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commentary

Where does everything come from?

And for that matter, where does everything go?

We live in a world with global supply chains and apparently bottomless consumption. The demands of the market are that companies get stuff and sell it – but they do not often remember where it came from and perhaps don’t much care where it goes. So to deliver accountability – and even transparency about what has happened in this global world – traceability is essential. This is a complex and difficult thing to do and to ask of companies. While some companies, such as airline manufacturers, do traceability naturally, others, such as the automobile industry, may have it thrust upon them.

Here is a short concept note on the need for a general traceability standard.

So that we can answer the question, where does everything come from?

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announcements

A living concern

If the entire earth were a business, what would it be worth? That is one of the central ideas of ‘What’s the point of capitalism?‘ a new ebook by Joss Tantram.

The analysis is a good read and the issue important. This is the first in a series questioning how 9 billion people – the population we are headed to – can live on the earth.

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commentary

Brexit after Brexit

Now that Brexit is on its way, everyone is trying to work out what it means. I believe the most profound implications are not about the re-configuration of the UK’s political parties, or the length of time withdrawal may take, or the possible economic impact – or even the fragmentation of the United Kingdom.

The most important implications will be what it means for social conditions and the environment. Brexit is a giant exercise in re-regulation.

Clearly part of the motive for leaving was to achieve a reduction in the regulation of business. I fear that will mean harder working conditions for the majority of the very people that voted to leave. But what no-one is talking about is a possible relaxation in environmental regulation.

It will be a Pyrrhic victory for Britain if the planet is defeated.

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announcements

Natural capital? But who owns it?

Here is my post about the ownership of natural capital on the ICAEW website.

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commentary

Is Plan A a stitch-up? Or just over-spun?

Labour Behind the Label has released a report that criticises the achievements of H&M and M&S in their clothing supply chains.

M&S in particular comes off in a bad light. Its 2010 Plan A commitment to deliver a living wage appears to have failed. What the report establishes is that workers in key parts of M&S’ supply chain are still living in poverty. But as the report acknowledges, M&S cleverly did not actually commit to delivering people from poverty – what they committed to was more like ‘enabling’ fair wage conditions to arise. And in 2015, when the commitment was supposed to have been completed, it just turns out that they haven’t arisen.

Of course M&S is not alone in this. It is a widespread failing of much CSR that public statements are carefully crafted to convey the impression of responsibility while actually, technically allowing the company to avoid blame if things don’t work out. That way the PR gain is maximised – at least in the short run.

In the long run people will simply not believe them.

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commentary

Supplier abuse

Tesco has been roundly criticised by the Grocery Code Adjudicator over its treatment of suppliers. The adjudicator investigated “the length of time taken to pay money due to suppliers, unilateral deductions from suppliers and an intentional delay in paying suppliers”. The findings leave no doubt that Tesco was engaged in substantial supplier abuse. In fairness it has to be said that, miraculously, Tesco is now ‘a very different company’ from the one described by the adjudicator, according to its CEO.

Yet the real issue is not just Tesco’s practices, but those of all the supermarkets.  I doubt that Tesco is unusual, it is just that since its wider financial malpractices were exposed, it became an easy target. The problem is that there are so few supermarkets that it is no wonder that they exploit their suppliers. And given the opportunities for suppliers to find new customers is so limited, it is understandable that they make few complaints.

But the problem goes even wider than this. While supermarkets may be repeat offenders in terms of supplier abuse, many large companies also work hard to maximise cashflow at the expense of suppliers. Very lengthy payment periods built into contracts are commonplace.

Who is going to bite the hand that feeds them when there are so few hands to go round?

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announcements

Quantitative Pleasing – how many is too much

The ICAEW have published my report on the perils of quantification and what can be done about it. Using the examples social and natural capital, it sets out guidelines for when and how quantification should be attempted – and what to do when it should not be done.

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commentary

Can you audit your way out of slavery, or do you have to pay the price?

Channel 4’s report on conditions for fruit packers reveals regular, awful treatment of the workers supplying the supermarkets.

