Organisations are under pressure to improve their performance when it comes to sustainability. Consumers want to buy and use products that come from sustainable sources, while senior management teams are increasingly aware of corporate social responsibility (CSR) risks.
The Information Communication Technology (ICT) industry, for one, has felt this pressure. After years of developing independent audit programmes and facing difficulties around scaling supplier inspections to meet these demands, ICT companies have taken a bold and different approach – partnering with peers to foster collaboration, solve audit challenges and to raise ethical, social and environmental standards – as well as awareness – within the sector.
What is the JAC?
The Joint Audit Cooperation (JAC) was founded in 2009 by Deutsche Telekom, Orange and TIM (previously Telecom Italia). Today, it brings together 13 leading telecom operators – including AT&T, KPN, Proximus, Rogers, Swisscom, Telefonica, Telenor, Telia, Verizon and Vodafone – through which we jointly verify, assess and develop effective audit and CSR capabilities. Together, we have created and implemented a process to ensure shared suppliers employ sound CSR practices.
The JAC journey: How it began
JAC came to life with the signing of a memorandum of understanding (MOU). The founding members agreed on a definition of the audit process as well as the best tools to use.
The MOU, effective on 23 December 2009, laid down the basics of the cooperation, building on the firm commitment of the signatories to manage their businesses in an ethical way. The focus was on creating a sustainable supply chain by evaluating suppliers’ capabilities and managing their operations in compliance with internationally recognised standards, such as SA8000 – which measures social performance in eight areas important to social accountability in workplaces – and ISO 14001 on environmental management. The agreement was also about delivering more sustainable products and services and improving performance.
The MOU included the methodology and the modus operandi the founders would follow and which, other than creating a cost-effective successful platform, ensures the JAC is fully compliant and does not infringe any antitrust regulations.
The first campaign was launched in March 2010 once the first checklist had been prepared, JAC had reached an agreement with third-party auditing firms and made contact with relevant suppliers. Some 21 manufacturing plants were audited, mostly in China. As a result, 18 corrective action plans were agreed upon, all of which were completed.
The JAC auditing process: A step-by-step look
The primary goal of the auditing process is to improve the CSR footprint of supplier factories. The process begins with a common verification of the manufacturing sites and the selection of auditors. The audits are conducted by a third-party that specialises in social and environmental issues.
To enable the sharing of results between JAC members, a nondisclosure agreement is signed with suppliers.
The audit protocols are based on a methodology that was developed in accordance with SA8000 and ISO 14001 principles, as well as onsite interviews with workers. Auditing firms are provided with the JAC checklist, which includes all the requirements with which suppliers are expected to comply. Any instances of noncompliance are classed within one of four categories: from minor, such as incomplete documentation; to unacceptable, including child exploitation. A score is assigned to each item and each supplier is given an overall score. Particular attention is paid to highly critical and unacceptable instances of noncompliance.
The checklist is maintained and updated when required.
In order to help suppliers understand JAC requirements, raise their awareness and even enable them to carry out a preliminary self-assessment, JAC has published the JAC Supply Chain Sustainability Guidelines.
There are two key parts of the final report:
- The audit findings based on objective evidence.
- Corrective action plans for suppliers.
The goal is to help suppliers see where they can improve and each JAC member is responsible for following up with those organisations to ensure full resolution and improvement.
Suppliers are willing to collaborate on these initiatives because they know CSR performance is a key priority for JAC member organisations.
The partnership between industry peers also signifies the commitment of their customers to long-term improvement in terms of sustainability. The suppliers that operate responsibly and invest accordingly know they will be the ones more likely to win more work.
Solving audit and process fatigue: A mutualised sharing platform
In 2015, JAC took a big step forward in solving two important challenges: enabling suppliers to share results with customers and making it easier to prioritise and work on corrective action improvement plans.
JAC adopted an online platform, developed in partnership with EcoVadis, to manage audit workflows. New audits and corrective action plans are uploaded and shared among members while a secure, shared library contains historical reports, guides, agreements, and documentation. This central repository makes it easier for members to collaborate and share best practices for real, sustainable progress.
Sharing actionable supplier information is critical for developing a sustainable, socially responsible supply chain. Instead of competing, JAC members have come together to make a difference. During the past six years, the initiative has grown by more than 400% and its members are going deeper into the supply chain to foster collaboration and supplier performance.
Those initiatives have since developed and in 2016, JAC launched the Worker Voice Initiative to eliminate labour abuses from the supply chain. The initiative was developed in collaboration with Good World Solutions, which uses its Laborlink service to allow workers to submit anonymous feedback through smartphone surveys.
