Ensure staff welfare in your supply chain
In this guide:
Benefits of ethical trading
How considering social, environmental and economic objectives can make you more competitive.
Implementing socially responsible policies is not just good for the environment and the wider community, it can benefit your business too.
What are the benefits of ethical trading?
By considering social and environmental objectives as well as your economic aims when trading overseas, you can:
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build sales, as customers increasingly choose to base their purchasing decisions on more than strict financial factors
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attract investment, as ethically motivated investors grow in number
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maintain staff loyalty and motivation, by treating people fairly and offering them chances of development
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enhance trust in your business, by fostering good relations and being transparent in your activities
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boost revenue, by opening up your business to new ideas
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save money, for example by implementing better waste-management procedures
All of the above will make your business more competitive and therefore more successful.
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How socially responsible is your business?
Audit business activities relating to the market, your workforce, the environment, the community and human rights
To promote your business as socially responsible, you need to chart your progress in implementing socially responsible activities and identify areas where further improvements can be made.
Social responsibility audit
First though, you need to assess how far your business goes beyond fulfilling its minimum legal obligations. This means carrying out a social responsibility audit in which you consider your business' impact on:
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the market - for example, how you promote yourself, how and where you obtain supplies and how you sell your products or services
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your workforce - the wages you pay, your employees' conditions and your equal opportunities policies
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the environment - for example, your emission, waste and consumption strategies
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the community - for example, whether you are a 'good neighbour' and what you put back into the community
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human rights - such as taking into account not just your own direct relationships but also your suppliers' business relationships
The nine principles of the UN Global Compact, covering human rights, labour and the environment, also provide a template against which you can assess your business.
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Protecting the environment
Implement sustainable development policies to minimise your business' negative impact on the world around it.
All businesses have an impact on the world in which they operate - and sometimes this can be a damaging one. However, even the smallest of businesses can minimise its impact on the environment - and even help repair damage already done - by implementing sustainable development policies.
That means considering the social and economic wellbeing of current and future generations, both here and abroad, when making all kinds of business decisions. To start implementing such policies it can help if you first:
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Assess your current environmental impact, here and overseas and consider how socially responsible is your business?
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Appoint someone to champion and oversee sustainable development.
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Make small, simple and manageable changes.
You could give close scrutiny to the following areas:
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Your design processes - for example, could you replace toxic substances with less harmful ones? Are your products designed to be multifunctional or reusable?
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Your energy consumption - for example, could you replace equipment with newer, more energy-efficient or less polluting models?
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Your resources - are you using renewable or recyclable materials? Do you recycle your own waste?
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Your environmental and health and safety training for employees.
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Ensure staff welfare in your supply chain
Trade ethically and take responsibility for the human rights of workers indirectly involved in your business.
Businesses are increasingly being required to look beyond their own direct relationships, such as those with their own employees, and to consider those further back in the supply chain. This is in direct proportion to the rise in investor and customer concern over worker and human rights.
It makes good business sense for you to ask pertinent questions about your overseas suppliers' labour practices. Such questions might include the following:
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Is employment freely chosen and are workers free to organise themselves?
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Is child labour used?
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Are working conditions safe and working hours reasonable?
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Are fair wages paid?
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Is discrimination practised?
A written questionnaire can be a useful way of getting information about workplace conditions from your suppliers, though onsite visits - if practical - are the most reliable way of checking these conditions.
Although there are few legal requirements for you to take responsibility for the behaviour of your suppliers, it could bring you significant business benefits if you consider the ethical dimension of the supply chain.
Benefits to your business include the ability to:
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promote your corporate social responsibility credentials
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attract ethically motivated customers
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attract ethically motivated investors
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avoid harmful publicity linking you to your suppliers' practices
Membership of the ETI can also help you develop the skills and share the experiences of trading ethically.
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Dealing in Fairtrade products
Use or sell Fairtrade products in business to promote sustainable development and corporate social responsibility.
One way in which your business can help ensure that producers' basic rights are respected and sustainable development is promoted is by dealing in Fairtrade products.
Fairtrade products are those which carry the Fairtrade label known as the Fairtrade mark. They will have been certified by the Fairtrade Labelling Organisation (FLO) as conforming to standards which improve the development of disadvantaged producers in developing countries.
There are two sets of standards. The first is designed to protect the rights of smallholders organised into co-operatives and the second applies to workers on plantations and in factories.
These standards cover a range of basic rights including wages, health and safety, trade union membership and housing. They also cover issues including environmental standards. For example, FLO certification ensures producers are not only fairly paid but also receive a premium to invest in community development.
Fairtrade products are mainly agricultural commodities, eg tea and sugar, though manufactured products including footballs, clothing and beauty products have now been certified.
It is estimated that UK sales of Fairtrade products reached almost £1.64 billion in 2016. Many large organisations have adopted the standards so they can benefit from the increased consumer awareness of and desire for Fairtrade products.
Fairtrade isn't only for large organisations. By dealing in Fairtrade products you can bring significant benefits to your business as well as helping ensure a fair deal for producers. Your business can also:
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promote its corporate social responsibility credentials
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attract ethically motivated customers
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attract ethically motivated investors
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Contribute to communities where goods and services are produced
Businesses contribute to communities where goods and services are produced.
Businesses are increasingly discovering the benefits of supporting communities in which their goods and services are produced or in which they operate. These include:
- good PR from promoting their corporate social-responsibility credentials
- attracting ethically motivated customers and investors and loyal employees
Ways in which you can support communities overseas include:
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linking up with charities working in the area
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sponsoring specific workplace projects, such as factory training
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sponsoring wider initiatives, such as village literacy projects
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offering employment to disadvantaged groups
Business in the Community (BITC) has developed the CommunityMark standard to recognise the work that small and medium-sized enterprises do in the community, both here and abroad.
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Avoid corruption and bribery overseas
Remain within the law and promote corporate social responsibility by trading honestly and transparently.
An essential element of corporate social responsibility is honest and transparent trading. Bribery and corruption create a disincentive to trade as well as uneven trading conditions that can damage economic systems and the individuals within them.
Under UK law, there is:
- a general offence of bribery, which is defined as giving someone a financial or other advantage to induce them to perform their functions or activities improperly, or to reward them for having already done so
- an offence of bribing a foreign public official in order to win business, keep business or gain a business advantage for the organisation
- an offence relating to failure by a business to prevent a person associated with it from committing the above offences on its behalf in order to win business, keep business or gain a business advantage for the organisation
You will have a statutory defence to the last of these offences if your business has adequate procedures in place to prevent bribery on your behalf.
As well as having adequate procedures in place:
- if you suspect a business of corruption, inform the local authorities
- ensure you keep accurate financial records so you can demonstrate that all transactions are completed fairly and legally
Read more information on UK bribery and corruption law.
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