Chapter 17
Purchasing, corporate social
responsibility and ethics
Program
 Business principles and procurement
 Towards a sustainable society: about ‘People, Planet,
Profit’
 Sustainable purchasing: The way to sustainable supply
chains
 Trust, business integrity and ethics
Business principles and procurement
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Global sourcing is broadly developed
Regulation regarding labor and environment often limited
Consumers do not accept atrocities in the production
How can purchasers contribute to sustainability?
Companies draw up principles that form a context for
doing business
Some principles are: respecting international law, fair
competing, integrity
Shell business principles
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Our values
Sustainable development and
Responsibilities
o to shareholders
o to customers
o to employees
o To whom we do business with
o to society
Principle 1: Economic
Principle 2: Competition
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Principle 3: Business integrity
Principle 4: Political activities
Principle 5: Health, safety, security
and the environment
Principle 6: Local communities
Principle 7: Communication and
engagement
Principle 8: Compliance
Living by our principles
www.shell.com
Sustainability: ‘People, Planet, Profit’
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Sustainability - Corporate Social Responsibility
Finding solutions without harming the needs of future
generations
Focus from shareholder to stakeholders:
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People: Labor circumstances
Planet: Usage of natural resources
Profit: Financial development
Weigh decisions based on these three criteria
Carroll’s Pyramid of corporate social Responsibility
Philanthropic responsibilities
Be a good corporate citizen
Ethical responsibilities
Be ethical
Legal responsibilities
Obey the law
Economic responsibilities
Be profitable
Carroll, 1991
Sustainable Purchasing
 Suppliers form an important source of competitive ability
 Suppliers also form risks considering sustainability
 Companies like Philips are busy considering these
issues
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Developing a standard
Self-assessment and audit
Plan of action with corrective measures
Suppliers are willing to cooperate
 Continuing this approach from first tier to second tier
suppliers is still a long way to go
Self assessment supplier sustainability
Answer
options
Score on Performance/Implementation
yes/no/NA 1: Failures do exist ; Implementation: beginner stage /
just started
2: Failures potentially exist; Implementation: work in
progress, > 50% completed
3: Failures do not exist; Fully Implemented
9.1 GENERAL
9.1.1
Has the top management of your company laid down and signed-off
policies covering at least Environment, Health and Safety, Child Labour,
Forced Labour, Discrimination, Compensation and Work Hours and
which are in compliance with all applicable local laws and regulations?
9.1.2
Does your company make sure that these policies are communicated to
and understood by every employee ?
Does your company make sure in a structural way that these rules are
known and respected by its own supply base and subcontractors.
9.1.3
9.2 Environment
Does your company have an environmental strategy/policy in place?
9.2.1
9.2.3
Is your company ISO 14001 certified?
If no, does your company have an Environmental Management System
equivalent to ISO 14001?
Does your company produce an annual environmental report and is a
copy provided to their customers?
Does your company currently do business with a Philips Product
Division?
If yes, does your company fully comply with the environmental banned
and relevant substance lists appropriate to the Philips Product Division
you supply?
Does your company consider reduction of environmental impact during
the product creation process ?
www.philips.com
Self assessment supplier sustainability
Answer
options
Score on Performance/Implementation
yes/no/NA 1: Failures do exist ; Implementation: beginner stage /
just started
2: Failures potentially exist; Implementation: work in
progress, > 50% completed
3: Failures do not exist; Fully Implemented
9.3 HEALTH AND SAFETY
9.3.1. Is there a written safety and health policy available signed-off by Top
Management and communicated, in which is laid down how to protect the
health and safety of the employees and contract labour and minimize any
adverse effect on the environment?
9.3.2 Does your company provide appropriate training to ensure that
employees and managers are aware of their own responsibility for the
health and safety of themselves and others and that they have adequate
competence on occupational health, safety and environmental matters?
9.3.4 Is a fire prevention system in place that is compliant with local applicable
regulations and company insurance clauses. Does the system cover the
whole company and its annexes, tested and is in perfect working
conditions.
9.4 CHILD LABOUR
9.4.1
9.4.2
Are written policies and procedures in place to prevent the use of child
labour and to implement programs and procedures to the transition of
any child found to be performing child labour?
Does the youngest age of workers comply with legal requirements and
according to convention 138 of the International Labour organization?
9.5 FORCED LABOUR
9.5.1
Are written policies and procedures in place to prevent forced and
compulsory labour and are these in compliance with applicable legal
requirements?
www.philips.com
Self assessment supplier sustainability
Answer
options
Score on Performance/Implementation
yes/no/NA 1: Failures do exist ; Implementation: beginner stage /
just started
2: Failures potentially exist; Implementation: work in
progress, > 50% completed
3: Failures do not exist; Fully Implemented
9.5.3
Is voluntary presence of employees fully respected and not forced in any
way and at any moment against their own will ?
9.6 COLLECTIVE BARGAINING AND RIGHT TO ORGANIZE
9.6.1
9.6.2
9.6.3
Does your company respects the right of all personnel to form and join
trade unions of their choice and to bargain collectively in accordance with
ILO C98?
Does your company acknowledge unions in discussions of labour
conditions?
Does your company, in those situations in which the right to freedom of
association and collective bargaining are restricted under law, facilitate
the development of parallel means of independent and free association
and bargaining for all personnel?
9.7 DISCRIMINATION
9.7.1
9.7.2
Are written policies and procedures in place to ensure equal opportunities
or eliminate/ avoid discrimination? (e.g. gender, race, religion, ethnic
minority, sexual orientation, disability)
Does your company make sure that each employee receives and
understands all applicable rules with respect to non-discrimination ?
Such as: race, color, sex, age, language, religion, political or other
opinion national or social origin, property, birth or other status.
www.philips.com
Trust, integrity and ethics
 As companies become more dependent on each other,
trust becomes more important.
 In a research project by the Centre of Advanced Purchasing Studies
(CAPS) it was found that real partnerships among the over 300
companies that were investigated were less than 1% of the total number
of supplier relationships.
 Purchasing is sensitive for ethical issues through
contacts with suppliers
 Code of conduct
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Increasing importance because of e-auctions
NEVI’s code of conduct
Building trust in supplier relations
Leadership
Business integrity/
organization behavior
Skills and
competence/knowledge
and management
Principles/ethics
Creativity
Trustworthiness
competence
Trust
Supply chain
excellence
Conclusions
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Corporate social responsibility (CSR) clearly has
increased in importance during the past years.
Since suppliers are an important part of the company's
value chain today, supplier relationships have become
an important focus area of sustainability programs.
The basic idea behind CSR is to meet the needs of
current generations without sacrificing the resources for
future generations