Harnessing Value Chains for the SDGs: How Far Have We Come, and What Next to Deepen Scale and Impact?

Businesses, by harnessing their value chains, can be powerful drivers of social, economic and environmental progress and, consequently, can play a critical role in achieving many of the draft SDGs, most notably: Goal 1: ending poverty, Goal 2 ending hunger, Goal 5: achieving women economic empowerment and gender equality, Goal 8: promoting sustained, inclusive and sustainable economic growth, Goal 12: ensuring sustainable production and consumption patterns, Goal 13: taking urgent actions to combat climate change and its impacts, and Goal 15: protecting terrestrial ecosystems.  

A growing number of companies are actively integrating social, environmental and economic improvements in to core business operations and their value chains, working with certification schemes like Fairtrade and Rainforest Alliance, and through sector and issue specific focused platforms and initiatives.

As the world starts to gear up to adopt and deliver the SDGs, this online discussion will draw on the perspectives of leading businesses, civil society organisations and development agencies, to take stock of where progress is being made to harness value chains for social, environmental and economic impact.  Contributors will consider how to build on progress to deepen impact and increase scale, and identify key enablers and barriers for business including governance and regulatory environments, and how to strengthen them.

Key questions to be addressed are:

  1. Where has the most progress been made in harnessing value chains for social and environmental impact, and where do the challenges remain for companies looking to translate principles in to practice?
  2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?
  3. How can businesses and development partners collaborate more effectively to take ESG performance to the next level of scale and impact, including the reporting of impact?

 

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Francis,

This is a great example.  Can you give us some insight in to the way you brought children , as stakeholders, in to the process?  Thanks.



Francis West said:

Where companies have undertaken impact assessments, this has helped focus where value chains and expertise can be harnessed for positive impact. If a company integrates the voices of the most vulnerable into its human rights impact assessments, it will be better placed to determine where to focus its efforts to positively support the delivery of the SDGs. This is clear from the experience of the telecoms company Millicom. After conducting a child rights impact assessment across its supply chain with Unicef, Millicom supported the creation of a new SMS service in Tanzania that allows parents to register new births as well as those of children under five on any mobile phone, straight to a centrally-run database. Birth registration- the subject of another SDG target- rose from nine per cent to 40 per cent in the pilot region of Mbeya in six months.

This isn't an easy process however. There is a challenge in that determining the impacts of a business (and therefore the opportunities to best support desirable social outcomes) requires consultation with stakeholders that are potentially or actually affected by a company’s operations and supply chain, particularly vulnerable groups, rather than with those organisations that have best managed to grab the company’s attention. Impacts on individuals take place in specific geographic locations at specific times and while it might be easier to undertake stakeholder consultation with NGOs HQ’d in London, businesses really need to get as close as possible to the voices of those at the sharp end of impacts in the value chain.

 

For Unicef UK, that means bringing the voices of children into the due diligence process so that a company can understand how they affect their lives beyond the traditional focus on child labour (which remains a grave issue with 168 million child labourers worldwide). Children are important stakeholders for business - as consumers, family members of employees, young workers, and as future employees and business leaders- but are rarely treated as such. Almost every business activity can leave a footprint on children’s lives - whether through employment conditions of parents, product safety, marketing practices or environmental impact.


Zahid Torres-Rahman said:

Let's start with the first question:

Question 1: Where has the most progress been made in harnessing value chains for social and environmental impact, and where do the challenges remain for companies looking to translate principles in to practice?

Specific to agricultural value chains....  there is great potential for strategically inserting mobile payments.  By transitioning the payments to farmers by large buyers (e.g. corporates, cooperatives) from cash to mobile we can jumpstart the ecosystem of cashin/cashout agents and merchants in rural areas to service all other rural mobile finance needs (e.g. health, education, utilities, solar panels/lanterns, clean cookstoves, treadle pumps, etc.).  Agriculture mobile payments requires alignment with mobile network operators, large commodity buyers, business service providers and other stakeholders.  Agri mobile payments will comply with SDG's 2, 3, 4, 5, 8, 9, 10, 12 and 17 that embrace in some way financial inclusion.   

There have been such initiatives in Uganda (cotton, coffee and tobacco), rice (Ghana and Tanzania), cotton (Zambia), cocoa (Indonesia) and elsewhere.  This is a new space and ideally allows us to harness agriculture value chains in pursuit of the SDG's.  

