To drill down on this idea more, consider the relationship between stakeholder interest and regulation. Issues that receive a significant quorum of concerned stakeholders are more likely to illicit regulatory response. For example, company concern for “conflict minerals” and “human trafficking” are directly driven by regulatory mandates set forth by Section 1502 of the Dodd-Frank Act and California Transparency in Supply Chains Act. Likewise, legal standards define fair labor conditions at the domestic level and organizations, like the International Labor Organization, publish international standards that govern employee treatment. NGOs, like the Fair Labor Association, connect the communication loop by informing stakeholders when companies’ labor practices violate these standards.
So what drives the list of environmental issues? MSP’s analysis revealed the three applicable drivers are “regulatory compliance,” “stakeholder interest” and “leadership.” For example, company concern for “e-waste recycling and management” is prompted by state level regulations that mandate the quantity of e-waste companies must recycle. Specific quantity requirements differ from state to state and are typically determined by the proportion of companies’ market share in a particular state. Part One of this series provides a more detailed explanation of this regulatory environment, the associated challenges and two best-in-class examples addressing them.
Respondents that cited “GHG management” as an issue pertinent to their companies’ implementation of SSCM strategy were often from consumer brands and were driven by leadership and stakeholder interest’ Specifically, they drove companies like Dell and Intel to request that their major vendors set targets to reduce GHG emissions. Often, such a request from a large consumer brand creates a cascade-effect across the value chain; one where vendors try to push responsibility for GHG reduction further up, onto their suppliers. Iterating this game of supplier impact avoidance across multiple tiers of a large, global supply chain reveals how GHG management in SSCM is inextricably intertwined with managing Scope 3 emissions at the consumer brand level.
Respondents explained this responsibility dilemma is exacerbated by the complexity and interwoven nature of the electronics industry’s value chain. Suppliers, particularly OEMs and contract manufacturers, are often bigger than their customers, which reduces customers’ capability to influence the sustainability of suppliers’ operations.
At the same time, it is not uncommon for suppliers to directly compete with customers in different facets of their businesses. For example, consider how Samsung manufactures components for popular Apple products while also competing against Apple in the smartphone market. Respondents cited these dynamics as hindrances to the discussions and negotiations necessary to implement a successful SSCM strategy.
Notwithstanding the SSCM complications created by the dynamics discussed above, analysis of the most prominent SSCM issues revealed stakeholder concern really matters to corporations. To me, this resonated as an empowering takeaway — typically the average individual stakeholder, asks the same question as the average voter: “Does my voice matter?” We, collectively, are the stakeholders who familiarize and inform ourselves of the issues pertinent to sustainability. We, in turn, inform our colleagues, client, peers and communities and in the process wield power to influence the direction of corporate attention.
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