By Frank Miller, Managing Director and Founder, Track Record Global
Products sourced through international supply chains, particularly products ultimately purchased by consumers, are coming under increased levels of scrutiny. Retailers, investors, and governments want to qualify and, ideally, ameliorate any negative impacts on Environmental, Social, and Governance (ESG) performance associated with the sourcing of the raw materials and their manufacture. ESG performance levels are the new ‘product quality’ that consumers want to see evidence of being managed by all operators in the supply chain.
Brand damaging impacts such as excessive greenhouse gas production, slavery and corruption can leach back down the supply chain to brand owners and retailers, damaging their core values, staff morale, staff retention, reputation and credibility. That, in turn, negatively impacts on sales and share value.
ResponsibleSteel is committed to developing stringent requirements around the responsible sourcing of raw materials, as a strategic priority in the first half of 2020. These requirements will focus on managing ESG qualities from the mines to the brands and retailers that sell steel-containing products to consumers. Only through this approach will manufacturers and retailers be able to make product quality claims.
The ResponsibleSteel Draft Standard version 4.1 Annex 2 identified 29 core raw materials regularly sourced by steel mills. Each raw material may be sourced from a number of mines and other sources.
So what needs to be done to qualify and mitigate brand and supply chain risks that doesn’t require a costly third party audit for every perceived ESG threat?
ResponsibleSteel and supply chain mapping
Track Record Global (TRG) (www.trackrecordglobal.com) believes that the foundational step in qualifying the risk in a supply chain is to map it: to capture the supply chain topographical structure in terms of the identity and location of the operators and their ‘supply’ relationships with other operators that have a role in physically delivering and processing the raw materials used to produce the steel.
TRG has in-depth experience of mapping international supply chains, in both the timber, and mining and minerals sectors. The process starts with listing core materials of interest (in the case of ResponsibleSteel, these could be the 29 listed core raw materials). These are linked back to their relevant tier 1 suppliers. TRG works with each of the identified tier 1 suppliers so that they understand the objectives behind the mapping process; and why it’s in their interests to gather supply chain detail from their own suppliers – all the way from the source mine or initial processor.
The maps are diagrammatic representations of the supply chains and can be used to identify and communicate the risks – based on the raw materials; the countries the supply chain touches; and the brand values of the suppliers involved. Ultimately specific 2nd and 3rd party documentation such as mining certificates, and the legal right to transport goods are the evidence required to ameliorate risk.back to news