At the end of the day, we all want value. But are we all talking about the same thing?
Richard investigates…

‘There’s hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person’s lawful prey. It’s unwise to pay too much, but it’s worse to pay too little.’ John Ruskin, 19th century art critic and writer

THIS is possibly not the first time this quotation has appeared in these pages, but it perfectly illustrates something we’ve known for a long time; that lowest price doesn’t necessarily represent best value. But we can go further than this.

With today’s technology and wealth of information we can gain an in-depth understanding of who we’re actually buying from and what their policies and attitudes are. For example, we may want to look at where the products and raw materials come from, who is in the supply chain and how those organisations behave.

We’re perhaps better equipped than ever to find out how our suppliers interact with their suppliers. What effect do their activities have on the communities near their factories, and where their raw materials are extracted? What are working conditions like, and can you be sure there’s no slavery, corruption, or other abuses of human rights within the supply chain?

Drawing on my experience of the hardwood flooring industry I know these issues are treated seriously by most of the UK’s larger main contractors. This is mainly because a substantial part of a larger main contractor’s income is generated from national or global client organisations who, along with government and local authorities are leading the way in adopting sustainable and ethical policies.

These clients increasingly want to employ construction companies who share the same values as they do, because they don’t want the reputational damage of being seen to direct funds into areas that are socially and environmentally damaging.

As a result, many main contractors have adopted formal processes to evaluate their suppliers and subcontractors. This has already begun with the largest companies and is filtering down to medium and smaller-sized builders, depending upon who their clients happen to be.

The idea of appointing approved suppliers isn’t a new one but our criteria for approval are changing. It began long ago when, to gain ‘approved supplier’ status companies were required to provide information of a fairly limited scope such as references, project details, financial reports and other company information.

More recently it’s quite normal for suppliers to be asked for information with a much broader scope such as sustainability information including embodied carbon data, environmental product declarations (EPDs), recyclability, VOC information and the like.

The focus is increasingly directed towards the whole supply chain; in effect looking at whether or not the supplier is a good corporate citizen if they support their communities and how they treat their workers. Any company who is asked if they are a good corporate citizen will inevitably answer ‘yes!’, and they’ll respond in the same way if they’re asked if they are a sustainable company. But as I’ve said before in this column, it’s important to obtain some hard evidence and to dig deeper than the company’s marketing and social media profile material.

Where corporate citizenship is concerned perhaps the key document is a corporate social responsibility report (CSR). This is a document that organisations in the UK can publish voluntarily, but in some other countries, Denmark for example, companies are obliged to publish an annual CSR. There is no standard format for a CSR, but it’s important to understand that it’s closer to a technical publication rather than one simply intended for image-building.

Contained within a CSR you should expect to find a description of the specific steps the company is taking to reduce their effect upon global warming, and their methods for dealing with waste and recycling. They may also talk about what they are doing to prevent noise, dust, air, and water pollution in their locality.

Other parts of the CSR may include employee welfare, safety and working conditions This is also a good opportunity for a company to demonstrate its support for other organisations that share their aims. For example, in 2011 my own company, Junckers signed up to the United Nations Global Compact which aims to tackle, among other things human rights abuses, working conditions, environment, and anti-corruption, and this forms part of our CSR.

There are other formal schemes by which an organisation can set out its approach to environmental and social issues. One of these is ISO 14001, which provides a template for companies to set out their policies for working conditions, safety and the like. ISO 14001 does not impose defined limits or a pass/fail scheme for companies, rather it’s a formal template that organisations can use to set out their practices in a clear agreed format, so used properly it provides openness and transparency.

When I have talked about the information that companies provide in support of their own sustainability, I have highlighted the fact that some companies, though willing to improve may only have limited options for change in the short term because current technology does not allow them to do so. I think most people would support these companies, at least in the short term, provided they are not ‘greenwashing’ and if we can see some evidence that they have a definite plan and are taking positive steps towards becoming more sustainable.

A CSR and standards such as ISO 14001 can be used by companies to communicate these activities, even though this may not yet be reflected in the products they are offering to the market at the present time. This is an entirely different approach compared with companies who treat sustainability and corporate responsibility solely as a marketing and PR exercise.

One scheme that provides organisations with a platform for genuine improvement is the Science Based Targets Initiative (SBTi). This is a collaboration between CDP (a charity that provides environmental reporting to companies and governments), the United Nations Global Compact, World Resources Institute (WRI) and the Worldwide Fund for Nature (WWF). Their aim is simple: to reduce global warming.

Organisations like yours and mine can sign up to SBTi and work with them to devise a plan to make our organisations more sustainable. First you identify which aspects of your company’s activities you want to improve, then you compile a plan, including a time scale and performance targets. SBTi will look at your plan and if it meets their criteria they’ll approve it, and then it’s over to you to carry it out and to report your progress along the way. I know that some of the larger main contractors in the UK are participating in this scheme and are encouraging their suppliers to do the same.

Similarly, organisations such as Sedex and ETI, the Ethical Trading Initiative, have attracted many big brand names to join their schemes to assess their supply chains. But you still need to look carefully at what is being said. One large UK furniture manufacturer claims ‘to follow the principles of ETI’. Read it quickly and you could come away with the impression that they’re fully paid-up members – but they’re not saying that. They’re just telling us they align themselves with ETI’s principles and of course that alone doesn’t really promise us anything. Do they align themselves fully, partly, or not at all? And who is checking?

Many of the flooring products we use in the UK will be manufactured in continental Europe, the US or other parts of the world where, provided the supply chain is relatively short, there’s a good chance employees are treated properly, and environmental damage is avoided.
But when products travel to us from more remote parts of the world and there may be a long supply chain, things may become less clear unless there is some credible third-party independent verification. It can be a lot harder to find information on where and how raw materials are extracted and what factory conditions are like.

Third party verification should provide the necessary assurances, but without that you still have to read the small print very carefully. If you’re looking at engineered wood flooring for example you’ll be offered products that are FSC Certified… but engineered floorboards are made from several layers of wood all glued together. Is every layer from an FSC certified source? Companies can and do claim the floor is ‘FSC’ if only one or two of the layers that make up the board are from an FSC accredited source. This isn’t unusual, but is this not a case of smoke and mirrors, and are you really getting the full value that full FSC accreditation provides?

The wood layers that are most easily certified will be those made from softwood because it’s fast growing and easily replanted and there is no need to resort to illegal logging to meet demand. The trees used for the hardwood layer on top will take considerably longer to grow and I suggest there are many more sources of illegal and non-sustainable hardwood than there are softwood, and this is all the truer if the top layer is made from a tropical timber such as mahogany, teak or iroko for example.

I think the world of corporate responsibility is still developing, but it has nonetheless reached a stage of maturity where suppliers and customers need not be ignorant of the social aspects of their own activities and those of their supply chains.

In the future it may become harder for companies with a poor social and environmental record to achieve the lowest price because non-sustainable products and processes may become more expensive through punitive taxation, tariffs, and other policies, as governments try to force companies to switch to more responsible practices.

For the present, any organisation that’s actively trying to make a difference for good will publicise the fact. You should be able to easily locate a CSR, ISO 14001 certificate and independent third party verified evidence on their website.

They’ll be sure to make it known if they’ve adopted the science-based targets initiative or are partnered with Sedex or ETI. If the evidence is not there, then it probably doesn’t exist so move on to someone else.
Richard Aylen is technical manager, Junckers