WBA: Companies with embedded sustainability best-placed to weather coronavirus storm

Haverkamp claims that firms which do not see supply chains as value chains are worst-placed in both the short and long-term 

That is according to the World Benchmarking Alliance’s executive director Gerbrand Haverkamp, who spoke exclusively to edie around the rising number of supply chain sustainability horror stories now gracing UK news outlets.

In the past week alone, thousands of citizens have been joined by thought leaders, celebrities and investors in taking pointed aim at:

• The UK and US Governments and respective national farming sectors for failing to prepare for worker shortages in the fruit and vegetable supply chain, ultimately drafting in low-paid workers from abroad despite social distancing and travel advice.
• Fast fashion retailers for not shutting warehouses or changing staff rotas so as to enable social distancing, and for cancelling and holding orders, thus risking worker livelihoods in supply chains overseas.
• Tech giants for failing to maintain repair services, risking both circular economy progress at the consumer level and social sustainability for those working upstream.

This is to name but a few cases. So extensive and frequent are the reports of poor practice in regards to human rights in supply chains at present that the Business & Human Rights Resource Centre (BHRRC) has created a dedicated page to track updates, from news reports, to NGO analyses and petitions.

Haverkamp explained that the difficulty in maintaining existing sustainable supply chain practices at present – whether they relate to social or environmental issues – is twofold. In the first instance, communications and investments may slow. The impact of these changes will likely be compounded by reduced disclosure, as suppliers go into crisis management mode, and limited potential for in-person audits, borne by restrictions on travel.

“There is certainly going to be a lack of oversight but the effect of that, we cannot broadly assess at this point,” Haverkamp said.

“What we fear is that a lot of commitments to work on environmental and social issues in the supply chain require strong relationships. If companies have to cut loose some of their suppliers because they can’t sell the products, or suppliers can’t deliver because they face restrictions, these relationships will be jeopardised.”

While acknowledging that some businesses will likely have no choice but to cut back on supply chain investment and practical support, Haverkamp said that those wishing to attain or retain a leadership position will seek to redefine what it means to “nurture” sustainable supply chains, rather than bluntly placing the issue on the backburner. This redefinition, he urged, should involve transparent and collaborative communication across the supply chain, rather than being bluntly implemented from the top-down.

“The companies that are ahead or trying to get ahead will frame their supply chain as a value chain – and value can only be created if relationships are strong,” Haverkamp summarised.

Long-term leadership

In the near-term, one benefit of taking this approach is clear: fewer angry mobs on Twitter and, therefore, less of an immediate drop off in sales.

But taking such a narrow view, Haverkamp argues, is disingenuous and will likely not benefit any business in the long run.

This is partly because corporates ultimately need the support of not only consumers, but investors and policymakers – groups facing mounting calls to link any bail-outs to new environmental and social requirements, as was the case with carmakers and banks in the 2008 financial crash.

While such calls have largely taken the from of letters from NGOs and progressive thought leadership pieces from figures such as Paul Polman and Mike Barry, Haverkamp ultimately believes they will intensify and spread beyond the existing CSR sphere – if not through consumer and investor pressure, through the environmental realities of the Anthropocene.

“Viewing sustainability as an added cost and cutting it is a tempting narrative, but taking this approach fails to recognise that these kinds of crises emerge because we have failed to invest in transformation in the past,” he said.  “No company could have prevented the pandemic, but the reason it is having such a massive effect on supply chains is because we have collectively failed to act on climate, social inequality and biodiversity.”

Indeed, the UN has warned that the current situation is “nature sending a message” – not that, as some far-right-wing groups dubbing themselves environmentalists claim, that humanity is the problem and blunt population control the solution – but that pandemics are more likely to take hold in a world where nature is not valued. Research has repeatedly shown how increasing temperatures, water stress, intensive farming and coming into contact with wildlife will all spur the spread of novel diseases.

These issues will, of course, take longer to materialise than the current pandemic. In the meantime, Haverkamp said, there is the risk that businesses which have “begun tiptoeing” in the CSR agenda will simply write it off as an “added cost” in a push for profit, and that Governments which already framed the environment as a fringe issue will more vocally denounce the green movement. Case in point: President Trump’s tweet about his administration’s $2trn stimulus package stating: “This is not about the ridiculous Green New Deal. It is about putting our great workers and companies BACK TO WORK!”

But such Governments and businesses will not be able to take this stance forever, Haverkamp is certain, as they will be hit by physical realities (resource scarcity, infrastructure damage from extreme weather, huge market shifts) or public pressure at an unprecedented scale.

Progress on the ground

Of course, all this talk of long-termism and new capitalism is, on a global scale at present, just that: talk.

But a crisis is the time for talk to be tested and, with that in mind, edie asked Haverkamp and his colleague, the Corporate Human Rights Benchmark’s lead communications consultant Claire Barraclough, for best-practice advice on weathering this test.

Barraclough urged businesses which already have strong senior leadership buy-in for environmental and social issues to strengthen this further, and professionals in firms without this model to prepare to pitch for the transformation once the pandemic abates.

Similarly, she recommended that businesses with strong processes in place should adapt and default to them accordingly, while those without should rapidly implement short-term measures such as Business for Social Responsibility’s rapid due diligence tools while, again, laying a longer-term foundation.

And the key piece of collective advice from Barraclough and Haverkamp was clear: Keep communicating with all stakeholders in order to co-develop solutions, rather than stopping communications over predicted reactions to problems. 

“We expect more communication than ever from our Governments,” Haverkamp explained. “If Ministers retreated back and said ‘we’re very busy’, no one would accept that. In a similar way, people want to know how companies are responding.”

The WBA does expect that companies may be constrained by immediate crisis management and ask to either provide less data, or delay disclosure. Indeed, there are reports that several nations are planning to ask for an extension for producing updated Paris Agreement NDCs, due to be submitted at COP26. Already, the EU’s automotive industry has said it will need more time to prepare for impending emissions regulations changes.

As such, Haverkamp said, the WBA will explore making changes to the number of indicators on certain benchmarks, or giving longer to respond and producing reports looking specifically at the pandemic response in the shorter-term.

But, as usual, no disclosure will mean no score. If companies are taking ambitious action but cannot prove it, most benchmarks will lump them in with the true laggards – at a time when consumers, investors and policymakers alike are broadly expected to take a closer look at the ethical and environmental performance of the private sector players they are backing.

edie recently published an article entitled “six ways CSR professionals can communicate through the coronavirus outbreak”, which can be read in full here.

Sarah George