Ignoring ethical issues can damage business

17 October 2001
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18 October 2001 | David Arminas

Purchasers should never believe they are powerless to make a difference to ethical behaviour in their supply chain.

Their starting point should be that their influence is vital for corporate success, according to Louise Jamison, director of ethical trading consultancy Impactt.

Get it wrong on ethics and it will have a direct impact on the bottom line, she warned. "Neglecting ethical issues will sooner or later affect customer loyalty and employee satisfaction. Up to 70 per cent of a company's value could be accounted for by brand reputation."

Going "back to grass roots" should include asking the simple questions such as where the part or product was made, under what conditions, whether workers were properly paid, and whether children were involved.

But Jamison cautioned purchasers against negative reactions towards suppliers if they discover an ethical problem that could affect their company.

"You really don't want to terminate contracts as a knee-jerk reaction," she said. "Talk over the problem with the supplier and work to improve the situation."

She suggested that procurement professionals should develop a code for what is acceptable to their company and what is non-negotiable.

SMoct2001

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