Managing risks and relationships: how to make your supply chain more resilient to shocks
Supply chain management should be more than just directing the flow of goods....
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Supply chain
Driving Empowerment and Competitiveness in the Value Chain
Strategies to foster inclusive growth in your supply chain
Providing fair wages and investing in communities across the value chain is not only morally right but also good for business, said speakers at an event organized by the IMD Alumni Club...
Speaking at the Driving Empowerment and Competitiveness in the Value Chain event, Ben Affleck and Whitney Williams, co-founders of the Eastern Congo Initiative, Guillaume Le Cunff, CEO of Nespresso, and Jonathan Normand, CEO and founder of B Lab Switzerland, called on organizations to take a closer look at their supply chains to understand how they could bolster communities and reduce global inequality while growing their businesses.
For a long time, the S, or social, aspect of ESG has been the “neglected middle child,” said Julia Binder, Professor of Sustainable Innovation and Business Transformation who moderated the event. Yet, the COVID-19 pandemic has served as a wake-up call, bringing to light the tight connection between business and society. In addition, companies are increasingly asked to take a stance on social issues from Black Lives Matter to the Me Too movement against sexual abuse, harassment, and rape culture.
Still, the unequal access to healthcare, education, and environmental resources, particularly in conflict regions across the globe, remains in the shadows, with the global north benefiting disproportionately from economic growth, she said. The COVID-19 pandemic, the war in Ukraine, and rising inflation have further exacerbated the problem with forecasts suggesting that a quarter of a billion more people fell into extreme poverty in 2022, with a total of around 860 million people worldwide now living in situations of extreme poverty.
At the same time, consumers are increasingly demanding that those who make their products are paid fairly and treated well, said Affleck, meaning companies who fail to do so will face a hit to their reputation and bottom line.
“We now live in a world with so much transparency, where every business has an Instagram page and every business wants you to know what their values are,” he said. “If you are not living according to those values, the consumer is ultimately going to hold you to that.”
So what are the concrete steps that organizations can take to address inequality and foster inclusive growth in their supply chains?
Know your suppliers
Companies should start by examining their existing structures and partnerships and identifying ways in which helping to bolster the community might help raise productivity, foster better relationships with the workers, and develop more loyalty, said Affleck.
It was incredibly moving to see someone who had been doing this job for 40 years taste their work for the first time- Ben Affleck
Nespresso CEO Guillaume Le Cunff described how he was invited by the Eastern Congo Initiative (ECI) to travel to Lake Kivu in the Democratic Republic of Congo (DRC) to see if there was a chance to protect and revive coffee within the region. He took with him a Nespresso coffee machine, 20 capsules, and a generator. While the DRC has long been a producer of coffee, the lack of electricity on Idjwi Island meant many farmers had never even tasted the product they had grown all their lives.
One of these farmers was a woman called Gaudencia. “It was incredibly moving to see someone who had been doing this job for 40 years taste their work for the first time,” recalled Affleck, who witnessed the coffee tasting. Giving people a connection to their work, simply by letting them taste the coffee enjoyed by people around the world, helps instill a sense of self-worth and dignity.
Since the coffee tasting with 20 capsules, Nespresso has built a global market for coffee from the DRC while also working with partners to improve access to healthcare and clean water in the region. “Beyond coffee, today 80,000 people benefit from this program,” said Le Cunff.
Jonathan Normand, CEO and founder of B Lab Switzerland, a non-profit organization that provides B Corp certifications on behalf of for-profit companies on their social and economic performance, stressed the importance of putting processes in place to take care of the human beyond the procurement process.
Work with a diverse range of suppliers and invest in overlooked communities
Organizations should also seek to work with a diverse range of suppliers and empower small and minority-owned businesses, as well as vulnerable people in their value chain, said Binder.
Affleck urged companies to examine their business through the prism of their relationship with those producers, and consider if they can seek out similar, overlooked producers “where in fact some small amount of investment might in fact yield a community that can produce high quality goods.”
In the DRC, for example, the ECI has been working to promote economic opportunities for women, who remain vulnerable to high levels of gender-based violence.
“Women’s participation in agriculture leads to more stability, more profitability, and fewer revenue dips – and businesses are less likely to default,” said ECI co-founder Whitney Williams, pointing to a 10-year analysis by Root Capital.
Partner with local communities to support social and economic development initiatives
There are also lots of indirect and less obvious ways in which corporations can help improve the quality of life of communities. For example, the ECI funds organizations that support women who are survivors of gender-based violence through a variety of mechanisms to try and change attitudes about some of the issues that women face, said Williams. This includes providing grants and doing advocacy work with policymakers.
The ECI also funded an initiative to establish a community radio station to give a voice to women who have been assaulted and to provide quality information on women’s rights, maternal health, and social justice.
Align your purpose to your business activities
Aside from fostering inclusive growth to meet the demands of consumers, the speakers said that becoming a more inclusive organization and getting certified as a B Corp can help attract talent, particularly among younger generations.
They also discussed the role of aligning the economic incentives of business leaders with goals that encourage inclusive growth. “I can’t believe or understand that your remuneration is disconnected from impact and accessibility, because this is the new normal,” said Normand.
Impact and purpose should also be embedded into a company’s long-term goals, said Le Cunff. “If you follow your purpose, you have to think long term, you have to take risks, and you have to be able to fail,” he said.
All panelists believed that inclusive growth would be imperative to the long-term survival of a business.
“The notion that inclusive ethical business practices somehow run counter to smart, profitable business practices is absolutely false,” said Affleck. “You’re running a company invested for the long term. You want to build long-term relationships with your suppliers, and you want those communities to thrive. You want the people to be healthy, educated, vibrant, loyal, appreciative, dedicated, and develop an affinity with you and your work (…) And in order to do that, you have to both pay people well and treat them fairly, you’re trying to do the simple human touch of connecting people with the product they create.”
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