To date, approximately 4,800 workers have been surveyed on working conditions, which has included overtime, rest days, wages and benefits, occupational health and safety, as well as dialogue with management. Nearly 72% of assessments on working conditions in manufacturing plants were conducted with Tier-2 and Tier-3 suppliers. These have provided valuable insight into what is actually happening in the supply chain.
While a large proportion of workers said they are happy with the company they work for and their working conditions, most of them said they would like to work as much overtime as possible to earn more money.
During the first pilot, seven sites were surveyed and around 4,800 responses collected. This type of survey will be applied to more sites in the future and appropriate actions will be identified and put in place where necessary.
During the same year, the sixth JAC Forum was held in Xi’an, China. The event brought together 133 representatives from some of the world’s largest ICT companies, including telecom operators, academics, auditing companies and international non-governmental organisations to further develop sustainable business practices and address specific CSR issues.
Some of the topics the forum touched upon included the worker engagement, and how feeling valued can drive improve staff satisfaction and bring business benefits in terms of reduced turnover, improved quality and greater productivity.
The forum also looked at how developing and benchmarking supplier performance can lead to increased productivity and product quality, as well as produce operational savings and a better working environment. Fire prevention solutions were demonstrated, and attendees learned how to implement an effective Environmental Management System and deploy more robust anticorruption measures.
Collaboration beyond competition: A look at the benefits
Mutual agreement is essential for effective collaboration. Alignment allows JAC member companies to put competition aside and collaborate to develop a more sustainable supply chain.
The more information organisations share, the more efficient and scalable the initiative becomes. By teaming up and sharing knowledge and best practices, JAC members are able to save time and resources, as well as reduce audit costs. We can also increase its scale and effectiveness. Beyond that, the JAC also helps reduce risk and improve performance across the board. Suppliers also benefit by receiving only one audit request, based on a standard methodology.
But the effectiveness of the coalition relies, to a large degree, on members holding themselves and holding each other to account.
JAC members are like-minded organisations that have built their own robust sustainability strategy and understand the link between sustainability and performance. Although sustainability can sometimes represent a real competitive advantage, cooperation among companies is much stronger here than in other areas.
JAC is the perfect application of one of the recommendations of the OECD’s 2011 Guidelines for multinational enterprises, which reads: “Enterprises may also engage with suppliers and other entities in the supply chain to improve their performance, in co-operation with other stakeholders, including through personnel training and other forms of capacity building, and to support the integration of principles of responsible business conduct compatible with the guidelines into their business practices. Where suppliers have multiple customers and are potentially exposed to conflicting requirements imposed by different buyers, enterprises are encouraged, with due regard to anti-competitive concerns, to participate in industry-wide collaborative efforts with other enterprises with which they share common suppliers to coordinate supply chain policies and risk management strategies, including through information-sharing.”
JAC members will next look to improve suppliers’ ability to manage and measure JAC requirements within a structured continuous improvement process. This new approach will combine factory-based training courses, onsite audits and sustainability forums to enable suppliers to share best practices and case studies. The JAC’s focus is also shifting toward measuring effectiveness beyond onsite audits to ensure long-term performance improvement and improved transparency through more tiers of the supply chain.
In particular, JAC has developed a new and more comprehensive checklist that provides extensive guidance to auditors, which will help ensure all relevant issues are duly checked. While the JAC will continue to audit suppliers, it will also focus on training to improve vendor capabilities in this area.
JAC stakeholders are committed to working with suppliers to collectively build capabilities – both internally and through all tiers of the supply chain. To do this, the JAC has created an academy to try to build capabilities within supplier organisations. The JAC Academy provides training sessions, defined key performance indicators for measuring performance, as well as sustainability forums to share best practices and case studies.
We are convinced that an initiative such as JAC can be highly beneficial to businesses in a number of sectors. There are a few recommendations that we would like to offer to help companies in other industries:
- JAC was not created to put the blame on its members’ suppliers if noncompliance was found. Cooperation with suppliers is fundamental. Even if, initially, suppliers are reluctant to participate, keep an open mind and show them that improving sustainability can deliver sound performance and create a cooperative environment;
- Do not expect suppliers, particularly lower-tier suppliers, to be familiar with sustainability practices and measurements. Providing guidance and explaining best practices marks the start of the path that you are supposed to walk together.
- Inform and involve your suppliers, provide them with opportunities to meet and network with one another and their customers, and find a way to publicly recognise their efforts. This will foster cooperation, facilitate the sharing of best practices and encourage competition.
Together, ICT companies can address the most pressing pain points in supply chain sustainability and make real, lasting improvements that create compelling advantages for businesses and enhance the industry’s reputation
This article is originally from the Procurement Leaders website: https://www.procureme
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