Corporate Social Responsibility

Block No. 5
Chapter Title: CSR throughout the Value chain
 Overview
2

1. Definition of supply chains and value chains

2. Drawbacks of global supply chains

3. Improving CSR in global supply chains

 Questions for class
3

What is a (global) supply chain? Please define ‘(global) supply

chain’ and mention the key actors in the supply chain

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 supply chains and value chains (1)
4

Supply chain is defined as “an integrated process wherein a number

of various business entities (i.e. suppliers, manufacturers, distributors,
and retailers) work together in an effort to: (1) acquire raw materials,
(2) convert these raw materials into specified final products, and (3)
deliver these final products to retailers”¹

1 B.M. Beamon (1998), Supply Chain Design and Analysis: Models and Methods, International Journal of
Production Economics, Vol. 55, No. 3, p. 281
 supply chains and value chains (2)
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Representation supply chain¹

1 B.M. Beamon (1998), Supply Chain Design and Analysis: Models and Methods, International Journal of
Production Economics, Vol. 55, No. 3, pp. 281-294
 supply chains and value chains (3)
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The value chain concept was introduced by Harvard professor M.

Porter in the 1980s. In literature a value chain is defined as “A set of
activities that an organization carries out to create value for its
customers by delivering a service or a product that the market values
and is prepared to buy at a price that affords the organization a profit
margin”¹

1. S.R. Clegg et al. (2017), Strategy: Theory and Practice, Sage: London, p.85
 supply chains and value chains (4)
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Representation value chain¹

1 Retrieved from: https://www.smstudy.com/Article/what-is-value-chain-analysis

 supply chains and value chains (5)
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Primary activities
•‘Inbound logistics’ pertain to storing, receiving and distributing raw
materials and other inputs
•‘Operations’ pertain to transformational activities that transform
inputs in outputs, i.e. raw materials into finished goods

Source: Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance,
Simon & Schuster
 supply chains and value chains (6)
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Primary activities
•‘Outbound logistics’ pertain to storage and distribution systems of
final products
•‘Marketing and sales’ pertain to the implementation of a marketing
strategy with the aim to generate sales
•‘Services’ pertain to after-sales services to maintain customers

Source: Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon &
Schuster
 supply chains and value chains (7)
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Support activities
•‘Procurement’ pertains to supporting purchasing practices
•‘Technology development’ pertains to knowledge management and
supporting technologies
•‘Human resource management’ (HRM) pertains to supporting HRM
activities such as recruitment and training
•‘Firm infrastructure’ pertains to the organizational (operational)
structures

Source: Porter, M.E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance, Simon &
Schuster
 supply chains and value chains (8)
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Differences between value chains and supply chains:

Value chains Supply chains

Aimed at creating value Aimed at delivering a product

Obtaining a competitive advantage Delivering a product to a customer

Division of primary activities and Follows the chain from suppliers of

supporting activities that all create raw materials to the end-consumer
additional value
 Questions for class

How could supply chains influence working conditions? In

other words, what are the positive and negative effects of
supply chains on working conditions? CSR = good
working
conditions
 Questions for class
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 Positive effects:
 Improved employment opportunities in developing countries
as a result of offshoring or outsourcing
 May lead to higher wages compared to other local workers

 Negative effects:
 Newly created jobs may be performed under indecent
circumstances – especially for women
 Job insecurity for new jobs (informal economy)

 Loss of jobs in Western countries

 Race to the bottom

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 Drawbacks of global supply chains (1)

Example: informal economy

Source: Barientos (2007)

 Drawbacks of global supply chains (2)

A lot of workers, such as temporary and migrant workers, in

developing countries are informal workers and partake in
the informal economy
Informal workers are oftentimes not protected adequately,
e.g. they cannot join a trade union or are not legally
protected because they have not signed any formal
employment agreement
To advance CSR, in particular the people dimension of
CSR, informal workers must be promoted to formal
workers so that they receive adequate protection
 Drawbacks of global supply chains (3)
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Main legislative issue: the governance gap

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 Drawbacks of global supply chains (4)

Governance gap explained: If rights are infringed in Bangladesh by

a Bangladeshi company working with a Dutch multinational, it is
impossible to hold the Bangladeshi company liable before a Dutch
court and vice versa Holding a
Human rights company
infringement liable

Human
rights
infringemen
t
 Questions for class
18

How can CSR be promoted in (global) supply chains?