To pick-up on John's second point, an area of progress has been the introduction of new regulations in some countries, such as the Modern Slavery Act in the UK. The UK will be the third large economy, following Brazil (2005) and California (2010) to legislate company reporting on modern slavery in supply chains. With all three laws being less than ten years old, it may still be too early to accurately assess the impact this type of mandatory investigation and reporting will have on procurement behaviour or worker conditions.

Many large companies in the UK already adhering to voluntary codes of conduct have welcomed the Act. They claim it is a significant step to creating a level playing field, though some assert the act does not go far enough to enforce its requirements. Companies can simply choose to state they have taken no action, so it will be a key point of note to see the role consumers, investors and other groups play in helping companies drive transformative change for workers in their value chains. 


John Morrison said:

Hello everyone. On Zahid's first question - I think the most progress has been made in supply chains where commodities are traceable or revenues can be made transparent (e.g. oil, gas, diamonds, conflict minerals etc). Similar, progress has been made where labour can be contextualised within international standards (e.g. ILO Better Work etc.). 

But the remaining challenges are many. Not least the fact that for some products - such as Ready Made Garments - price remains the overwhelming concern and this affect's labour conditions. There are two fundamental challenges in my view: (i) to move away from audit-led approaches to the supply chain to those focusing on impact and (ii) to involve the wider value chain, including investors and eventually consumers themselves. At the moment there are just not enough incentives and disincentives for action in most value chains.


Zahid Torres-Rahman said:

Let's start with the first question:

Question 1: Where has the most progress been made in harnessing value chains for social and environmental impact, and where do the challenges remain for companies looking to translate principles in to practice?

I agree with the discussion.  And think that transparency is at the heart of this.  Cotton can be traded 10 times between farm and garment - so a complex supply chain ....

But the connections are there - as I know that if mill receives poor quality yarn they will be back in touch with their suppliers quickly. 

It's not just about global business being accountable but about engaging the middle of the supply chain.

I think there should be a year where no companies are allowed to do auditing or social reports, instead the money should be invested in more innovative approaches that directly involve workers themselves, shareholders or consumers. It will take something significant to shift us out of current behaviour patterns. Post Rana Plaza at least got actors thinking together and taking an impact-led approach - but how successful have we been in involving consumers in such approaches?



Rachael Clay said:

Hi, Rachael Clay, Director of Ethicore here.

The question of how to translate principles in to practice is a critical one.  Many companies want to move beyond box ticking and reporting, to really focus on solutions to challenging risks and problems.  How can we turn projects and pilots in to real long-term changes in value chains?  What support do you think is required for companies (and INGOs) to translate?

Thanks for your thoughts!

Clearly, Government has a central role to play in driving up ESG standards and in terms of human rights are the primary duty bearers. Nevertheless, businesses can help raise the bar in that respect and use their incredibly powerful voices- both in the UK and in the Global South – to affect change. A good example of this is when H&M and other major retailers lobbied the Cambodian government to raise wages in the garment sector. In the UK, the Modern Slavery Act contains a supply chain transparency clause largely down to lobbying by businesses and organisations like ETI. 



Zahid Torres-Rahman said:

Great insights so far! Let's move on to our second question:

2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?

My response is to part of question # 1 - where do the challenges remain for companies? and question #3. i.e. how can businesses and development partners collaborate more effectively. I currently work for Clemson but soon to retire and work for a non-profit Citizens Center for Public Life. In South Carolina, USA when I work to try to involve others in global development to eliminate hunger and poverty I get responses like we have our own problems, we have to solve them first.  BUT, we are not doing so.  in 27 counties SC has poverty of 20% or more.  I have been working to put together a service learning project to work locally and globally simultaneously to eliminate hunger and extreme poverty.  Deliberative democracy efforts are an initial tool.  Business representatives have contacted me.  But, we have not moved forward.  I really think people like me need more coaching from business leaders on helping us provide what business needs to make it easier for business to partner with non-profits.  Maybe help in speaking more of a business language than our non-profit humanitarian focus.  New email address will be: babara.a.brown13.bb@gmail.com

Public procurement is another area that we could look at in terms of raising standards. The UK government buys a huge amount of goods and services from business. With £45 billion worth of contracts awarded to private firms each year- around three per cent of the UK's GDP - public procurement is a major component of the UK economy. The government could do much more to use this purchasing power to influence corporate behaviour. In its existing UK Action Plan on Business and Human Rights, the government already states that it expects companies to be conducting human rights due diligence. While the government clearly sees the value in this due diligence process, it could do more to scale up the practice by making this a requirement of companies that bid for large public sector contracts.



