Improving Social and Environmental Performance in Global Supply Chains

Abstract

The rise of global supply chains has delivered many benefits for consumers and firms. Yet concurrently, social, environmental, and ethical problems have arisen and continue to persist, despite government, private sector, and nongovernmental efforts to address them. What are effective methods for global firms, or buyers, to gain an understanding of problems in the supply chain and to address them? We examine strategies using a sense and response framework, and find various approaches within this framework to be associated with improved performance. In particular, research suggests that using a collaborative, proactive approach with suppliers and providing meaningful incentives can be effective. There exists an opportunity to cascade these efforts to second tier suppliers and beyond, where some of the greatest impacts and opportunities to affect change lie. In this chapter, we discuss supply chain practices associated with improved social, environmental, and in several cases, economic performance. We discuss how leading firms are building upon compliance programs, which remain important, to increase their emphasis on building shared value for various actors along the supply chain.