Why Sprint, H&M, Mars see supply chain visibility as crucial

When poisoning from lead-acid batteries killed several workers at a Chinese cell phone supplier that sells to the U.S. market, Sprint Nextel Corp. got worried.

After a Chinese nonprofit alerted the cellular service provider that its name was on a website listing companies that purchased from the supplier, the company leapt into action.

"We immediately researched it and, luckily, we found we weren't buying from them," said Amy Hargroves, Sprint's director of corporate responsibility. "We did send a legal letter to them making sure they took our name off that website."

While the Overland Park, Ks.-based company avoided a possible public relations disaster in this case, the incident highlights the necessity for corporations to have visibility into their supply chains so they can know whether suppliers are meeting their sustainability standards -- and act quickly when they aren't.

"Through that dialogue we really understood what that risk was," said Hargroves, as she related the story of the incident at the BSR Conference in New York City last week. She was one of a number of corporate sustainability executives who spoke about the need for major corporations to work with suppliers to identify and mitigate risks.

The message from those executives: Being clear about your standards, making sure suppliers aren't punished for transparency, establishing partnerships to help suppliers meet your standards, and rewarding those who succeed are the keys to ensuring that sustainability permeates your supply chain.

"Our suppliers know that sustainability is part of making a deal -- that's really important to us," said Helena Helmersson, head of sustainability for H&M Hennes & Mauritz AB, the world's second-largest clothing retailer, behind Spain's Inditex SA. "We say to stakeholders that whatever you find in our stores you should be able to feel good about."

One important step toward that goal is transparency from suppliers, something the Stockholm, Sweden-based company insists on. "That's really important," said Helmersson. "You will not be punished for being transparent as long as you have a good action plan."

Next page: How H&M responded to deaths in Bangladesh