IUCN
1980World
Conservation Strategy, IUCN
1983UN Commission on Environment and Development : « The Brundtland Commission »
1983UN Commission on Environment and Development : « The Brundtland Commission »
1987 Brundtland
Commission Report
1987 Brundtland
Commission Report
1984International
Conference on Environment and
Economics (OECD)
1984International
Conference on Environment and
Economics (OECD)
1992 « Changing Course »
WBCSD
1992 « Changing Course »
WBCSD
UN Commission for Sustainable Development
UN Commission for Sustainable Development
The Earth SummitThe Earth Summit
1995-Copenhagen World Summit for
Social Development
1995-Copenhagen World Summit for
Social Development
1990 Human Development
Report
1990 Human Development
Report
UN Millennium Development
Goals
UN Millennium Development
Goals
Agenda 21 BlueprintAgenda 21 Blueprint
Rio DeclarationRio Declaration
1993EC DG Environment
1993EC DG Environment
1997Kyoto Protocol
1997Kyoto Protocol
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20002000
20102010
UN Global Compact – The 10
Principles
UN Global Compact – The 10
Principles
2001Third
Intergovernmental Panel on Climate
Change Report (UN)
2001Third
Intergovernmental Panel on Climate
Change Report (UN)
2002- South AfricaWorld Summit on
Sustainable Development
2002- South AfricaWorld Summit on
Sustainable Development
UNEP Global Environmental Outlook
UNEP Global Environmental Outlook
2003Cartagena Protocol
on Biosafety
2003Cartagena Protocol
on Biosafety
2004Indian Ocean
Tsunami
2004Indian Ocean
Tsunami
2005Kyoto Protocol
enters into force
2005Kyoto Protocol
enters into force
Hurricane KatrinaHurricane Katrina
2007« An Inconvenient
Truth »Al Gore
2007« An Inconvenient
Truth »Al Gore
« The Stern Review »Lord Stern
« The Stern Review »Lord Stern
Global Financial, Food and Fuel
Crisis
Global Financial, Food and Fuel
Crisis
2009 -Copenhagen
Climate Conference
2009 -Copenhagen
Climate Conference
G-20Commits to
phase out fossil fuel subsidies
G-20Commits to
phase out fossil fuel subsidies
Evolution of the global sustainable development agenda
13
So, how is business involved in the
sustainable development agenda?
14
Millennium Development Goals MDGs and the role of
business in sustainable development.
In 2000, 189 nations made a promise to free people from extreme poverty and multiple deprivations. This pledge became the eight Millennium Development Goals to be achieved by 2015
A social development vision that pledges to “spare no effort to free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty”
A set of eight quantitative time-bound social targets to be achieved by 2015 (from 1990)
A framework for business towards development cooperation
Source: UNDP.org
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Eight Targets address primarily social needs and human rights
Target Achievements (2010)
Eradicate extreme poverty and hunger
• Progress in many developing countries• Extraordinary success in Asia, mostly East Asia• Little progress in Sub-Sahara Africa
Achieve universal primary education
• Target unlikely to be met due to insufficient pace of progress
• High drop-out rates• Lack of teachers
Promote gender equality and empower women
• Gender gaps in access to education have narrowed• Access to university-level education remains highly
unequal• Low rates of women in paid employment• Women are gaining political power
Reduce child mortality
• Child deaths are falling• Little progress in sub-Saharan Africa
Source: UNDP.org
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Eight Targets address primarily social needs and human rights
Target Achievements (2010)
Improve maternal health
• Significant improvement in maternal health• Most large disparities in providing antenatal care and
skilled assistance during delivery• Official assistance for family planning declined sharply
Combat HIV/ AIDS, malaria and other diseases
• Tangible progress in global fight against AIDS• Children in sub-Sahara affected most by loss of parents• More access to antiretroviral therapy needed• Funding has helped control malaria
Ensure environmental sustainability
• Improved access to drinking water• Basic sanitation target hard to reach• Species threatened by extinction growing• Less loss of forest area• Great strives to improve lives of slum dwellers
Develop a global partnership for development.
• Aid below expectations• Lower tariffs help least developed countries• Tangible debt relief• Increased access to information technologySource: UNDP.org
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• fostering innovation• providing funding • promoting entrepreneurship in developing countries• connecting and integrating local producers with domestic
and global markets. • This work is supported by the Growing Inclusive Markets
(GIM) and Business Call to Action (BCtA) initiatives.
