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Ethics and Business Linkages: Supply Chain Implications for Exporters

  • WORLD EXPORT DEVELOPMENT FORUM 2008

    Consumer Conscience: How Environment and Ethics are Influencing Exports

    8 - 11 October 2008, Montreux, Switzerland

     
    SESSION SUMMARY: Friday, 10 October 2008                             print icon   Printer-friendly version  
     

    BREAKOUT SERIES 3

    Ethics and Business Linkages: Supply Chain Implications for Exporters

    SPEAKERS:
    Celine Roche, Vice-President, Speciality Ingredients Division North America, Mane
    Stuart Symington, Chief Executive Officer, Fresh Produce Exporters' Forum, South Africa
    John Whelan, Chief Executive Officer, Irish Exporters Association, Ireland
     
     
    MODERATOR:
    Ashok Sharma, Indian Academy of Management, India 
     

    Demand for green and ethically produced goods is rising, but when assessing how well business is doing on this score, it is not enough just to look at the producer and the consumer end. Questions need to be asked about the whole production cycle, including about whether the purchasing practices of big buyers, such as supermarkets, are ethical, this session heard.

    Moderator Ashok Sharma cautioned at the start that there is still a long way to go in getting big business to think green. There is no evidence yet that environmental questions weigh as heavily as traditional considerations such as cost when big business takes its decisions. "Although green is in the minds of the consumer, it is not a major issue in the minds of the corporate executive," Sharma said.

    Ensuring a more ethical and green supply chain will involve balancing the social, environmental and economic factors, creating business-driven global values.

    Soaring international fuel prices are one factor pushing supply chains in a greener direction, said John Whelan of the Irish Exporters Association. With fuel prices driving up transport costs, there is increasing pressure to 'buy local', particularly when it comes to food. As a result, the so-called carbon footprint left by transport will be smaller, Whelan said.

    But there is a need to find the right balance when it comes to deciding who - producer, consumer, supplier - must do more to be more environmentally friendly and to cut carbon emissions, for example. Whelan cited the issue of recycling, which can amount to three times the original cost of production for certain goods.

    It is often easier to shine the environmental or ethical spotlight on the consumer or the producer because their actions are more visible than those of intermediaries along the supply chain, he said.

    But it is precisely intermediaries in the production process whose actions need to be scrutinized more closely, said Stuart Symington.

    In a presentation that sparked must interest, Symington said that the whole supply process needs to be examined from an ethical point of view. When that is done, many of the actions and policies of supermarkets, or the gatekeepers -- as he termed them, are highly questionable.

    He questioned, for example, supermarket business and buying practices. Too many big chains, which are taking increasing control of the global market, employed questionable policies such as selling below cost, removing brand names and withholding price information from the producer until it is too late to switch deliveries.

    "Ethical trade is not just about providing an ethical product, it is about creating an ethically sound business. Buyers' purchasing behaviour has to be as ethical as the ethical products that they demand," he said.

    Farmers, who his organization represents, are awash in ethical codes, he said. Sometimes, these could be beneficial in forcing changes that are needed in labour practices, for example. But they cannot just be "foisted" on the producer, he added.

    Celine Roche of Mane agreed that an ethical approach has to be applied throughout the supply chain for it to be successful. Her company, which sells fragrant oils such as patchouli, benefits from being able to market their products as "ethical."

    Fair trade is good for a company's image, guarantees quality and sets its product apart in a world in which the market is flooded with fragrance offers, she said. "It is more than a trend. The demand from major brands is increasing," Roche said.

    Panellists concluded that international retailers should no longer be allowed to operate in a regulatory void. One recommendation was for an international buyer-supplier form to be set up, possibly under the aegis of the ITC, to agree on ethical business practices.