Please think of two possibilities

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 Improving CSR in global supply chains (1)

A. Examples of legislative developments

 On an international scale, the UN aims to hold
companies operating across the globe liable for human
rights infringements through a binding UN treaty on
business and human rights
 On a domestic level, various legislative initiatives are
taken to hold companies liable and to promote CSR in
the supply chain (e.g. in the US, UK and the
Netherlands)
 As a consequence, Western multinationals active in
Bangladesh can be held liable in their own countries
for infringements down the chain (!)
 Improving CSR in global supply chains (2)

1. Binding UN treaty on business and human rights

 Two resolutions UNHRC:
 Ecuador and South Africa resolution: ‘to establish an open-ended
intergovernmental working group on a legally binding instrument on
transnational corporations and other business enterprises with respect to
human rights’
 Norway resolution: addresses governance gaps and urges UNHRC to consult
states and other stakeholders about the (dis)advantages of a binding treaty on
business and human rights
 Disadvantage Ruggie (2015):
 Main European countries did not endorse the initiative, housing major
multinationals
 Improving CSR in global supply chains (3)

2. California Transparency in Supply Chains Act of 2010

 Large retail sellers and manufacturers doing business in the state
of California
 Need to disclose their efforts to eradicate slavery and human
trafficking from their direct supply chains for tangible goods
offered for sale
 Disclosure on the website of the seller or manufacturer about
inter alia whether it performs supplier audits or evaluates and
addresses risks of human trafficking and slavery
 Sanction: injunction
 Improving CSR in global supply chains (4)

3. Modern slavery act 2015 (UK)

 Combats human trafficking, servitude and forced labour

 Independent Anti-slavery Commissioner

 Stimulates prevention, detection, investigation and prosecution of slavery
and human trafficking
 Commercial companies need to:
 Publish an annual slavery and human trafficking statement on their website
 Statement must contain information about the steps undertaken to ensure
that slavery and human trafficking does not take place in the supply chain
 Sanctions: injunction, fines, up to life imprisonment
 Improving CSR in global supply chains (5)

4. Developments in the Netherlands re supply chains

 Van Laar Bill (2017): prohibition of products that are related to child
labor. Responsibility of company to prohibit products made by children
also relates to its supply chain
 Wet aanpak schijnconstructies (Dutch Labor Act) (2015): supply chain
responsibility for the payment of wages, meaning that multiple supply
chain actors may be held liable for underpaying workers.
 Questions for class
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What is a corporate code of conduct? What is a supplier

code of conduct?

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 3. Improving CSR in global supply chains (6)

B. Corporate codes of conduct and supplier codes of

conduct
 Definition corporate or supplier code of conduct
 a policy document that defines the responsibilities of the
corporation towards its stakeholders and/or the conduct the
corporation expects of employees or suppliers

Source: Vytopil (2016)

 3. Improving CSR in global supply chains (7)

Example Shell
 3. Improving CSR in global supply chains (8)

Example Shell (II)

 Questions for class
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Imagine that you are the CSR manager of a company.

You are commissioned to draft a supplier code of
conduct for all your suppliers. Please take fifteen
minutes to discuss in groups the themes that you
would include in the supplier code of conduct, then
draft its table of contents and present your findings
with the group during the plenary session

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 3. Improving CSR in global supply chains (9)

Vytopil (2016): in general, codes of conduct are not

legally enforceable towards multinationals or supply
chain partners
Solution: inclusion in contracts or general terms and
conditions

Source: Vytopil (2016)

 VALUE CHAIN OF ‘JOBEK DO
BRASIL’
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Barin Cruz, Luciano, and Dirk Michael Boehe. "CSR in the global marketplace: Towards
sustainable global value chains." Management Decision 46.8 (2008): 1187-1209.

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 GROUP
31
EXERCISE
5min

JOBEK has a leading role in the Global

Value chain. Discuss few concepts which
explain the competitiveness of
sustainable global value chains of
‘JOBEK DO BRASIL’
Competitiveness of Sustainable Global Value
Chains
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The following three concepts which might explain the

competitiveness of sustainable global value chains:
1)governance and bargaining power in a global value chain;
2) the preconditions for the success of a CSR product
differentiation strategy itself, particularly, credibility, willingness
to pay for (more expensive) CSR products and barriers to
product imitation; and
3) complementary awareness building activities to strengthen a
sustainable global value chain in the long run

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3. Improving CSR in global supply chains
(10)
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How supply chain partners can collaborate to improve

CSR

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 Conclusion
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Value chains and supply chains differ from each

other, The latter is aimed at delivering a product to a
consumer, while the former is aimed at creating
value and obtaining a competitive advantage
Drawbacks of global supply chains are the existing
governance gaps as well as the informal economy
CSR in global supply chains may be improved by (a)
(international) legislation or (b) (supplier) codes of
conduct

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