• fostering innovation• providing funding • promoting entrepreneurship in developing countries• connecting and integrating local producers with domestic
and global markets. • This work is supported by the Growing Inclusive Markets
(GIM) and Business Call to Action (BCtA) initiatives.Source: UNDP.org
18
In September 2010, results were deemed insufficient and the
world recommitted itself to accelerate progress towards these
goals
UN MDGs Advocacy Group includes business leaders (e.g. Bill Gates)
UNDP’s MDG Breakthrough Strategy (BTS) and MDG Acceleration Framework (MAF), as country roadmaps for Asia-Pacific (2011)
Public-private initiatives: e.g. UN CEO water mandate (July 2007) to assist development of water sustainability policies and practices.
“…We are going to miss this historic opportunity to reach the MDGs … We need more private
sector engagement in this campaign”
19
While important milestones had not been achieved, some shining
business initiatives provide positive signs
Coca-Cola, nonprofit TechnoServe, and the Bill & Melinda Gates Foundation launched a partnership to enable over 50,000 small fruit farmers in Uganda and Kenya to increase their productivity and double their incomes by 2014. (2010)
Coca-Cola’s Manual Distribution Centres in Africa: 12,000 jobs created and over $500 million rise in revenues.
Anglo American: Investing in local enterprise development in South Africa, providing financing for small business start-up funds targeting the most vulnerable segments of society, in addition to providing mentoring and access to supply chain opportunities.
BASF Grameen Ltd: Joint social business venture promoting better nutrition and protecting against insect-borne diseases in Bangladesh, aiming at improving the health and business opportunities of low-income communities in Bangladesh.
Source: www.wbcsd.org and www.inclusivebusiness.org
Unit 1.3 Globalization and supply chain management:
competition and global production systems
Unit 1.4 Drivers of sustainability in supply chains
Unit 1.5 Case Discussion:
Michelin Green Gold Bahia Project
Session Outline
21
What is sustainable development?
"Meeting the needs of the present generation without compromising the ability of future generations to meet their needs"
The Brundtland Report: “Our Common Future”, 1987
“Sustainability is improving the quality of human life while living within the carrying capacity of supporting ecosystems”
Caring for the Earth, 1991(IUCN, UNEP, WWF)
“Sustainability is improving the quality of human life while living within the carrying capacity of supporting ecosystems”
Caring for the Earth, 1991(IUCN, UNEP, WWF)
22
The three pillars of sustainability
Source: 2006. The Future of Sustainability Re-thinking Environment and Development in the Twenty-first Century
23
Unit 1.1 State of Sustainable Development
Unit 1.2 A review of key concepts
Unit 1.3 Globalization and supply chain management:
competition and global production
systems
Unit 1.4 Drivers of sustainability in supply chains
Unit 1.5 Case Discussion:
Michelin Green Gold Bahia Project
Session Outline
24
Globalization has resulted in increased competition
and complexity in supply chains…
Globalization has profoundly impacted the dynamics of production and flow of goods and services across countries.
Lower production costs in developing and transitional economies has resulted into developed country businesses outsourcing manufacturing to these countries.
As a result, China, with a large and low cost workforce, became the ‘workshop of the world,’ followed by others like Bangladesh or Cambodia.
A similar shift took place in services, with companies in developed countries outsourcing a full suite of IT and customer service functions to India, Bangladesh and more recently Eastern Europe
25
Supply Chain and Supply Chain Management
Supply Chain
“A system whose constituent parts include material suppliers, production facilities,
distribution services and consumers linked together via the feed-forward flow of
materials and the feedback flow of information “ (Stevens, 1989)
Supply Chain Management
“Supply Chain Management is a set of synchronized decisions and activities
utilized to efficiently integrate suppliers, manufacturers, warehouses,
transporters, retailers and customers so that the right product or service is
distributed at the right quantities, to the right locations, and at the right time, in
order to minimize system-wide costs while satisfying customer service level
requirements. The objective of supply chain management is to achieve
sustainable competitive advantage” (Li, 2007)
26
How do we understand supply chain sustainability in
the context of this module?
“Supply chain sustainability is the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycle of goods and services.
The objective of supply chain sustainability is to create, protect and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.”
