02 December 2004 | David Arminas
The government wants purchasers to ensure their companies fully understand the dangers and benefits surrounding corporate social responsibility (CSR).
Speaking at the launch of the FTSE4Good standards for assessing human rights in supply chains, Nigel Griffiths MP, the minister for CSR at the Department of Trade and Industry, said many companies had already made major improvements to their supply chains.
He told SM: "Purchasers should do their best to take the lead in making sure their companies understand not only the serious risks to brand image but also the sound business rewards for being a good corporate citizen.
"With the launch of the FTSE4Good criteria, they now have excellent guidance. CSR is very much on a firm foundation."
The standards set out a time-table for companies to introduce a policy, a system for monitoring and a reporting methodology on issues ranging from equality and discrimination to forced and child labour and worker representation.
The labour standards also consider working hours, wages and disciplinary procedures.
Companies must meet the policy and systems criteria by July 2006 and have their first report published by January 2007.
FTSE4Good's standards were put together after 18 months of consultation with business, according to Jayn Harding, head of CSR at FTSE4Good.
"This is the first FTSE index that is risk-relative," said Harding, who was previously Sainsbury's environmental and labour standards manager.
"It will identify and compare companies on their exposure to supply chain problems, giving them a high-risk to low-risk ranking. But the FTSE4Good index now allows companies to immediately monitor supply chains before implementing a policy."
FTSE4Good is part of the FTSE Group, a 50:50 joint venture between the Financial Times and the London Stock Exchange.
Data is used for a range of purposes including benchmarking performance, market analysis and helping investors to make informed choices.
"If not taken seriously, these labour issues can seriously damage a brand image," noted Darren Ford, professional practice manager for CSR at CIPS.
"Too many chief executives and directors look at CSR as a tick-box process. It must be relevant and based on up-to-date information."
The launch of the FTSE4Good criteria coincides with publication of the institute's CSR guidelines on its website (www.cips.org
They urge purchasers to focus on risk-management strategy as well as business opportunities, and, above all, to have CSR integrated with the business strategy at board level.