4 ways that make sustainable supply chain due diligence an opportunity, not a threat

As you might have read in our earlier posts, due diligence as an expected approach is quite clearly described in the OECD Due Diligence Guidance. Coming from the Directive on Corporate Sustainability Due Diligence Proposal, much focus over the course of 2022 has been on the importance of due diligence to ‘avoid risk’ and ‘take responsibility’. But don’t forget, it creates positive business opportunities too. The supply chain is a key impact area if you want to be a sustainable business as your supply chain is where much of your environmental and social impact lies. The so called ‘scope 3 impact’.

Here’s 4 ways in which due diligence offers a lever of positive change for your business – from information to collaboration:

 

1. Due diligence gets you focused

Due diligence offers an opportunity to learn about all material and production processes that are connected to your business. In short: it helps you to better understand the business you are in and how you can improve your business model. You can’t focus on all supply chains and raw materials in the same capacity. And you don’t have to. It’s important to think about the level of connection you have with a supply chain and the level of sustainability risks. The European Due Diligence Directive proposal underlines high risks sectors such as textile, agriculture, and minerals. To identify how you are linked to risks in the supply chain you can make use of the OECD Due Diligence Guidance for Responsible Business Conduct (The Terrace has created a simplified version) emphasizes the importance to understand ways in which you can “cause” or “contribute to” sustainability impacts by you as a business or if you they are “directly linked” to your operations, products, or services by a business relationship. At The Terrace we develop sustainability ‘Risk scans’, based on key social and environmental topics, commodities, and sourcing regions, to keep into account.

For example, Volkswagen AG gathers first-tier supplier data, prioritizes human rights and 16 high-risk raw materials in their due diligence process.

 

2. Due diligence creates data

Due diligence offers an opportunity to gather – and make use of – supply chain and supplier-level data. As there is a high chance your business is already involved in international production chains, it can be empowering to better understand it and use it to improve your products and/or processes. A relatively easy step to take is to use supplier questionnaires. Many examples and templates out there for you to use, for instance by B Lab or Ecovadis. Questionnaires most easily reach your 1st tier suppliers, further down the chain it might be more complex and often communication stays one-sided. Additionally, technology (providers) can make supply chain communication and collaboration more two-sided, where upstream suppliers are active participants and gain insight too. Farmforce is an example of a farmer engagement app, to gather data right from the first mile of food production. Sourcemap offers a network that connects you to suppliers and sub suppliers. Provenance offers blockchain technology to track commodities from its source.

For example, the Thank My Farmer app is used by different retailers and makes use of blockchain to show consumers where coffee beans come from and lets them make direct contributions to farmers.

 

3. Due diligence builds supplier partnership

A lot of due diligence data comes from your suppliers. Instead of making it a one-directional and ‘top down’ effort, see due diligence as a collaborative effort where you set up engagement around different sustainability topics based on mutual needs. You might have a lot of suppliers overall, which is why companies such as Marsdecided to work with less. We see companies such as Walmart specifically focusing on leveraging these partnerships to improve sustainability, such as Project Gigaton to reduce scope 3 carbon emissions. Next to sending a supplier questionnaire, think of setting up a shared workshop about diversity in the workplace. In this line we see businesses learn from their suppliers, and vice versa.

For example, Girls who Grind build long-term working relationships with the women who supply them with beans. By working closely together, the women on both ends learned about the unfair distribution of wealth along the coffee chain. And they decided to tackle it, together.

 

4. Due diligence builds industry collaboration

Collaborate with others in your industry on key due diligence topics. Building more radically connected supply chains and gathering insights makes little sense when every company keeps it to their own. As in reality, no supply chain functions in isolation. Due diligence is an opportunity to collaborate pre-competitively and build better supply chains. Independent multistakeholder platforms have a huge role to play in harmonizing due diligence by companies and defining synergies. The Global Coffee Platform, The Organic Cotton Accelerator, and Sustainable Natural Rubber Platform, are examples of efforts that try to unite due diligence data.

For example, a coalition of cocoa companies specifically welcomed due diligence for their industry and provided direction for key criteria and focus areas in the context of cocoa in this position paper. This offers a great route forward for all companies involved in cocoa, and similar smallholder commodities.

 

By sharing our take on how due diligence offers a lever of positive change for your business, we hope to have given you some positive ways to start or improve your supply chain due diligence. Do you want to get more insight in how this could work for you and your supply chain? Feel free to drop us a line.


Interview with Antoine Heuty from Ulula

As part of our supply chain due diligence theme months, we interviewed Antoine Heuty, the founder and CEO of Ulula, a Canadian social enterprise (B Corp) offering a digital human rights impact management platform to help organisations taking responsibility along their supply chains.

