My previous post, "Why a nexus of regulatory requirements may take IT by surprise," discussed key drivers of sustainable supply-chain management strategies and the potential for an interesting interaction between the regulatory requirements of the Sarbanes-Oxley Act and Section 1502 of the Dodd-Frank Act. Malk Sustainability Partners, a specialty management consultancy that guides businesses in developing profitable corporate sustainability strategies, engaged global IT companies and industry experts to investigate the key drivers, important issues and popular strategies behind the sector’s adoption of SSCM. MSP synthesized this information into a study describing the state of SSCM in IT, available for download here.
This installment will discuss issues identified by interview respondents as most pertinent to be addressed in their SSCM strategies.
The most frequently mentioned concerns in the social and environmental categories are listed below (management issues will be addressed in my final post):
Forty-two percent of respondents referenced social issues, the most prominent of which were:
- Conflict minerals.
- Labor issues.
- Human trafficking.
Twenty-one percent highlighted environmental issues, the most prominent of which were:
- Greenhouse gas management.
- Water pollution.
- E-waste recycling and management.
Respondents cited social issues as their companies’ chief concern when asked about their implementation of SSCM strategy. Interviews revealed one of the reasons why companies focus more attention to social issues than environmental ones is the time and capital required to affect noticeable change in business processes that impact the environment. For example, addressing labor issues in the supply chain can be achieved relatively easily — often by customers requiring that suppliers compensate employees for overtime or provide better working conditions. However, getting a supplier to replace equipment that reduces harmful emissions can be more complicated because of the time and capital inherent in making such a decision.
Drawing from the list of SSCM drivers in my previous post, many respondents explained “stakeholder interest” is influential in their companies’ decisions to address sustainability issues. Following this line of argument, stakeholder concern also influences which sustainability issues, environmental and/or social, companies choose to address. Many stakeholder groups are more attentive to social issues than environmental ones — likely because stakeholder groups are comprised of people who identify more viscerally with issues that impact other people.
For example, consider the proportion of stakeholders aware of Apple’s labor issues with Foxconn, or Motorola’s laudable conquest to manage use of conflict minerals, as compared to the proportion concerned that nearly 60 percent of the surface water monitored in China is not safe for human consumption after treatment. Since the majority of stakeholders are not forced to deal with deteriorating water quality in China, but understand the idea that buying a certain product has potential to support employee mistreatment or armed rebel conflict in the Democratic Republic of the Congo, it makes sense that companies prefer to address prominent social issues before handling environmental concerns.
Next page: What drives environmental issues?