Commentary: What to do if Coronavirus canceled your sustainability audits
As coronavirus continues to threaten communities and businesses, companies can mitigate sustainability risk by maintaining supply chain visibility with ratings.
The effects of COVID-19 have devastated lives across the globe for months—and the Western Hemisphere is just now feeling the brunt of it. For many companies, the epidemic has also led to the cancellation of supplier on-site audits of social and environmental practices. The cancellations, while necessary, are leading to concerns that the disruption will threaten sustainability practices and create blind spots in safety and labor conditions.
But businesses don't need to completely compromise supply chain visibility and control during these trying times. To ensure ethical and sustainable business continuity in the supply chain, companies first need to understand the risk and impact of canceling audits and then find helpful alternatives. Third-party supplier sustainability ratings are one alternative that can help provide resilience through the crisis.
The impact of canceling audits
It's understandable that audit companies or the internal auditors themselves have had to cancel on-site audits during the peak of coronavirus due to the travel restrictions and other government orders put in place to minimize exposure to the virus. However, this precautionary measure will have an immense short-term impact on companies' supply chain visibility into the sustainability issues previously uncovered by audits, as well as their due diligence programs to address these issues.
The audit cancellations expose companies to great risks and blind spots during a time period where brands can't afford more volatility. It opens the supply chain to environmental, labor and human rights, and ethics threats that could profoundly harm the overall business. For example, many companies are being forced to consolidate supply onto fewer suppliers, which is pushing overcapacity at those few suppliers, leading to excessive hours for employees or quick mass hiring. These circumstances could lead to abuse, modern-day slavery, unethical working conditions, and more.
Many companies rely on on-site sustainability audits to measure and/or monitor supplier practices such as working conditions. Shut off that flow of information, and there's no way to know if the supply chain is complying with codes of conduct and, ultimately, your brand values. If your suppliers or partners decide to take away their focus on reducing energy or water consumption, not only is your brand reputation at risk from a sustainability point of view but also your costs will increase. And worse, the lack of audits opens the supply chain to the risk of dangerous working conditions, forced labor, discrimination, and more.
Lack of on-site audits will also cause delays in reporting on ESG (environmental, social, and governance) disclosures—an important action for securing investments and growth opportunities, as exemplified most recently by global investment management company BlackRock's decision to focus on sustainable investing. Hundreds of studies have shown that sustainable equities outperform in a bull market and are also more resilient in a bear market. Reporting on ESG is crucial for ensuring long-term success, and companies should try to maintain their disclosure and progress as best as possible.
Plan B: Turn to sustainability ratings
"Flying blind" due to canceled on-site audits is not your only option in the midst of COVID-19. To maintain visibility and control, sustainability ratings are available to enable remote desktop assessments on corporate social responsibility (CSR) issues within the supply chain—especially in quarantined regions.
Sustainability ratings assess a company and its suppliers' sustainability performance in environment, labor and human rights, ethics and sustainable procurement based on international sustainability standards. Ratings that cover the breadth and depth of issues in a typical supply chain—both of purchasing categories and countries, as well as the full range of sustainability criteria—can provide a level of visibility by exposing threats deep in the global supply chain that can help brands prevail until the outbreak is controlled. For example, ratings can indicate whether a supplier in Asia is following labor laws and working restrictions posed by COVID-19. They can show if a partner in Europe is maintaining their commitment to cutting water usage and gas emissions.
Ratings are remote, not impacted by travel restrictions, and are a good alternative to have in your pocket in an ever-changing, globalized world filled with natural disasters, outbreaks, and political turmoil. In this case, results from rating assessments can be used to hone audit strategy once conditions have returned to normal and travel bans are lifted, which will be useful as a surge in audits and possible backlog delays are expected. For example, buyers could prioritize which of their suppliers to audit based rating results. They would know to pay close attention to suppliers with low scores, suppliers that refused to engage in corrective actions, those that do not improve scores over time, and those that simply refused to participate in a rating assessment.
Aside from ratings, there are also industry-specific solutions to maintain visibility across a focused set of categories—such as the Higg index from the Sustainable Apparel Coalition, or the Responsible Business Alliance self-assessment for the electronics industry.
In times like these, it's important to put your people first without jeopardizing your business and supply chain. Risks around the environment, human rights, ethics, and more are extremely detrimental to brand reputation and business longevity, and constant monitoring and assessment is critical. In the wake of a crisis where businesses are forced to cancel on-site audits, don't give up control just yet. Remember that sustainability ratings can help your brand mitigate risk during all types of compromising situations.
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Businesses were preparing to deal with the effects of the latest major storm of the 2024 hurricane season as Francine barreled toward the Gulf Coast Wednesday.
Louisiana was experiencing heavy rain and wind gusts at midday as the storm moved northeast through the Gulf and was expected to pick up speed. The state will bear the brunt of Francine’s wind, rain, and storm damage, according to forecasters at weather service provider AccuWeather.
“AccuWeather meteorologists are projecting a storm surge of 6-10 feet along much of the Louisiana coast with a pocket of 10-15 feet on some of the inland bays in south-central Louisiana,” the company reported in an afternoon update Wednesday.
Businesses and supply chains were prepping for delays and disruptions from the storm earlier this week. Supply chain mapping and monitoring firm Resilinc said the storm will have a “significant impact” on a wide range of industries along the Gulf Coast, including aerospace, life sciences, manufacturing, oil and gas, and high-tech, among others. In a statement, Resilinc said energy companies had evacuated personnel and suspended operations on oil platforms as of Tuesday. In addition, the firm said its proprietary data showed the storm could affect nearly 11,000 manufacturing, warehousing, distribution, fabrication, and testing sites across the region, putting at risk more than 57,000 parts used in everyday items and the manufacture of more than 4,000 products.
Francine, which was expected to make landfall as a category 2 hurricane, according to AccuWeather, follows the devastating effects of two storms earlier this summer: Hurricane Beryl, which hit the Texas coast in July, and Hurricane Debby, which caused $28 billion in damage and economic loss after hitting the Southeast on August 5.