In today's interview, Antoine provides us with insights into Ulula as a way to leverage due diligence in supply chains.

 

1. Can you tell us more about Ulula and how you accelerate positive change?

Workers are at the core of our supply chains; yet they are often unheard and invisible-which leads to abuses with an estimated 27.6 million people suffering in forced labor conditions. Ulula - a certified B-corp- leverages mobile phones to engage with workers directly and anonymously to create more human and resilient supply chains.  We support organizations through a suite of digital human rights due diligence solutions enabling them to get direct feedback from workers and community members in real-time in order to identify problems, manage risks and engage stakeholders as key actors of the remediation process.

We have reached close to two million people in over 40 countries from small scale miners in the Democratic Republic of Congo to mega factories in China and palm oil plantations in Malaysia to construction workers in the Gulf.

We use technology to empower workers to get greater agency by enabling them to report on their actual working conditions or by offering safe and inclusive grievances and mechanisms. Technology offers access to all workers irrespective of their language and access to smartphones -we do a lot of work through voice and simple phones- and turns feedback into alerts and analytics creating more transparency and impetus for effective remedy.

 

2. What has been/are the greatest challenges users of Ulula face when (starting to) engage in supply chain due diligence?

Ulula offers a practical way to engage workers and communities across global supply chains. While this aligns with core requirements of recent mandatory human rights due diligence regulation, engaging the discussion around human rights is not easy for workers and organizations alike.

Building worker trust is the most important success factor. We have built Ulula to ensure strong privacy and worker protection. We also make sure workers can access the tool in their preferred language and use communication channels they are comfortable with -including offline. Being clear about who will be able to see anonymized data or who will receive their grievance is instrumental to building trust. Sharing the results of worker surveys builds greater transparency and creates more confidence. Involving worker representatives and independent third parties also plays a key role in building worker and remedy centered grievance mechanisms.

Organizations sometimes feel quite defensive about what they will find out when they really start listening to workers: will that open a floodgate of complaints? How will they manage? It is often important to clarify that using more effective worker engagement technology does not create labor and human rights problems; it merely helps uncover them more systematically and early. Corporate users typically uncover issues previously ignored -which offers an opportunity to engage supply chain actors to redress and prevent them. We help organizations tailor the tools so they also meet their needs and make sure we can advise them to manage cases so they can use the feedback and data they collect for action.

 

3. Do you have an illustrative example of how a company “identifies, prevents and manages supply chain impacts” with Ulula? How is information gathered?

Last year, Ulula worked with a large cosmetic brand in South Asia as it faced serious concerns of abuse towards “beauty agents”  contracted by third party labor agencies and working in their stores. Ulula designed a worker survey to help identify the root causes of the problem with questions around harassment, working hours, overtime, pay, access to grievance mechanism and workplace satisfaction. We deployed the survey amongst beauty agents in their local language via phone call (using pre-recorded automated messages) or WhatsApp text message. We reached close to 80% of the workforce enabling the identification of various abuses in the workplace and providing specific metrics  accessible on digital dashboards for engaging dialogue with labor agencies and other actors. We are also following up with periodic surveys to assess improvements from the workers’ perspective.

 

4. On impacts on the environment, employees, and society, are there specific topics or supply chain areas that companies should definitely include in their due diligence? (Maybe because they are more often overlooked?)

The selection of topics depends on the material issues specific to each sector and company. Rather than looking for the subjects that may be overlooked, it seems important to align due diligence efforts not only to what matters to stakeholders - i.e. salient issues for workers and communities- but also to areas where companies are determined to make a positive change. To be sure, companies have to take proactive action to identify and address negative impacts such as forced labor or harassment in the workplace. They also need to consider how they can create positive impacts on the planet and people and make sure they have robust systems to make sure the impact is real.

 

5. Next to working with Ulula, what can companies do in terms of creating a positive impact through due diligence, e.g., ways of supply chain engagement?

Irrespective of the particular set of tools a company decides to use to conduct human rights due diligence, the new regulatory paradigm is creating an impetus for turning policies into action. An increasing number of companies have robust and comprehensive human rights policies in place; but the implementation gap remains large and may even grow as the bar raises with new mandatory due diligence requirements.

Taking meaningful action for positive impact  requires engaging in dialogue with workers and communities on a more continuous and systematic basis. More bottom up approaches can empower workers and communities to become agents of change. Listening to stakeholders can and probably should take multiple forms -from face to face to virtual and technology-enabled options.