Zahid Torres-Rahman said:

Great insights so far! Let's move on to our second question:

2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?

Hi Rachel

I agree we have to move beyond pilots and not just reach the thousands but the millions.  We have to show business this can be done at scale and of course engage Government.

I am not suggesting this is easy!

Alison



John Morrison said:

I think there should be a year where no companies are allowed to do auditing or social reports, instead the money should be invested in more innovative approaches that directly involve workers themselves, shareholders or consumers. It will take something significant to shift us out of current behaviour patterns. Post Rana Plaza at least got actors thinking together and taking an impact-led approach - but how successful have we been in involving consumers in such approaches?



Rachael Clay said:

Hi, Rachael Clay, Director of Ethicore here.

The question of how to translate principles in to practice is a critical one.  Many companies want to move beyond box ticking and reporting, to really focus on solutions to challenging risks and problems.  How can we turn projects and pilots in to real long-term changes in value chains?  What support do you think is required for companies (and INGOs) to translate?

Thanks for your thoughts!



Francis West said:

Clearly, Government has a central role to play in driving up ESG standards and in terms of human rights are the primary duty bearers. Nevertheless, businesses can help raise the bar in that respect and use their incredibly powerful voices- both in the UK and in the Global South – to affect change. A good example of this is when H&M and other major retailers lobbied the Cambodian government to raise wages in the garment sector. In the UK, the Modern Slavery Act contains a supply chain transparency clause largely down to lobbying by businesses and organisations like ETI. 



Zahid Torres-Rahman said:

Great insights so far! Let's move on to our second question:

2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?

I think it is clear that we need to develop internal capacities and responsibilities on gender in supply chains. If our analysis is deep and accurate, we should be able to develop the needed indocators of what we need to change. I think the biggest challenge is we are not taking time to invest in producer organisations so that these organisations are not inthemselves violating the rights of those participating in the productive initiatives. If we are true about creating inclusive businesses it should then be reflected even within the Producer Organisations. I believe the resources are there and there has to be common ground that allows us to work together even more.

Zahid Torres-Rahman said:

Great insights so far! Let's move on to our second question:

2. What are we learning about the key enablers for business seeking to improve their ESG performance, including the role of good governance and regulatory environments?

 

Hi Rachel,

On the back of some work we did with the tour operator Kuoni on bringing Children and/or their representatives into an impact assessment process, we produced this guide that outlines the practical steps to take: ENGAGING STAKEHOLDERS ON CHILDREN’S RIGHTS

Rachael Clay said:

Francis,

This is a great example.  Can you give us some insight in to the way you brought children , as stakeholders, in to the process?  Thanks.



Francis West said:

Where companies have undertaken impact assessments, this has helped focus where value chains and expertise can be harnessed for positive impact. If a company integrates the voices of the most vulnerable into its human rights impact assessments, it will be better placed to determine where to focus its efforts to positively support the delivery of the SDGs. This is clear from the experience of the telecoms company Millicom. After conducting a child rights impact assessment across its supply chain with Unicef, Millicom supported the creation of a new SMS service in Tanzania that allows parents to register new births as well as those of children under five on any mobile phone, straight to a centrally-run database. Birth registration- the subject of another SDG target- rose from nine per cent to 40 per cent in the pilot region of Mbeya in six months.

This isn't an easy process however. There is a challenge in that determining the impacts of a business (and therefore the opportunities to best support desirable social outcomes) requires consultation with stakeholders that are potentially or actually affected by a company’s operations and supply chain, particularly vulnerable groups, rather than with those organisations that have best managed to grab the company’s attention. Impacts on individuals take place in specific geographic locations at specific times and while it might be easier to undertake stakeholder consultation with NGOs HQ’d in London, businesses really need to get as close as possible to the voices of those at the sharp end of impacts in the value chain.

 

For Unicef UK, that means bringing the voices of children into the due diligence process so that a company can understand how they affect their lives beyond the traditional focus on child labour (which remains a grave issue with 168 million child labourers worldwide). Children are important stakeholders for business - as consumers, family members of employees, young workers, and as future employees and business leaders- but are rarely treated as such. Almost every business activity can leave a footprint on children’s lives - whether through employment conditions of parents, product safety, marketing practices or environmental impact.


Zahid Torres-Rahman said:

Let's start with the first question:

Question 1: Where has the most progress been made in harnessing value chains for social and environmental impact, and where do the challenges remain for companies looking to translate principles in to practice?

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