As nongovernmental organizations heighten their monitoring and the Chinese government enforces new laws to increase transparency and accountability, multinational corporations can expect growing pressure to run a clean supply chain.
But rather than simply monitoring Chinese suppliers’ compliance with local environmental, health and safety (EHS) standards, leading companies are giving suppliers tools and incentives to independently improve environmental performance.
And at the same time, they are overcoming their traditional reluctance as competitors to cooperate in monitoring and fixing problems at common suppliers.
We group the lessons multinational corporations have learned into two categories based on “the knowing-doing gap” -- that is, what you need to know and how you should act on what you know.
Any sustainability effort in China must start by creating a context that facilitates identification and visibility into the supply chain. Activities that can help foster a knowing environment in China include:
- Providing incentives for identifying, disclosing and addressing problems.
- Collaborating with nongovernmental groups to facilitate monitoring and helping Tier 1 and subtier suppliers self-identified problems.
- Making use of improving Chinese government data to augment internal supply chain transparency efforts.
- Working with multibrand forums to standardize Chinese supplier audit data at Tier 1 and subtiers.
- Encouraging environmental transparency as an efficiency tool.
Photo of Shenzhen electronics factory provided by Steve Jurvetson via Wikimedia Commons
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