 

6. Do you have one final tip for companies working on supply chain due diligence?

Link due diligence to the purpose of your company - not a tick-the box exercise. It will help transform due diligence in a learning and dialogue process with your internal and external stakeholders and will help create shared value for all stakeholders.


Meet the positive change maker: Emmely Jurrius

1. What made you decide to join Team Terrace?

I've been involved with sustainability in my personal life and as a volunteer for a climate organization for quite a few years, but since having children I felt an even stronger drive to make more impact. The Terrace is a mission-first company, with interesting and challenging clients, has a proven track record, a bold attitude and is on its way towards a clear dot on the horizon. When I saw they were looking for a designer, I didn’t hesitate for a second to apply.

 

2. What did you do before joining the team?

I studied Linguistics, I have an academic Masters in Editing and a few years ago I decided to dive into the books again to become a designer. I’ve worked at The Royal Concertgebouw for ten years, as a marketing and communications specialist and in the past years as their first in-house designer. Since 2019 I am an active volunteer and board member for Stichting KlimaatGesprekken (based on the British Carbon Conversations). This organization trains climate coaches and gives workshops on decreasing (carbon) footprint, but mainly focuses on increasing handprint, i.e., how to connect to others in constructive ‘climate conversations’ and inspire them to live more sustainable.

 

3. What kind of sustainability challenges do you personally care about most?

My personal interest mainly lies in the psychological and anthropological side of sustainability, specifically the issue of how society can be moved in a constructive and non-judgmental way to see a sustainable, climate-friendly way of life as the new normal. To see the advantages of making ‘green’ choices instead of perceiving it as a ‘must’. I think there is a huge responsibility and a wonderful chance on making positive change for companies that choose to actively use their impact on their employees, company policy and therewith society for this.

 

4. What kind of sustainability solutions for which type of clients would you like to work for at The Terrace?

I feel inspired by companies that dare to challenge and give responsibility on sustainability innovations to their employees, and managements that are outspoken on their beliefs, not afraid to make bold choices and dare to look at themselves in the mirror. I feel that The Terrace’s clients all have their own strengths and personal drives to be aiming for positive change in a way that fits their profile. I Iove to challenge my creativity to help our clients in all different sectors finding the best way communicating this. Art and design have an incredible power that can undoubtedly be the key to bringing about positive change.

 

5. What would you like to learn at The Terrace?

I would like to learn what different challenges companies face in their quest for a more sustainable way of shaping and running their business. What drives them, what solutions have they already thought of or found, and what can we help them with? I also think I have a lot to learn on the technical side of sustainability solutions, and I hope to gain a lot of this knowledge ‘on the job’.

 

6. What means positive change for you?

To me change is positive when it connects people and creates a fairer, more sustainable world in an open and respectful way. I believe that it is in everyone’s benefit if we learn to really listen to each other, keep challenging each other in a positive way to do better, respecting our differences and embracing similarities. I am convinced that there always is a common ground or shared intrinsic value to be found, that with the right guidance will be the driving force to create positive change.


Meet the positive change maker: Floris van Neer

1. What made you decide to join Team Terrace? 

The Terrace is an organization that shares my ideals and my beliefs: that a better tomorrow is possible. The whole team is on the same mission and that motivates me to give my best every day. I also like the way TT works: focusing on both strategy and communication is a clever and effective way in bringing about positive change. There are still a lot of companies struggling with the concept of sustainability. Helping them to formulate their own sustainability strategy with clear and concise communication is – I believe – the way to go.

2. What did you do before joining the team? 

I obtained a bachelor's in Global Sustainability Science (GSS) at the University of Utrecht and gained a joint master’s degree in Metropolitan Analysis, Design & Engineering (MADE) at the TU Delft and Wageningen University & Research. Hereafter I worked at a global multi-disciplinary sustainability consultancy for a while and also worked as a consultant for an urban planning bureau.  

3. What kind of sustainability challenges do you personally care about most? 

I would like to make sustainability tangible for everyone in a company. A lot of employees feel that sustainability targets within a company are set out by a handful of people at the top level. Hence, these goals often feel like a must instead of a want. However, when the values of employees are explored you realize these are often already aligned with the goals as set out by the board – they are just formulated differently. Effectively measuring waste streams translates to, among other things, less food waste, and carbon reduction targets lead to more carpooling and increased usage of public transport. Sustainability is often a win-win situation! 

4. What kind of sustainability solutions for which type of clients would you like to work for at The Terrace? 

Since I joined the Strategy Team of The Terrace, I will mainly focus on sustainability strategies (like ESG), sustainability reports (like B-Corp), and stakeholder engagement. 

