Consumer trends today are clear — shoppers demand better social, environmental, and economic conditions throughout corporations’ supply chains.
The footwear, apparel, and retail industry has been under especially intense scrutiny in recent years. Consumers are more informed than ever before.
Sixty-three percent of consumers view shopping as a means of change, and among millennial consumers, 52% report researching brands before they buy.
A 2015 study showed that 9 out of 10 consumers expect corporate social and environmental responsibility and would boycott companies with unethical business practices.
As consumer expectations begin to shift and the demand for sustainable products grows, companies have to search for new ways to stay relevant.
No matter the size of your company, there is too much at stake for you not to prioritize CSR and compliance by taking them into your own hands.
The benefits of CSR for business
One unique facet of CSR is that it is self-regulated; companies set their own goals based on their products, size, and resources. Today’s leading brands, retailers, and vendors are crafting such programs, which provide the following benefits:
1. CSR demonstrates a commitment to social and environmental responsibility to all stakeholders.
Both internal (employees) and external (customers, NGOs, society at large) stakeholders take notice when a company is transparent about responsible sourcing, waste management, working conditions, pay, and other facets of sustainability.
2. It improves corporate compliance.
Internal CSR initiatives spill over into broader compliance with laws and regulations. This insulates companies from expensive fines and litigation associated with non-compliance.
3. It helps with supplier management and due diligence.
CSR provides a clear code of conduct when vetting suppliers and factories to decide whether to work with them.
4. CSR increases revenue and improves bottom line finances.
Sustainability-marketed consumer packaged goods saw 50% growth between 2013 and 2018, growing a full 5.6 times faster than conventional products, with 90% of sustainable products outpacing comparable conventional products.
“Brand love and brand loyalty will very much be dependent on the sustainability attributes that a brand enables or builds with its consumers.”
Working toward net-zero carbon emissions, competitive wages and opportunities, and other initiatives harbors significant long-term payoffs.
Industry best practices for improving CSR across your supply chain
Below we share ways to drive CSR through your own internal compliance programs, regardless of the size of your company. Taking on this project in-house is an important step toward sustainability — one that is fully adaptable to your company’s current state and unique needs.
The following are CSR best practices to show stakeholders you are committed to social and environmental responsibility:
1. Define clear standards and codes of conduct.
As a brand or retailer, you have influence over the practices of your suppliers and factories. Use this influence to drive positive change.
This begins with identifying your goals and building a framework that fits your needs. This could consist of codes of conduct establishing acceptable vs. unacceptable behavior from suppliers, what constitutes a major vs. minor violation, and so on.
It is vital to maintain a bird’s-eye view and address serious issues across the entire supply chain, ensuring there are no weak links at any point in the production process.
Having clear standards and codes of conduct creates a level ground the collaborate with factories and suppliers.
2. Forge strong, collaborative relationships with suppliers and factories.
The days of policing are over. Once you establish clear standards and codes of conduct for your suppliers, it becomes easy to collaborate with them – and to implement changes across your supply chain.
For a CSR program to be successful, you need to train suppliers and factory personnel on sustainability practices, and also have the capacity to pivot immediately when changes are necessary.
By collaborating with suppliers from the understanding of what is expected from them, you not only raise the bar for your company, but also for your supply chain as a whole.
Another good practice when implementing sustainability projects is maintaining a close relationship with your first- and second-tier suppliers. These suppliers can help you oversee your lower-level suppliers, and keep you informed about potential risks.
As a brand, you can collaborate with your first- and second-tier suppliers to constantly collect information about the health, safety, labor, and sustainability practices down your supply chain. This allows you to “to deploy customized risk-mitigation programs where needed,” explains Harvard Business Review
What is necessary to foster a culture of collaboration? A two-way system of communication wherein buyers and suppliers can stay in close contact, resolve issues, and track performance.
All parties benefit from this relationship through increased efficiency and reduced costs. “By engaging deeply from the start,” writes GreenBiz, “you will get to know who is in your supply chain, what they are thinking and what questions they have.”
3. Create incentives to drive sustainability in your company and supply chain.
According to HBR, one of the most common mistakes companies make is rewarding efficiency and cost-savings while neglecting sustainability.
By contrast, CSR leaders incentivize suppliers by promoting “supplier sustainability awards, long-term contracts, and preferred status” — and these represent just a handful of potential incentives for good performance.
This counteracts the all-too-common pressure placed on sourcing and procurement managers to find quality products at the lowest cost possible without any real incentive to prioritize sustainability.
Reward sustainability in the same way you reward cost-effectiveness, and the drive toward ethics-based decision making will begin to take on a life of its own in your company.
4. Settle for nothing less than complete visibility over your supply chain.
It is an increasingly common practice to require suppliers to disclose where they source from before agreeing to do business together.
This creates greater traceability and transparency, particularly when buyers conduct audits regularly to ensure all supply chain partners are complying with CSR codes of conduct.
Robust supply chain management software is necessary to accomplish this task. Without it, striving for supply chain visibility requires keeping painstaking track of hundreds or thousands of documents, spreadsheets, and lines of communication from all elements of your entire supply chain and setting up a team to interpret data.
Another solution for the task of building complete visibility is to collaborate with higher-level suppliers to map out interdependencies within your supply chain — an example of the importance of building strong relationships.
5. Implement sustainability reporting.
Reporting on supplier sustainability metrics and practices bolsters your brand reputation, building accountability within and outside of your organization.
We hardly need to explain the advantages of good brand reputation, and given that consumers care about CSR more than ever before and are willing to do their homework before they shop, transparency is a key ingredient in any brand reputation strategy.
The trend of triple bottom line reporting — in which a company reports not only on finances, but also on social and environmental impacts — has increased in popularity recently. This strategy makes it clear to stakeholders that the ethics of your supply chain are as important to you as your finances.
6. Adopt the right technology to reach your greatest potential.
The right technology will help you achieve maximum results from your CSR initiatives. It lets you map out your entire supply chain while also mapping out the risk. Information is collected and organized in real-time, helping you identify potentially problematic gaps and address them quickly.
From conducting verifiable digital audits to issuing CAPAs and ensuring follow-through on improvement initiatives, a technological solution “delivers analytical capabilities that are beyond the classic audit model,” writes MIT Sloan.
CSR is the new norm
The impact of CSR on business, on finances, and on organizational performance is hard to overstate. Particularly in this era of hyper-informed and ethically motivated consumers, it is vital to put a custom-tailored CSR plan in place to mitigate risk and achieve greater growth.
As GreenBiz writes, “…things will go wrong and when they do, it’s important to manage in an honest and transparent but conservative way.”
Particularly in the apparel and footwear industry, which has been criticized for unsustainable and furtive business practices, CSR is a new necessity. Failing to report on sustainability can lead to backlash from governments, consumers, NGOs, and other stakeholders, and can badly tarnish brand reputation.
Financial executives are also taking heed of the fact that the vast majority of consumers worldwide will pay more for sustainable brands — a figure that continues to rise every year.
The solution lies in enterprise-wide technology that enables brands to increase visibility over the practices of their supply chain partners. And this ultimately increases collaboration through a single source of truth that empowers the entire production ecosystem to quickly and efficiently respond to issues.
Demonstrate to stakeholders that you prioritize sustainability. Define clear codes of conduct, establish a platform for healthy collaboration with your suppliers, incentivize sustainability throughout your production chain, and strive for full visibility over your entire supply network.
Inspectorio Rise can help you shape and roll out your compliance and CSR initiatives at scale.