Ethical Performance
inside intelligence for responsible business


Buyers need incentives to take an ethical view

April 2008

Retail companies have been urged to train buyers on labour standards – and to link their pay to supply chain improvements.

The Ethical Trading Initiative (ETI) says the progress achieved by some retailers in improving workplace conditions at their suppliers is often negated by buyers with little knowledge of or interest in labour standards who therefore award contracts on price alone.

New ETI guidance suggests that this ‘lack of integration between commercial and ethical activities’ be addressed by training buyers in industrial relations and labour issues such as minimum wage levels, and by adding questions about ethical standards to supplier fact-finds.

The change would be achieved by developing performance indicators for buyers that could be reflected in pay or bonuses.

Companies are advised to approve a list of suppliers with a track record of improving labour standards, to whom buyers may direct business. They should also provide buyers with all data from ethical audits of suppliers to improve their understanding of the issues. The ETI, a UK-based coalition of companies and civil society, says that communication between buying and ethical audit teams is often poor.

The new guidance is based on recommendations agreed at an ETI members’ meeting of 60 company representatives, 14 NGOs and 12 trade unions. It says companies should encourage buyers to consider cost-cutting methods other than factory gate price reductions, such as efficiency measures and ordering fewer product samples.

Janet Biggs, director of social responsibility at New Look, who has circulated the ETI guidance to the clothing retailer’s Ethical Champions staff network, told EP that ‘sampling processes’ had been identified as an area where improvements could be made.

The guidance acknowledges that expanding the buyers’ role may require additional resources.

Ethical Trading Initiative | UK & NI Ireland | Supply Chain Management

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