Every company relies to some extent upon third-party suppliers – as, in turn, do they. Such interdependencies leads to extremely complex supply chains. So where should mutual accountability for supplier impacts end?
A future-fit company takes responsibility for any social and environmental impact resulting from the provision of any supplied good or service whose absence would seriously affect its business. We refer to the suppliers of such goods and services as core suppliers, and they fall into two groups:
- Suppliers of outsourced functions: A company is mutually accountable for the operational impacts of any direct supplier to whom it outsources core business functions (e.g. customer support, manufacturing, logistics).
- Suppliers of product inputs: A company that sells goods (or services whose delivery requires goods to be consumed) is mutually accountable for all cradle-to-gate operational impacts caused by the creation of the materials (ingredients, components, etc.) required to make those goods.
For a company to be considered future-fit across its entire value chain, its core suppliers must reach all future-fit goals relating to the Environment, Employees and Communities. That’s because a company’s ability to create value depends on the actions – and thus impacts – of those core suppliers.
Mutual accountability here is not only necessary but also desirable, due to the attention it can bring to bear on impact hot-spots in the value chain. Actions taken to address such hotspots by any mutually accountable party will increase the future-fitness of all parties.