Practical steps to integrate ethical trade into core business

ASDA is taking a series of practical steps to integrate ethical considerations into its buying decisions, combining training with new incentives for buyers.

It is now widely recognised by companies, trade unions and NGOs alike that many aspects of brands' and retailers' buying practices undermine the efforts of their ethical trade teams to enforce international labour standards in their supply chains.

As part of ETI's Purchasing Practices project, Group members Gap Inc., Next, New Look, and George at ASDA are working with ETI trade union and NGO members to analyse buying practices in their key supply chains and to investigate the impact these have on workers.

Within the project, and with input from trade union and NGO colleagues, ASDA has developed a series of initiatives designed to have a cumulative effect on suppliers' ability to comply with the ETI Base Code. Key strands include awareness-raising and incentivisation of buyers; better production planning; and building closer ties and improving communication with suppliers:

Winning hearts...

in other words, says Jon Wragg, Merchandise Planning Director at ASDA, "Getting buyers to empathise with workers". All buyers must now attend a one-day training session on ethical trade, and there are plans to invite people from the field to share their own experiences and to communicate the often harsh realities of life for many workers.

..and minds...

ASDA George has a traffic light-style system for rating factories according to their labour standards. Buyers will be set targets for directing orders to the highest-rated ‘green' factories. There are also plans to include a margin incentive for buying from green-rated factories, which would have the effect of encouraging buying from factories with better labour practices. Says Wragg, "Essentially, we'll be saying to buyers that we'll help them meet their commercial objectives if they use ‘green' factories".

Favouring suppliers with good labour practices will also be rewarded through the company's bonus system. Wragg said that "one buyer may be set a target for 50% of their buying to come from green factories in one year, increasing to 65% the next year".

Improving critical path management. Critical path milestones now have visibility at board level and a board director will be appointed to monitor whether milestones are being met. Wragg said "this isn't an admin person on the side, this is a high-profile appointment so we can get the critical path right."

Better communication with suppliers. ASDA has decreased the number of its suppliers by 40 per cent over the past two years and plan to continue to decrease it by a further 10 percent. It has also introduced a two-way scorecard for suppliers to rate ASDA on its purchasing practices. Said Wragg, "It's naïve to think we'll get completely open feedback from suppliers, but at least it gives us the opportunity to enter a dialogue."

According to Wragg, "These plans are no silver bullet. There's nothing really new here - we're just trying to take a number of practical, measurable steps that we hope will cumulatively make a real difference."