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Resilient and Inclusive Supply Chains 

Corporate due diligence and concern for human rights must shape our value chains 

As we head towards two years since the start of the Covid-19 pandemic the need to build resilient supply chains has never been clearer.

Even as delegates debated this issue at the European SDG summit 2021, some major ports in Europe find themselves dealing with a backlog of containers, a shortage of trucks to move them, and last mile suppliers are struggling to deliver to customers the products they have ordered or want to buy.

The human factor

But there’s much more on the value chain agenda than efficient logistics. More and more companies are making commitments to the human element of supply chains, especially those businesses sourcing products and materials from economies where workers enjoy fewer rights and protections.

Opening the session entitled Resilient and Inclusive Supply Chains, Stefan Crets, Executive Director of conference hosts CSR Europe, told delegates that responsible corporate engagement at every stage of the supply chain had, “a great potential to make a difference on climate targets and the Sustainable Development Goals.”

Crets called for “collaboration at scale” and highlighted the issue of inclusivity, saying supply chain due diligence is “about livelihoods, about people.”

Connecting the dots on the energy transition supply chain

In the first half of 2021, more than 2.6 million new electric vehicles were sold worldwide, a rise of 168% on the previous year. 

supply chain

Source: EV Volumes

Electric vehicles are a central technology in the energy transition, but they all require a key mineral for their batteries: cobalt. 

 

 

 

supply chain

Source: Entreprise Générale du Cobalt

Delegates at the Resilient and Inclusive Supply Chains session heard that 60% of the world’s cobalt is sourced from the Democratic Republic of Congo, presenting a range of supply challenges.

Jean-Dominique Takis Kumbo is General Director at Entreprise Générale du Cobalt, (EGC) which is tasked with safeguarding the human rights and health and safety of workers in the informal or artisanal mining sector in DRC. “We estimate we have 200,000 diggers and that more than a million people depend on this sector for their livelihood. It is therefore essential to support the sector in ensuring that our supply chain is ethical, responsible and sustainable.”

EGC is quick to recognise that artisanal cobalt miners endure harsh working conditions, but warns that things will only get better if large corporations collaborate with those at the distant end of their supply chains. “Disengaging from this sector,” said Takis Kumbo, “will only increase the poverty and precarity in which our communities are living and will eventually cause social disruption.”

Renata Jungo Brüngger, looks after integrity and legal affairs on the board of management at German carmaker Daimler AG. She explained how her organisation was responding to concerns over human rights in the vehicle manufacturing supply chain.

“We want the people who contribute to producing our cars to be as safe as our passengers. That is why we deep dive into our highly complex supply chain. That is why we implemented our Human Rights Respected system. We are sending quality engineers for audits on site at markets with risks.

“And finally,” she continued, “that is why we have linked our ambitious targets to our company bonus schemes for managers. At Daimler we are firmly committed to the UN guiding principles on business and human rights.”

New regulations for ethical supply chains

For most companies, due diligence on supply chain ethics and responsibility has until now been a voluntary undertaking. In Europe, that is about to change with EU legislation on the horizon that will compel companies to produce sustainability reporting.

Didier Reynders is the Commissioner for Justice at the European Commission. He told delegates about the key aims of the forthcoming legislation. “The aim of the proposal is to foster sustainability in corporate decision making, and help companies become environmentally and socially more sustainable.

 

“To achieve these goals, we are working on a mandatory due diligence duty. This would enable companies to identify and mitigate risk of adverse impacts in their own operations and value chains.”

Navigating value chain ecosystems

It’s now clear that a combination of internal corporate purpose, reputational risk and regulatory pressure will drive companies to drill ever deeper into their management and development of resilient and inclusive supply chains. TCS has used its deep contextual knowledge across many industry ecosystems to help a number of clients to navigate this complex transformational journey. With the focus on supply chain ethics growing ever sharper, it’s a journey many more companies will be compelled to undertake.

Kerstin Jorna, Director General, DG GROW at the European Commission told the conference; “We are working on transition pathways for the 14 industrial ecosystems. We want to engage all actors.”

Jorna left delegates at the conference with a powerful and clear call to action.

“We need to build sustainable and resilient supply chains - that is not a luxury.”