Navigating the Landscape of ESG in Procurement: Insights from Australia
Environmental, social, and governance (ESG) considerations have become a critical aspect of modern business practices as stakeholders increasingly demand a higher standard of responsible conduct. Companies must ensure that their suppliers and service providers also align with their ESG goals, making supply chain contracts a key opportunity for businesses to realize their ESG objectives.
In Australia, there has been a real focus on tackling modern slavery and ethical sourcing. It’s not enough for an Australian company to behave ethically; where they source from needs to be ethical too. Australian companies want to be seen as leading the charge on ESG and are willing to use their influence to speed up the process further down the chain.
Case Study: The Just Group
The Just Group is an Australian conglomerate that operates a number of popular brands like Just Jeans, Dotti and Smiggle. And like many Australian companies, The Just Group places high emphasis on the importance of ethical sourcing which they have displayed via their commitment against Child and Adult Forced Labour in Uzbek Cotton and Turkmen Cotton sectors, ending the use of Angora & other rabbit hair, fur and feathers in their products or their commitment to a living wage.
What did they do?
The Just Group is committed to ethical sourcing practices in its supply chain. They have established an ethical sourcing program that includes a supplier code of conduct, compliance measures, policies, and procedures to ensure that the company and its suppliers are complying with international human rights standards and local laws. They also require suppliers to sign a supply terms and conditions document that includes the code of conduct.
The company actively engages with stakeholders, including suppliers, government, and non-governmental organizations. The Just Group has a zero-tolerance policy for modern slavery, which includes forced labour, slavery, child labour, human trafficking, debt bondage, forced marriage, and servitude. They have partnered with ELEVATE to implement a comprehensive ethical sourcing program for their Tier 1 factories that includes communication of the code, tailored audits, anonymous worker sentiment surveys, grievance mechanisms, remediation and corrective action plan management, and production verification audits. The Just Group also encourages its suppliers to pay workers a living wage not only in their Western retail stores but also in their factories in places like Bangladesh.
How did they do it?
The Just Group has crafted an ethical sourcing program consisting of a supplier code of conduct, compliance protocols, policies and procedures to guarantee that the company and its suppliers are in agreement with global human rights laws as well as local regulations. To provide further assurance, they require their suppliers to sign supply terms & conditions documents which embody the aforementioned code of conduct.
They also partner with ELEVATE to implement a comprehensive ethical sourcing program for their Tier 1 factories that includes communication of the code, tailored audits, anonymous worker sentiment surveys, grievance mechanisms, remediation and corrective action plan management, and production verification audits. The company also actively engages with stakeholders, including suppliers, government, and non-governmental organizations. The Just Group encourages its suppliers to pay workers a living wage and partners with Better Cotton to improve cotton farming globally.
Main challenges & how they overcame?
One of the main challenges for The Just Group was to ensure that their suppliers were complying with their ethical sourcing program. To address this challenge, they have engaged in a number of strategic partnerships to encourage sustainable business practices up and down the value chain. This includes the aforementioned ELEVATE partnership but it also includes the pledges to Better Cotton, The Global Organic Textile Standard (GOTS) and Pledge against Child and Adult Forced Labour in Uzbek Cotton and Turkmen Cotton sectors.
Main lessons learnt?
The main lesson learned by The Just Group is that continuous oversight and management are necessary to effectively identify and address risks of unethical practices. Policies alone cannot sufficiently mitigate the modern slavery risks and vulnerabilities workers face in the countries they operate in. The company has also learned that partnerships and collaborative relationships (examples above) with multi-stakeholder initiatives and advocacy groups are crucial to improve labour rights, health and safety, transparency, and integrity in global supply chains.
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ProcureCon Australia session - Day 2: Keynote Panel: Bring your ESG initiatives to life - How can you transform your contracting, supplier engagement, and everything in between to move from ambitious sustainability “promises” to “action”?