“Supply chain sustainability is the management of environmental, social and economic impacts, and the encouragement of good governance practices, throughout the lifecycle of goods and services.
The objective of supply chain sustainability is to create, protect and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.”
Source: United Nations Global Compact and BSR Practical Guide: “Supply Chain Sustainability”
27
A myriad of sustainability-related issues are emerging in global
supply chains…
Source: Managing Sustainable Global Supply Chains, Business Network for Sustainability, 2010. Study based on the number of references to issue across 194 sources consulted on sustainability.
Common Sustainability Issues in International Supply Chains
28
Supply chains can and must play a central role in
sustainable development
Supply chain professionals in an outstanding position to influence business
and consumer practices through activities such as:
• Improving working conditions
• Reducing packaging
• Ensuring recyclability of materials
• Using fuel-efficient transportation
• Ensuring a fair compensation for the supplier
• Reducing waste and emmissions
• Encouraging suppliers to undertake environmental and social programmes
29
Businesses can no longer overlook these challenges and their
implications on stakeholders and society
Apple faced avid claims in 2010 lack of environmental and social caution and transparency in its supply chain. Apple had previously admitted that in 2008:•50% of its suppliers’ factories for products including iPhones and iPads weren’t paying valid overtime •25% weren’t paying workers minimum wages•25% failed to meet environmental standards
Apple faced avid claims in 2010 lack of environmental and social caution and transparency in its supply chain. Apple had previously admitted that in 2008:•50% of its suppliers’ factories for products including iPhones and iPads weren’t paying valid overtime •25% weren’t paying workers minimum wages•25% failed to meet environmental standards
Nike was publicly accused of using child labor in offshore factories in 1996. It took Nike two years to announce significant, long-term measures to improve working conditions at supplier factories.
Nike was publicly accused of using child labor in offshore factories in 1996. It took Nike two years to announce significant, long-term measures to improve working conditions at supplier factories.
Mattel was forced to recall US$100 millionworth of product when one supplier usedlead-contaminated paint on the company’s toysin 2007. The company watched its stock pricefall 18% in the months that followed and hassince been the target of litigation.
Mattel was forced to recall US$100 millionworth of product when one supplier usedlead-contaminated paint on the company’s toysin 2007. The company watched its stock pricefall 18% in the months that followed and hassince been the target of litigation.
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Moreover, as businesses continue building global supply chains,
an array of emerging issues and new challenges arise…
Source: Financial Times, Risk Management/International Trade and Investment Insert, Print Edition from May 2, 2011
31
Major sustainability challenges in supply chains C
Main drivers for sustainable supply chain practices
• Strategic intent
• Business strategy
• Strategic intent
• Business strategy
• Brand protection
• Brand protection
• NGO claims• Consumer
demands• Shareholder
pressure
• NGO claims• Consumer
demands• Shareholder
pressure
• Compliance with local regulation
• Compliance with local regulation
• Sustainability of supply
• Sustainability of supply
• Efficient use of resources
• Efficient consumption• Cost-cutting initiatives• Improved processes for
waste management
• Efficient use of resources
• Efficient consumption• Cost-cutting initiatives• Improved processes for
waste management
• Disruptions in supply• Unexpected events:
conflict, natural disaster,
• Disruptions in supply• Unexpected events:
conflict, natural disaster,
• Talent attraction and retention strategy
• Internal reputation
• Talent attraction and retention strategy
• Internal reputation
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Market-facing drivers: stakeholder pressures
International political pressures: e.g. UN’s 2000 report exposing De Beers’ human rights violations in Angola’s blood diamonds (Maignan et al, 2002).
Environmental and social groups: e.g. Greenpeace, Amnesty International.
Legal and regulatory demands: e.g. Dalian Municipality and China’s Air Pollution Prevention and Abatement Laws for auto manufacturers (Zhu et al, 2007).
Alternative Trade Organisations: e.g. Fairtrade.
Customer demands and protests: e.g. Home Depot’s wood coming from endangered tropical forests (Maignan et al, 2002; Hall, 2000).
The Media: e.g. US TV show ‘Eye for Eye’ nailed Adidas for child labour practices in 1994.
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Possible implications of external stakeholders pressure…
Short Video Clip
Video Clip: Better Business, Better LivesETI Norway
http://www.etiskhandel.no/Artikler/4191.html
What are the sustainability issues raised in this video?