No doubt all the supermarkets’ suppliers are regularly audited to guard against just this sort of exploitation. So what has gone wrong? The immediate answer is that the ‘unannounced, random audits’ were not nearly random or unannounced enough. In these circumstances, the only audit that will work is the one that the company does not know is happening. Channel 4 is really providing just this sort of ‘mystery audit’ service for the supermarkets.

But all auditing is operating after the fact. To prevent exploitation happening in the first place, the causes have to be addressed. And the deeper cause here is the relentless downward pressure on prices that the supermarkets exert on their suppliers. Saying each year ‘next year we will pay you 5% less for the same product’ will lead to slavery. If the supermarkets really want lower costs, they should work with their suppliers to figure out how it can be done without exploiting anyone.

Or just pay what decent work costs.

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announcements commentary

SROI – at the awkward adolescent stage?

The SROI methodology for valuing impacts is coming of age. But it is a difficult age which begs important questions. The biggest question is perhaps the presumption that a valuation can be achieved through assigning quantitative financial values to any kind of impact.

After that, perhaps the next most important is: what should it be used for? The current choice is to help mission-driven organisations produce a fairly quick evaluation of the difference they make in the world. It does that well, even if there remain a number of questions about how it goes about that task.

However there are two other huge areas to which SROI could make a difference, although that would require a modification of its methods. One such area is the social impact of mainstream companies. Where ordinary commercial interests and value flows are a large part of the impact, an SROI-like methodology must confront the question of what the total impact of an organisation is, rather than only what difference it makes. The technical reasons for that I have spelt out in an blog on the Social Value International website.

The other big area is public policy-making. As Daniel Fujiwara has pointed out with some care, the adoption of an SROI-like methodology in policy-making circles would require SROI to adopt the kind of rigour that underlies current cost-benefit analyses.

So, a bit like an adolescent, SROI needs to decide exactly what it wants to do in the world.

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announcements commentary

Is reporting child's play?

The ACCA has recently published a report on the reporting of child rights issues, in which I was involved.

The abuse of child rights is one of the most serious issues that a company can face. More than any other it has the potential to bring down any organisation associated with it. That is because the issue is so serious and the children concerned so vulnerable.

The reporting of child rights issues is perhaps one step removed, but nevertheless a crucial piece of the corporate accountability puzzle. ACCA’s paper starts from the relatively poor state of child rights reporting, acknowledging that few companies report much more than on the policy they have adopted on the issue.

The next step was to look at the role that reporting standards play in supporting child rights reporting. Overall the findings were that, with the exception of the GRI, the support that the main reporting standards provide is quite limited. While all the main standards (IIRC, Shift, GRI) are obviously consistent with transparent reporting on the issue, there is little explicit support. However the GRI is different since it has published more detailed guidelines in association with UNICEF.

ACCA also convened a roundtable to discuss what the reporting of child rights should look like. The main body of the report constitutes a set of guidelines, based on the structure of the UN Guiding Principles. It also provides examples of good practice from those companies that do demonstrate good practice in this area. This includes Lego’s guidelines on marketing and also H&M’s work with UNICEF and in piloting the Children’s Rights and Business Principles.

The ACCA report deserves credit for highlighting the issue – as there is a real need for companies to disclose more than their policies on the matter. But child rights reporting does present even more of a challenge than human rights reporting. Most human rights reporting (as indeed most corporate non-financial reporting in general) is directed at opinion formers. Yet the real people to whom accountability is owed are those whose rights are at stake. When it comes to child rights reporting, this implies a need is to communicate directly to children. That is not easy, although it can be done. This is a challenge that the ACCA paper identifies, but for which it does not offer significant guidance.

Which companies should take note? It is not only those that rely on extensive supply chains in which children may be exploited. It is also those that through the credit card products they deliver, can supply the finance for child abuse to take place. And of course it is also those that sell products designed to appeal to children. The test will be whether the coming months see more reporting of child rights issues.