What would you do? Social Responsibility Factors in Choosing Offshore Suppliers

Imagine walking into your office and being tasked with a new challenge: finding an offshore supplier in a region from which you don’t usually source.  Once you start, the task gets even harder: you have nagging concerns about social responsibility factors, including health and safety, as well as fair labor practices, even though initial audit results show nothing amiss. How do you select the supplier that provides the cost efficiencies you need, while also ensuring you maintain the high ethical standards of your business – and your profession? What would you do?

Let’s start with audits. When selecting a supplier, a thorough audit process is a vital first step. Ask yourself: is my audit process as good as it can be? Am I conducting this audit myself or using a reputable third-party firm that follows internationally accepted criteria? Trust the process but at the same time, if your ‘gut’ tells you something is amiss, go back and re-audit. One such ‘red flag’ could be if the supplier’s pricing is significantly lower than their competitors, especially if all the suppliers are from the same country. Essentially, if something seems too good to be true, it probably is.

Even if you use a reputable third-party audit firm, it is important to ensure that you – along with your management team, including legal counsel – have established your own organizational criteria. Ensure that the audit firm uses this, along with established international norms. Resources to help you ensure your processes are airtight are often available through industry trade organizations. Others include: 

• Environmental, Health and Safety Guidelines from the International Finance Corporation/World Bank (IFC/WB)
• International Labour Organization’s Core Labour Conventions and Standards
• ISO 20400 Guidance Standard for Sustainable Procurement

Once you award a job to a specific supplier, follow up with additional verification to ensure that proper processes are continuing. Ask yourself if you have true visibility into the full supply chain. The supplier that you are auditing may meet your standards, but are they subcontracting work? Make sure your contract allows you to leave a supplier that does not comply with your policies and could damage your brand – even if you did not contract with them directly. 

Do your policies consider all possible risks and all facets of sustainability? To help the supply management industry, ISM® has published Principles of Sustainability and Social Responsibility, which include a Guide to Adoption and Implementation. Currently, the Principles are as follows:

1. Anti-corruption: Do not tolerate corruption in any form. 

2. Diversity & Inclusion: Promote diversity and inclusion throughout the organization and the supply chain. 

3. Environment: Support environmental precaution, promote environmental responsibility and encourage environmentally friendly technologies and processes. 

4. Ethics & Business: Behave ethically always and demand ethical conduct within the organization and throughout the supply chain. 

5. Financial Integrity: Conduct all financial business dealings and decision-making with integrity. 

6. Global Citizenship: Act (in person and virtually) for the benefit of all global citizens, locally and elsewhere, fulfilling ethical and moral obligations. 

7. Health & Safety: Protect persons in the supply chain from the risk of injury, danger, failure, error, harm and/or loss of life. 

8. Human Rights: Recognize and acknowledge that human beings have universal and natural rights and status regardless of legal jurisdiction and local factors. 

9. Labor Rights: Respect, promote and protect an individual’s labor rights as defined by applicable international conventions. 

10. Supply Chain Sustainability: Support supplier development of more sustainable business practices, products and services and the embedding of sustainability throughout supply chains. 

11. Transparency: Make available full and complete information necessary for collaboration, cooperation and collective decision-making. Require a corresponding level of transparency from suppliers and throughout the supply chain.