How socially responsible is your supply chain?

Analyst Pam Fitzpatrick just published a research note on cobalt supply chains – the issues and challenges are similar to conflict minerals. A report by Amnesty International describes unsafe working conditions, exposure to health risks and child labor at artisanal cobalt mining operations in the Democratic Republic of Congo. It is hard to imagine what people living and working there must endure. For supply chain, this calls for action. Supply chain must improve materials traceability and human rights due diligence to improve conditions for all of the workers in our extended value chains.

It’s a call for Gartner to take action, too. I want to share some of our new research development that relates to supply chain’s role in corporate social responsibility.

First, we are excited to be adding a CSR metric to the 2016 Gartner Supply Chain Top 25 methodology. Given the CSR reporting already available, such trusted sources as the Dow Jones Sustainability index and the Carbon Disclosure Project, this CSR component score will use third-party data as a proxy for assessing the company’s commitment to and proficiency in running socially and environmentally responsible supply chains. Five independent data sources will be used giving a total possible score of 10. Pam together with Research Vice President Stan Aronow are the brains behind this new metric.

Working through this, it has been fascinating to see some companies scoring a perfect ten – impressive, and they should be highly respected for this. More fascinating, and somewhat concerning is the companies scoring very low. A very highly ranked company actually scored a perfect zero – any guesses who that is? More to come on this addition to our methodology.

Pam and I are also building out a 5-stage maturity model for CSR/Sustainability. Our goals are two-fold. First, to describe the five stages of maturity model and the attributes of a CSR-focused decision-making and regulating (governance) infrastructure.
Second, to help CSCOs & heads of SC strategy plan investments and build capabilities that enable integration of environmental/social/governance factors into supply chain’s strategic decisions and operations.

As we validate our model through interviews, it is interesting to see the traditional focus on compliance and cost saving compared to the more advanced visionaries who manage to combine risk and innovation for long term value creation. And this is one of the issues: the investments are long-term, rather than meeting the needs for quarterly results. Once published, this will provide deep insights into the critical issues and hopefully enable the journey to a socially and environmentally responsible business. We are drilling into these questions and more as we talk to CSR/Sustainability leaders: Who owns this in Supply Chain? What drivers triggered you to further invest? What metrics are used to measure progress? How is ROI measured? Who pays for investments?

We know that these topics are at the forefront of the minds of many of our clients, and we look forward to taking steps towards a better business future with you.

Jane Barrett is the Group Vice President for Gartner’s Supply Chain Research group