PARIS — More than two thirds of buyers include a CSR clause in their contracts, yet more than half of suppliers say they have come across CSR requirements that were impossible to achieve, given the price and quantity of the product required, claims new research. Additionally, the study found most CSR clauses are not sufficiently detailed, with 75 per cent referencing “generic regulations.” The findings of the landmark study are particularly pertinent to the textile industry, where research suggests suppliers continue to be squeezed harder than ever while still being expected to hit CSR targets which can be costly to implement.
EcoVadis, a business which provides sustainability ratings for global supply chains, surveyed 569 companies and asked them about the use of CSR clauses in commercial contracts. It found that while such clauses are widely used and have strong potential for improving supply chain sustainability performance, current practices need improvement to truly impact change.
Conducted in partnership with Affectio Mutandi, the study among buyers and suppliers sought to determine the effectiveness and impact of such contracts on sustainability practices.
The study also identified numerous clause types and found large discrepancies in how they are applied, indicating that the current state of CSR clauses is still opening many companies to risk.
Says the report: “The need for a CSR clause in commercial contracts has been exacerbated by the 2013 Rana Plaza disaster in Bangladesh, which killed over 1000 sweatshop workers. Many well-known global brands, whose products were found in the wreckage, abruptly discovered that, in the absence of a direct contractual relationship, their “default” due diligence exerted no control over subcontractors. This served as a wakeup call for companies around the world, in all industries.
“The international community responded. The guidelines recently published by the OECD covering the garment and footwear sector (2017) and the extractive sector (2016), emphasised the significance of contracts and demonstrated that a CSR clause is the best tool for social and environmental improvement in the supply chain.”
“As regulatory pressure and demands for transparency continue increasing and businesses are being held accountable for the practices of their suppliers, this study shows the pressing need to rethink how we use contract clauses to support CSR and sustainability practices,” said Pierre-Francois Thaler, co-founder and co-CEO of EcoVadis. “Our goal at EcoVadis is to make sustainability performance measurable and benchmarkable, which is the foundation of integrating specific and enforceable CSR criteria in contracts, and serves as a motivator for suppliers to engage in improvements.”
Other key findings suggested 41 per cent of suppliers say contractual CSR commitments have raised their awareness of environmental, social and ethical issues, while 38 per cent of clauses extend to tier two suppliers and beyond.
However, only 25 per cent of buyers adapt CSR clauses depending on the sector and size of the supplier.
