New World Bank Report Aims to Reduce Barriers to CSR Compliance at the Supplier Level in Global Supply Chains

Source: World Bank, 5 November 2003

A new report, Strengthening Implementation of Corporate Social Responsibility in Global Supply Chains, issued by Business for Social Responsibility (BSR), the Danish Institute for Human Rights (DIHR), and the Copenhagen office of PricewaterhouseCoopers, assesses barriers to the implementation of CSR in global supply chains, and outlines options for the "next generation" of efforts to improve labor and environmental conditions in suppliers’ workplaces and their communities. The World Bank Group commissioned the report, with additional support from the Royal Danish Ministry of Foreign Affairs and the Levi Strauss Foundation.
"This report demonstrates the views of a diverse range of stakeholders and points in the same direction: the need for greater consistency and collaboration to accomplish the goal of improving working conditions for the millions of workers producing goods for companies that have come to rely on their supply chains," said Aron Cramer, Vice President of BSR and one of the report’s authors. Cramer added, "We hope that this report will guide the next generation of efforts by companies, the public sector, stakeholders, workers and their representatives to create sustainable solutions to this critical set of issues."

Dr. Margaret Jungk, senior advisor at DIHR added, "The World Bank study fills a critical gap in our existing knowledge of CSR implementation in supply chains. It constitutes one of the largest, most comprehensive research studies of its kind, aiming to understand the challenges faced by suppliers and buyers, as well as the expectations of NGOs and other stakeholders. But …" warned Dr. Jungk, "the ultimate impact of the study should not be limited to the academic/research community — rather, it should fuel the efforts of businesses and governments to implement their policies on the ground, where real people are grappling with real human rights, labour and environmental issues on a daily basis."

"It is particularly noteworthy that many of the identified challenges seem to be applicable across industries pointing in the direction of structural barriers rather than industry-specific barriers to implementation," adds Peder Michael Pruzan-Jorgensen, Manager with PricewaterhouseCoopers. He continues: "In particular it was striking that almost all consulted parties pointed to the need for greater involvement of local government in enforcing relevant laws pertaining to the working environment. As such, the report is an eye-opener in the sense that governments in developing countries need to be attentive to improving labour conditions rather than lowering standards in their efforts to become competitive in the global market place."

The report is based on interviews with more than 200 individuals in multinational companies and their supplier partners, NGOs, trade unions, governments and inter-governmental organizations, as well as 200 agricultural and apparel workers, in Asia, Latin America, Europe and the United States.

Although the report shows significant progress has been made through current approaches to apply CSR in supply chains, current efforts are likely not sustainable, and are insufficiently coordinated to ensure systematic improvement.

Some key findings in the report include:

All parties to this debate will need to change practices to achieve sustainable change.

All stakeholders have a strong desire for host country governments to fully apply laws.

Local, collaborative initiatives are needed to integrate good practice fully.

Codes should give increased attention to environmental issues.

Workers themselves need to become more involved in efforts to protect their rights and to improve their working conditions.

The report also addressed some of the commonly-cited "barriers" to achievement of good social and environmental performance in supply chains, and found that:

Despite the potential for inefficiency and confusion caused by the existence of over 1000 individual codes of conduct, the plethora of codes is not considered the primary barrier to implementation.

A "top-down" approach that relies heavily on the demands of brand-name companies has been critical in achieving initial progress. There is a strong sense, however, that this approach by itself may be inadequate during the next generation of efforts.

Some suppliers remain unconvinced about the commercial merits of applying CSR in supply chains because the business case has not been clearly presented.

Suppliers’ efforts are often hampered by a lack of consistent buyer commitment to CSR issues and inconsistent messages coming from companies’ CSR and merchandising staffs.

There has been an over-reliance on worksite monitoring, although it is clear that many have begun to shift attention to more of a holistic approach.

Structural barriers to the achievement of good CSR practices exist, in particular, where the present business model relies on remote, frequently shifting supply chains.

The authors cautioned against overemphasizing the commonly-stated view that the proliferation of codes of conduct presented a barrier to good practice, noting that there is significant — if incomplete — alignment of codes with International Labor Organization (ILO) conventions on core labor rights. The report also noted that "local ownership" of solutions is essential to the long-term achievement of the social and environmental goals embodied in the numerous codes of conduct that have developed in recent years.

Download the full report (pdf)