Opinion By Jaana Quaintance-James

Until recently, media attention regarding the ethical sourcing practices of Australian brands has been limited. During 2012, Coles and Telstra were both exposed for poor supply chain working conditions, but while covered in the international press, this did not receive much coverage in Australia.

In 2013, however, there has been unprecedented media attention to these issues, particularly since the April collapse of Rana Plaza, the Bangladesh apparel factory complex where over 1,100 workers died.

In June, Oxfam released a survey of 1,000 Australians that indicated that 70 per cent of consumers would be willing to pay more for their clothing if that meant that the factory workers making the products were paid a better wage and had safer working conditions.

Click here to sign up for our FREE daily newsletter

Many of Australia’s most well-known brands are now feeling the pressure to ensure that they are doing enough to manage ethical sourcing risk and that the behaviour of their suppliers is aligned with their brand values and commitments. It would be a mistake to assume these issues are confined to the apparel industry or to Bangladesh.

Internationally, ethical sourcing issues in the electrical appliance and consumer electronics industry have been widely reported, with China receiving frequent attention as a high risk location from the perspective of working conditions.

Examples of this include Apple’s high profile troubles with Foxconn and the 2012 investigation into VTech, the world’s leading supplier of home phones.

Companies in the electrical appliance and consumer electronics industry have a unique challenge compared to the apparel industry: ‘conflict minerals’. These are minerals that, when extracted, transported or traded, end up financially supporting armed groups, directly or indirectly.

Not as famous as the high profile blood diamond trade, conflict minerals are being mined in African warzones and sold to be used in the manufacture of consumer electronics. These minerals include cassiterite, wolframite, coltan and gold.

What should companies in the Australian electrical appliance and consumer electronics industry be doing in relation to ethical sourcing? Here are seven steps to ethical sourcing that can be taken to manage such risks in your supply chain:

1. Map your supply chain

Invest the time and resources to find out exactly where your products are sourced from. You most likely need to look beyond your first tier suppliers.

2. Collect and manage self-assessment data

Requesting information directly from your suppliers about their performance is a good way to quickly increase your visibility and provides a basis for the rest of your program.

3. Prioritise through risk assessment

It may not be practical to audit every supplier so prioritise based on a risk model that factors such things as: information provided by suppliers, location, product type, length of supply chain and the value of your investment.

4. Set standards and engage 

Develop a supplier code of conduct that articulates to stakeholders your company position on supplier behaviour and enables you and your suppliers to have a shared understanding about the end goal.

5. Audit and assess 

Although the limitations of audits are acknowledged (poor auditing standards, attempts by suppliers to defraud auditors and corruption) you can still benefit from running a baseline assessment. Develop a program that employs effective auditing methodologies and skills to identify the key issues and then engage suppliers to enable change.

6. Assist suppliers to improve

Suppliers often need help to understand and implement your requirements in their business processes and systems. You can assist them in doing this, and at the same time build stronger relationships to support better business outcomes for both.

7. Assess and manage your impact on suppliers

Demanding lower prices and faster turnaround is likely to have an impact your suppliers’ ability to maintain standards around ethical sourcing. Talk to suppliers about how you can avoid making their jobs harder, and identify opportunities to plan and communicate with them around supply issues more effectively.

Jaana Quaintance-James works at Banarra, a sustainability consultancy based in Sydney.