CSR can be optimal if executed throughout Supply Chain

By Himanshu Sekhar Panigrahi

So far the vitality of CSR as a living and ever-evolving concept has been maintained across the globe. Since its origin the theory and practice of CSR has been acquiring newer elements that contribute to positive social change. Over its journey, since the time it had been considered business charity to the present stage of the belief in its potential for strategic social transformation, the concept is increasingly demonstrating its holistic and integrated nature.

CSR has become more broad-based and inclusive in terms of its operation corresponding to the three pillars of sustainable development- economic development, social equity and environmental justice. However, it is yet to create a remarkable realization across the supply chain network of the businesses. In general, the CSR performance of the companies down their line among the supplier groups has remained mediocre.

So, how critical is the role of the entire supply chain in CSR of any business? And, why business bodies need to have a 360° assessment of their activities? 

Supplier a primary stakeholder

First, suppliers are considered as the key and primary stakeholders of any business as they influence and be influenced by the business decisions and actions. And, other stakeholders, especially the communities, are influenced by the business actions of the supply chain. Effective engagement and management of this group of stakeholders hence holds adequate importance in the CSR strategy of the companies for generating positive impact on the bottom line.

How profits are made?

Second, as business houses intending to execute effective and sustainable CSR rely on how profits are made rather than what is done with profits, they need to check and ensure ethical performance of all the players across their supply chain. It has been observed from the facts that wider supply chain networks are more prone to human rights issues like child labour, wage disparity, improper working condition, and environmental issues like inappropriate waste management, pollution and hazards. Such irresponsible behaviour and practices of the suppliers impair reputation of the firm. Hence, big firms need to be careful to shield their brand name from being accused of possible wrongdoing in their supply chain network.

Goods and services remain safe and healthy

Third, responsible businesses always strive to assure that their goods and services remain safe and healthy throughout their life-cycle. And, it becomes possible only when the vendors, suppliers or the contractors in the supply chain think and act in the same line as done by the businesses at the top. In the age of growing outsourcing, as big firms assign chunks of their activities to small and medium enterprises the former fail to transfer the same amount of responsibilities and risks to the latter, and the latter remains at ease of committing operational negligence. Here arises the need for ensuring supply chain transparency by big companies.

Company a Big Brother

Fourth, companies, as big brothers or more powerful partners in the firm-supplier relationships, are increasingly expected and put under pressure to be responsible for the social and environmental behaviour of the members of their supply chain. They are growingly urged now-a-days by the pressure groups, civil society organizations, media houses, investors and governments to keep track of and minimize the negative effects not only of their own actions, but also of the operations of their supply chain pertained to their transportation, distribution and procurement activities.

Responsible and ethical business operation of MEs

Fifth, the supply chain associates are, more often than not, small and medium enterprises (SMEs). And, for sustaining the essence of CSR movement the mistaken belief that “CSR is meant for only big business houses, so SMEs are insulated from carrying out it” should be busted. Responsible and ethical business operation by SMEs, considered as the backbone of national economy, is highly desirable as they possess local outlook and have potential for contributing to national progress.

CSR and Sustainable Development Linkage

Sixth, as CSR and the concept of sustainable development are closely linked, the goal of sustainable development cannot be accomplished if a major part of the entire business operation i.e. supply chain network remains aloof from CSR endeavour. Adopting a holistic view and widening the CSR boundary by engaging the suppliers in the process has become highly imperative now.

Undoubtedly, mapping its supply chain network and bringing all the constituents into the fold of CSR and sustainability initiative is a challenging task for any business entity. However, this venture is replete with business opportunities.

About the Author: Himanshu Sekhar Panigrahi is the Dy. Manager-CSR working at Hindustan Copper Limited (A Government of India Enterprise). The views expressed in the article are personal.

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Disclaimer: The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of India CSR.