5. What would you like to learn in becoming a sustainability consultant?

I would like to increase my network and my experience with a vast range of (sustainability) companies. This will enable me to connect these companies with each other and hence bring about even more positive change. 

6. What means positive change for you?  

I view positive change from a utilitarian point of view – acting to ensure that happiness and well-being for all affected individuals are maximized.


Meet the positive change maker: Deike Robotta

  1. What made you decide to join Team Terrace? 

I was always excited about the potentials of communication in changing consumer behavior. But on top, I was looking for a company that allowed me to combine my interest in communication with my passion for sustainability. At The Terrace, I am excited to have found this golden combination. From now on, I am looking forward to create positive change through effective communication, creativity and thought leadership at The Terrace. 

  1. What did you do before joining the team?

Before starting at The Terrace, I obtained my Master of Science in Consumer Marketing. To explore the opportunities of marketing beyond its commercial motives, I studied the role of sustainability in the context of business and specifically marketing. That is why I researched the topic of demarketing in the scope of my Master thesis. In addition, I took part in the sustainability honors program of my university. That program did not only make me excited to work in the field of sustainability but specifically in consultancy. Various consultancy projects, e.g. on businesses’ roads to carbon neutrality or on the potential of green hydrogen in the energy transition, showed me that every client case is a new challenge and opportunity to gain new knowledge and make a positive impact. By the way, the first time I heart from The Terrace was via this honors program.   

  1. What kind of sustainability challenges do you personally care about most?

With my background in marketing, I was always interested in the potentials of changing consumer behavior for the good. Most importantly, I challenge the idea that life satisfaction is a function of material consumption. Because in the end of the day, the only way for me to contribute to a sustainable future is by consuming more consciously and more circular overall. 

  1. What kind of projects for which type of clients would you like work on? 

At The Terrace I am looking forward to work on a variety of projects. For example, I have started working on projects for NGOs and highly purpose-driven businesses. Besides, I am curious to experience the differences between supporting a non- and for-profit client on their sustainability journey. Especially, I am excited to facilitate clients in overcoming the barrier of rising consumer skepticism with honest and creative story-telling.  

  1. What would you like to learn in becoming a sustainability consultant?

We all have heard the word sustainability. But what exactly does it mean and entail? Sustainability is a big word, and the greatest skill and challenge is to make sustainability less overwhelming for businesses and consumers. I hope to learn how to combine the power of communication and creativity to make the urgency for sustainability understandable and tangible for everyone. 

  1. What does positive change mean to you? 

For me, positive change is all about inspiring others to question and improve the current way of doing things. But change in the right direction only happens as a collective effort. Therefore, my goal is to take leadership and inspire others to contribute to changing our unsustainable systems.  


Photo Blog Marjolein Baghuis

Saving people and planet starts at breakfast - by Marjolein Baghuis

"We are both the flood and the ark. No one but us will destroy the planet, and no one except us will save it." Powerful words from Jonathan Safran Foer's book We are the weather, saving the planet begins at breakfast. As humanity is facing the COVID-19 pandemic, I wonder: can we save people and save the planet at the same time?

Never waste a good crisis

The word crisis stems from the Greek word krinein: "to separate, decide, judge." And while we may not always be able to determine the outcome of a crisis, our decisions in a crisis reveal who we are. We show our true selves by figuring out what we're capable of letting go of. This applies to climate change as well as the current pandemic. Recognition of what's really important helps us to keep trying. To not give up after the first attempt to eat less/no meat or to not rebel after the first week of lockdown. The trouble is, that while decision-makers excellently frame what's at stake during the COVID-19 pandemic, they don't consistently do this for the looming climate crisis.

Structure for collective action

Just three months ago, who would have thought that large parts of the world could be locked up? People are sticking to the measures because the daily reporting of deaths makes us all feel fragile. And because governments make clear what's expected of them. (Of course, this is grossly overgeneralizing the reality, but I think you see what I mean.) While we all had high hopes that the Paris Climate Agreement would lead to collective to halt climate change, the truth is that instead, we're lagging behind these commitments, collectively. In some countries, NGOs have even successfully sued the national government for not taking enough action against climate change.

Let's hope governments learn from the current crisis to prepare effective measures to halt climate change. To frame the urgency and to invest in what's needed, rather than what's the easiest course of action to secure reelection in the short term. Helping citizens make better decisions for people and planet.

