In today's world, a business’s success is highly dependent on its consumers, and their view on the businesses attitudes towards sustainability and ethics.
Consumers are increasingly influencing change in businesses by opting for ethical and sustainable brands. The reason for this is that consumers are more passionate and more educated around the consequences of poor supplier management and behaviours, than ever before.
Researchers Julia Hartmann and Sabine Moeller from EBS University of Economics and Law and University of Roehampton Business School produced a report on “Chain liability in multitier supply chains? Responsibility attributions for unsustainable supplier behavior”. They did this to better understand the issue of unsustainable and unethical behaviours in supply chains, and the impacts that this can have on consumer behaviour, as well as a brands image.
The research shows that businesses who pride themselves in their ethical and sustainable behaviours could in fact be at risk of damaging their brand image more, if they are openly stating that they are combating an issue, and are then found not to be, whether that is directly or within their supply chain.
Like Julia and Sabine outline, the consequences of unsustainable supplier behaviour can be extensive; consumers can lose trust, lack loyalty, in extreme cases boycott, and participate in bad reviews, potentially resulting in a damaged brand image which in turn could have a direct affect on a business’ level of success.
An accusation posted on Nestle’s Facebook site in April 2010
You have destroyed millions of hectares of rainforest. I will no longer buy any Nestle products.
Many businesses might not even be aware that their suppliers are practicing unethical and unsustainable behaviours. In fact, they might not know exactly who is supplying their products, which leads to the question - how can a business be sure that their nominated suppliers are the ones being used without supply chain transparency? There are lots of other questions that businesses might not have the answer too, such as; how much do they really know about the factory supplying their products? Is it a home of modern slavery? How does the factory dispose of their dyes? How big is their carbon footprint? The list goes on, and in turn business must start to ask themselves – how can we manage what we can’t measure.
Without these answers it can be very hard for a business to mitigate risk and the consequences could be devastating.
One specific pollutant caused the death of 8000 people in four major Chinese cities
Elizabeth C, Economy, 2013
How can businesses prevent brand damage?
As consumers are becoming more aware of the impacts that their buying habits are having on the world around them, it is becoming ever more essential for businesses to know exactly what damage, if any, they or their suppliers are causing. This is the only way that a business can truly start to prevent it.
Consumers do not differentiate between members of the supply chain when it comes to unsustainable supplier behaviour. Instead, they hold the focal firm responsible for everything that occurs in the supply chain
Julia and Sabine
The result is that for businesses who do have suppliers that are causing damage, large or small, it is the business that is going to be held responsible.
Therefore, understanding the potential risks and having full supply chain transparency is vital to every business, so that they have visibility and are able to work a preventatively in order to protect not only their brand, but also the environment and communities the interact with.