Ethical Performance
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Bid starts to get suppliers into CSR reporting mode

October 2008

Multinationals are to be urged this month to help small- and medium-sized supplier companies produce their own non-financial reports.

The Global Reporting Initiative (GRI) will make the appeal jointly with GTZ, the German government’s international sustainable development agency.

The two organizations have been running a pilot project in which four German companies – Daimler, Herzogenaurach, Otto Group and Puma – and Spain’s Telefónica have lent their expertise to suppliers producing small non-financial reports. Now they want the project to be scaled up and are seeking other multinationals to follow suit.

Both bodies will present the results of the project, known as the Global Action Network for Transparency in the Supply Chain, in Berlin on 17 October.

Under the pilot, multinational brands have assisted a total of 12 suppliers from Chile, China, India, South Africa, Thailand and Turkey in various ways, including through face-to-face advice and workshops.

Suppliers that have benefited include the Impahla clothing company in Cape Town, which published a 28-page sustainability report with support from Puma, one of its main customers. The report, which recently won an award from the Association of Chartered Certified Accountants, was produced with a consultant paid for by Puma – and after the German company had organized a reporting workshop for Impahla managers.

Impahla, which has about 100 staff and an annual turnover of ZAR35million ($4.28m, $3.05m, £2.4m), said the biggest barrier to sustainability reporting had been time constraints, not money. But, backed by the consultant – and with some work at weekends – it had been able to come up with what was needed. Impahla intends to continue to publish reports.

A GRI analysis of the pilot found that although suppliers were sometimes reluctant to begin reporting, once they started they generally regarded it less as a gesture towards their sponsoring multinationals and more as ‘an exercise that will help their businesses’.

GRI believes large brands should assist in this way because the smaller companies gain a better insight into social and environmental issues. However, it does not expect suppliers to meet larger companies’ reporting standards. It is content to see them produce documents that reach application level C under the GRI guidelines – below its two other levels, B and A.

Felicia Pulham, who leads the corporate responsibility team for Asia at the Apco consultancy, said the pilot was an ‘excellent’ development. ‘For many multinational companies, a significant portion of the impact associated with their business may be in their supply chain, so fostering transparency among suppliers is important for long-term progress’, she said.

Global Action Network for Transparency in the Supply Chain | Global | Nonfinancial reports

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