Unchaining Value Corporate responsibility through the value chain

Background and objectives Describing global value chains Unchaining Value Corporate responsibility through the value chain Workshop 31 October 2007 Background and objectives Describing global value chains ICT sector overview and key challenges Food and beverage sector overview and key challenges Issues in common Small group discussions Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Background and objectives To understand challenges explore best practice To understand capacity building within suppliers to address environmental and social issues in the supply chain To explore scope for a multi-sector initiative on sustainable supply chains Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Background and objectives Fit with existing UNEP initiatives Partnership with UNGC Cross-sector or multi-sector? Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Interviews and research ICT OEMs/operators: Nokia, O2, Deutsche Telekom, HP, Panasonic Contract Manufacturers: Delta Electronics* Academia: Wuppertal Institute, Öko- Institute, Yale University Networks/Consultants: GRI, BSR, Verité, sustainabilityagents NGOs: Good Electronics, ASK, TEAN Unions: Unite the Union Food Manufacturers: SAB Miller, Unilever Retailers: Carrefour, Marks & Spencer Fast food: McDonald’s, Starbucks Consultants: McKinsey Multistakeholder initiatives & certifications: Business Social Compliance Initiative Food Module, Common Code for the Coffee Community, Fairtrade UK, Rainforest Alliance, SAI Platform, World Cocoa Foundation NGOs/Think Tanks: Food Ethics Council, International Institute for Environment & Development, Oxfam *agreed to participate, results still outstanding Background Value chains ICT sector F&B sector Issues Small groups

Potential Re-Use or Recycle Transport & Distribution Unchaining Value Corporate responsibility through the value chain Describing global value chains Tier 2+ suppliers R&D Outsourcing Upstream Suppliers Raw Materials Refinement Suppliers Manufac-turing Outsourcing Testing Suppliers Potential Re-Use or Recycle End Consumer Retail Customer Transport & Distribution Packaging Outsourcing Outsourcing Information Management Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain ICT sector overview and key challenges Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain ICT sector overview and key challenges Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain ICT sector overview and key challenges Background Value chains ICT sector F&B sector Issues Small groups

ICT sector characteristics: Unchaining Value Corporate responsibility through the value chain ICT sector overview and key challenges ICT sector characteristics: OEMs aim for strategic long-term partnerships with suppliers of high-end components and products Impacts (environmental/social; across sourcing, manufacturing, use, disposal) often determined in the design phase Performance affected by infrastructure, education, incentives, culture, ability to reach out to workers, available technology, etc. Overall price pressure, outsourcing and offshoring Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain ICT sector overview and key challenges ICT sector responses: Industry-wide efforts to set minimum standards and facilitate uptake among suppliers, notably Electronic Industries Code of Conduct (EICC) and the Global e-Sustainability Initiative (GeSI) Minimal uptake among contract manufacturers Interest in product labelling, though no significant activity Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Food sector overview and key challenges Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Food sector overview and key challenges Breeder Producer Middlemen / Market Middlemen / Market Slaughterers Distributors / Market Processors Restaurants Supermarkets Wet market Background Value chains ICT sector F&B sector Issues Small groups

Food sector characteristics: Unchaining Value Corporate responsibility through the value chain Food sector overview and key challenges Food sector characteristics: Wide range of growers, from huge agri-business to smallholders, family and community farms Supply and distribution across processors, manufacturers, distributors, retailers, middlemen Size and volatility of world commodity markets Increasing demands for traceability Variability of supply and demand Background Value chains ICT sector F&B sector Issues Small groups

Food sector responses: Unchaining Value Corporate responsibility through the value chain Food sector overview and key challenges Food sector responses: Commodity-specific, e.g. coffee, soya, palm oil Monitoring focused on raising performance, not compliance Broad commitments that leverage corporate distribution and buying power via business-NGO partnerships Focus on benefits to suppliers, beyond cost savings and efficiency Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Food sector overview and key challenges Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Issues in common Role of consumers: how important? Product labelling may present important opportunities The business case for suppliers is critical Collective action, partnering and free riders Burden of review and documentation Challenges in partnering upstream and downstream, e.g. planning, processing of information, coordination, training Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Three-stage model: Drivers Actions Phase 1: Comply Risk management: Product safety, regulatory compliance, reputation Business value: Short-term viability, reliability and quality of supply Heavy focus on supplier standards Cost minimisation and ‘policing’ approach to auditing Phase 2: Compete Business value: cost savings (e.g. energy or material use reduction); improved productivity; strengthened demand from customers or consumers Capacity-building e.g. Training programs, technical assistance Supplier engagement in developing standards and approaches Guidelines and learning Philanthropy Phase 3: Lead Business value: New market creation; brand enhancement; long-term viability of supply; premium quality supply Creating value and innovation, e.g. developing livelihoods; shaping demand and loyalty Innovative partnerships / chain networks Multistakeholder collaboration to raise the level of the entire industry Institutional capacity building Efforts to measure outcomes (rather than inputs) Background Value chains ICT sector F&B sector Issues Small groups

Unchaining Value Corporate responsibility through the value chain Small group discussions Part one: Major challenges within sectors; solutions needed; moving through the three phases Lunch break Part two: Highlighting good practices; evaluating success; scope for multistakeholder initiatives Background Value chains ICT sector F&B sector Issues Small groups