Ethics is embedded into everything the procurement team at environmental services firm Ecolab does, and it can mean making some tough decisions…
Ethical sourcing is in Ecolab’s DNA, according to vice president procurement, Europe and MEA Christophe van Riel. With its products used in hotels, hospitals and restaurants around the world, the water, hygiene and energy technologies and services firm touches people’s lives every day – even if the beneficiaries often aren’t aware of it.
The company works with customers in more than 170 countries, promoting safe food, clean environments and water and energy efficiency. So it’s fitting an overarching corporate theme is doing good for society and the planet. Ecolab was ranked second in Newsweek’s 2017 list of the US’s greenest companies. What does this mean for procurement and supply chain? SM caught up with van Riel and his colleague Andrew Powers, director of procurement packaging and equipment and procurement business partner, to find out.
Tie it back to business
Ethical sourcing involves sustainability, but it goes beyond the ‘green’ definition of the word, says Powers. It’s also connected to “being sustainable in terms of profit and loss”, and being fit for the future. This is because doing things the right way helps Ecolab do business. Van Riel is convinced the company’s ethical stance has attracted some of its bigger customers.
“It has a business benefit as well as an ethical benefit,” explains Powers. “There’s a direct correlation between doing what’s right and having a sustainable business. There are many companies you can point to who are suffering economically because of ethical violations.”
A commitment to sustainability and ethics starts from the top, adds Powers. “It’s a non-negotiable part of our business strategy, not something that’s a nice to do.”
Think ethics 24/7
Powers likens a focus on ethics to a safety culture: something that everyone in the company must own and focus on. “You don’t just do safety from 9 to 5 and then drive your car home recklessly. You need to have a 24/7, 365-day mindset.”
Every meeting in procurement starts with an ‘ethical moment’: a reminder of the importance of ethics coming before any other business. “Sometimes we talk about a case; sometimes it might be that the holiday season is coming, so remember we have zero tolerance of accepting gifts from suppliers,” Powers explains. “We have to keep these concepts and ideas fresh in people’s minds.”
“If you want to make it the culture, you have to communicate, communicate, explain, explain,” adds van Riel.
Ecolab has a code of conduct in which employees are trained regularly. Every year, every member of the procurement team is given refresher training and signs to say they understand the code and agree to abide by it. In countries where bribery and corruption are rife, members of the procurement team are ‘rotated’ to minimise risk. People are rotated by category (“so the supplier base is different”, van Riel explains) and by region. Regular audits also “ensure people understand that what we say, we do”.
Engage your suppliers
Having a culture of ethical procurement internally is all well and good, but as van Riel says: “If you only keep it internally, it will be artificial.” Suppliers are expected to play by the same rules as Ecolab staffers.
“When we have reviews with our vendors, before we talk about the business and financial, we go through a safety and ethical moment,” explains van Riel. They also sign up to the code of conduct. He calls it a “continuous onboarding and communications process”.
During quarterly vendor reviews, Powers will focus on a section of the code of conduct and go through it as a refresher. “I’ll say: ‘Don’t forget, this is our policy on gifts’ or ‘This is the hotline you can call to report any unethical behaviour’, because suppliers can be a really good advocate for us in terms of identifying some of this activity.”
Multiple conversations around the code of conduct keep things “present” rather than reducing it to a box-ticking activity. “It’s 360-degree, circling the supplier to make sure they understand it,” says Powers. “We don’t just sit in our offices and do procurement. Any time I’m out visiting a supplier, I’m checking on ethics. There’s a lot of work, but it bears fruit in benefits for the organisation.”
Stick to your values
Putting ethics first can mean making tough decisions. Ecolab has a zero-tolerance policy. People have been let go due to unethical behaviour. “It’s not a three-strikes policy: it’s one strike, and you’re out,” says Powers.
Externally, the approach is the same: “If we found a vendor that was working unethically, we would work to phase them out.”
Van Riel recalls an incident a few years ago, when Ecolab was decommissioning a vendor due to a breach in ethical standards, and was then asked by a customer to use that supplier. “We were straight with them. We told them we could not work with that vendor, [even if it meant losing the contract]. If you preach zero tolerance, you cannot have deviation, even if it costs you business. It will cost you 10 times more [in the long run].” In this instance, they didn’t lose the customer, and “everybody is happy” working with other vendors.
Powers adds that engaging both employees and suppliers fully in the ethical agenda hasn’t always been easy, but that the message is getting through. “We like to start with why we are doing something, rather than the nuts and bolts of the how and the what,” he says. “Why is it important to drive ethical sourcing? It’s about sustainability, having a healthy company and attracting the best talent.”
Industry as a whole is pushing towards being more ethical, van Riel agrees. He believes the workforce, in particular younger ‘millennial’ employees, is driving it. “People don’t want to work for a company that isn’t operating ethically.”
Go further: take the ethical initiative with CIPS ethical e-learning and online testing. cips.org/en-gb/training-courses/ethical-procurement-and-supply-/