Options for individual action

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Of course, none of us have to wait for collective action plans and government measures. In Safran Foer's book, he lists four actions everyone can take to reduce their greenhouse gas footprint:

  1. Switch to a plant-based diet;
  2. Avoid air-travel;
  3. Get rid of your car;
  4. Have fewer kids.

What sets the first action apart from the rest of this list is that what you choose to eat is a decision you take many times, every day. The author's plea is for everyone to stick to vegan food for breakfast and lunch, at the very least. He admits finding it a challenge at times. Yet in the end, it's better for the environment to be an inconsistent vegan, than to only eat vegan or vegetarian food every once in a while.

When I heard him talk about this at the book launch in Amsterdam, I was quite surprised that he was cutting himself and his readers this much slack. But I must admit that I too find it hard to keep vegan during lunch, even though I have been a vegetarian for over 20 years. But I'm sure I've cut my animal protein footprint - and hence my greenhouse gas emissions since I started trying!

Accelerating the protein revolution

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The pandemic adds another dimension to the discussion about animal-based protein and the need for a protein revolution. Animal welfare, climate change, and individual health problems were already part of the debate, but it now becomes painfully clear that our collective health, our society, and the economy are at stake as well. Pandemics are often caused by diseases that spread from animals to humans.

So as we build back a better world post-COVID-19, let's include a move towards more plant-based protein. Let's create a new normal where we no longer spend taxpayers' money to support livestock farming. Greenpeace research estimates that, up to now, nearly a fifth of the EU's budget goes to livestock farming. If instead, that money is directed at more future-proof ventures, we'd be better off in many ways. The European Green Deal added "From Farm to Fork" in May 2020. It strives to create a healthy food environment that makes it easier to choose healthy and sustainable food options. The current pandemic makes the need for positive change even more clear.

What positive change are you driving?

I’ve been meaning to write this blog since Jonathan Safran Foer was in Amsterdam to launch the book in September 2019. By the time I’d finished reading the book, I felt the corona-environment would not be the best time to blog about climate change and protein.

Until one of my favorite columnists, Ionica Smeets, linked the pandemic to Eating Animals, one of his earlier books. That helped kickstart me into blogging mode again, with the new normal providing all kinds of topics to blog about for positive change! What kind of change are you hoping for - or better yet driving - off the back of this crisis? How can you connect saving people and planet for positive change?

This blog first appeared on changeincontext.com. Photo credits: Anna ShvetsElla OlssonNoelle Otto


Meet positive change maker Frederique Glazener

Meet the positive change maker: Frederique Glazener joins Team Terrace

Frederique Glazener
Frederique Glazener, Strategy Trainee at The Terrace

In 'Meet the positive change maker' we introduce the faces behind The Terrace to you. This time: our Strategy Trainee Frederique Glazener, who has been working at The Terrace since September 2019.

1. What made you decide to join Team Terrace?

I am interested in the role that organisations can play in the transition towards a more sustainable society. The Terrace helps organisations to find and formulate this role and so I believe it is a very good place to kick-off my career in sustainability! The variety of clients that The Terrace supports allows for a sector and industry transcending view. This broad perspective really appeals to me as I believe organisations have to increasingly collaborate to tackle future challenges.

2. What did you do before joining the team?

This summer, I completed my masters in Global Business & Sustainability in Rotterdam. I devoted my thesis to investigating the conditions of product-as-a-service models for contributing to circularity. I conducted this research for PwC, where I was an intern in the circular economy team. Earlier in my studies, I also did an internship at Triodos Bank, where I was part of the team handling loan applications of sustainable entrepreneurs. Both internships strengthened my enthusiasm to pursue a career in sustainability!

3. What kind of sustainability challenges do you personally care about most?

The challenge of the continuity of our global food system. Agricultural production is an important driver of climate change, which in itself threatens food stability due to extreme weather conditions. A vicious cycle. At the same time, it seems like current solutions raise resistance with different stakeholders and population groups, making it very complex.

4. What kind of sustainability solutions for which type of clients would you like to work for at The Terrace?

Well, in line with the previous answer, I would be interested in projects that concern circular or regenerative agriculture. So, for example, a client that wants to source its food more sustainably and therefore wishes to take its supply chain under the loop. In addition, the fashion industry really appeals to me. Not only do I really like clothing, more importantly I am very well aware of the negative environmental footprint of the textile industry, as well as the poor labour conditions it is often associated with.

5. What would you like to learn in becoming a sustainability consultant?

To make the complex simple. I can imagine that clients that are coping with their company's sustainability challenges daily do not see the wood for the trees. The added value of a sustainability consultant can be taking a fresh look, and thinking out of the box. Therefore creativity and quick analytical thinking is necessary. And, dividing a complex challenge into concrete reachable goals so that the client knows its way also after the consultant's work is done. The core purpose of a brand, and how that can form a sustainability agenda also interests me. And... many other things!