Business Social and Environmental Responsibility - Essay Example

Running header: Business social and environmental responsibility Student’s name: Instructor’s name: Subject code: Date of submission: BUSINESS SOCIAL AND ENVIRONMENTAL RESPONSIBILITY Businesses are constantly evaluating their suppliers in terms of their environmental and social responsibilities. In some cases, they dictate these terms to their suppliers. This has resulted from increased recognition of the demands placed on the business lately. As such, the business views compliance not just as adherence to legal requirements but also as including respect for the culture, social norms and customs of the society. Furthermore, the business has realised the challenge in striking a balance between economic growth and environmental preservation and hence the need to work together with all stakeholders in solving this. The business has hence seen the need for all business activities and all stakeholders including suppliers to cooperate in resolving the contemporary social and environmental challenges including those related to climate change and energy among others (Coleman, 2010). This is why Businesses are constantly evaluating their suppliers in terms of their environmental and social responsibilities. The following are the reasons why businesses are increasingly placing emphasis on environmentally and socially responsible suppliers; a) Improvement of supplier collaboration – it is hoped that increased emphasis on supplier environmental and social responsibility will result in improved social and environmental conditions. This will in turn result in reduction of costs resulting from environmental preservation and social responsibility as well as increased productivity and reduced consumption of resources. b) Improving product quality – environmental and socially responsible suppliers implies that the supplier delivers high quality goods that meet social and environmental standards. For the business, responsible suppliers are critical in ensuring product quality and developing more sustainable products. c) Ensuring compliance with customer expectations and demands- this has resulted from increasing demands for companies to manufacture products under decent social and environmental conditions. d) Reducing risk of negative PR –responsible suppliers can protect the business from negative PR that may result from social and environmental problems associated with suppliers. In addition, this will also guard the business against possible human rights violations through supplier of products that are not socially and environmentally friendly. e) Attracting and retaining workforce- insisting that suppliers be environmental and socially responsible will signal both potential and current employees that the company prioritizes social and environmental conditions. The business has realised that it will be socially and environmentally responsible if the products it is being supplied with observe environmental standards. Furthermore, the fight towards environmental sustainability can not be fought single handedly and all stakeholders must corporate in achieving environmental and social sustainability. Whether BHP Billiton and Toyota Company have placed environmental and social terms and conditions on their suppliers Both Toyota and BHP Billiton emphasize on societal sustainable development through the manufacture and distribution of high quality innovative products according to BHP Billiton Charter and Toyota Earth Charter. As such, the companies have undertaken initiatives towards harmonious and sustainable development of the society and the environment (Weinstein, 2011). In the same respect, the companies expect their suppliers to support them in their initiatives by fully adhering to applicable regulations and laws as well as social norms while practicing management that is based on respect for people. The companies also recognize the need for all business activities as well as stakeholders to work together in resolving global environmental issues. In this respect, the companies highly regard environmental and social initiatives by suppliers in their business activities. On their part, the companies are committed to developing and providing innovative safe and outstanding high quality goods and services in line with customer demands, supporting equal employment opportunities, inclusion and diversity for their employees and non discrimination towards them, provision of a safe environment in which stakeholders may operate, provision of sustainable solutions as well as equal and fair treatment of suppliers through provision of fair procurement methods while developing long-term relationship. The companies have also placed the following environmental and social terms and conditions on their suppliers; a) Health, safety and environmental conditions The suppliers are expected to provide safe and hygienic working conditions to their employees. The suppliers should put in place and enforce health and safety procedures in a bid to prevent accidents and injury in the course of supplying goods or work. The suppliers are expected to provide adequate training to their employees in the execution of their duties in a bid to minimize accidents. BHP and Toyota also expects its suppliers to ensure safe transportation of goods by ensuring proper packaging, marking and labeling according to applicable transport and storage regulations. All chemical substances should be accompanied by material safety data sheets before being supplied to their sites. Toyota specifically expects its suppliers to supply any of their personnel working at Toyota’s site with personal protective equipment that is relevant to the type of work being undertaken. They also expect suppliers to continually strive for improvement in their environmental performance through non use of hazardous materials such as lead, cadmium, mercury and hexavalent chromium. The suppliers should also ensure development of use of recyclable products in the goods they supply and ensure responsible use of natural resources while integrating principles of sustainability into their business decisions and product design. The suppliers should also ensure their business activities comply with all applicable environmental rules and regulations and obtain certification to ISO14001. b) Treatment of employees The companies’ suppliers must demonstrate that they treat their employees fairly and legally as regards remuneration, working conditions and benefits. The companies will not work with any supplier who uses forced labor or child labor. In addition, the suppliers are expected not to discriminate against their employees on the basis of beliefs or personal characteristics, race, sexual orientation, nationality, gender, age, religion, disability, age, membership of association, political opinion and marital status. The suppliers are also expected to pay wages commensurate with minimum wage or prevailing industry wage whichever is higher (Toyota, 2007). The suppliers should also ensure that employees work during the stipulated standard working hours while being given reasonable rest breaks. The suppliers are also expected to respect employees’ right of joining associations they choose as well as collective bargaining right. The suppliers are also expected to treat their employees with respect and dignity. They should not be subject to any abuse whether sexual, verbal or psychological. c) Community involvement Both the companies view the suppliers that contribute to the local community’s welfare favorably. This can be areas such as provision of assistance to local organisations, community, financial or otherwise or through improvement of the conditions of the supplier’s country of operation. Whether Toyota and BHP Billiton should have identified other environmental and social conditions The social and environmental responsibility demands placed on the companies’ suppliers are largely complete. However, the companies should have also identified the following environmental and social conditions for their suppliers: a) Environment conservation BHP and Toyota should require that suppliers obtain all necessary environmental permits and registrations. These should be maintained and kept current while their operational, monitoring and reporting requirements should be strictly adhered to. They should also expect their suppliers to identify all materials-chemical or otherwise that pose a hazard if released to the environment are identified and managed to ensure safety in handling and disposal while complying with all applicable environmental requirements for eliminating of hazardous substances. The companies should also expect their suppliers to properly monitor, control and handle all waste water, solid waste and air emissions that could have adverse effects on the environment. Part of their environmental conditions for the suppliers should be that of understanding their carbon compounds emissions and taking appropriate steps to manage and reduce them. b) Ethics Toyota and BHP should expect their suppliers to maintain and observe the highest ethical standards by complying with all laws and regulations on bribery, prohibited business practices and corruption. The suppliers should be expected to show good corporate governance, accountability, transparency and implement business codes of conduct. c) Resource efficiency and responsible sourcing of minerals Toyota and BHP should expect their suppliers to use their natural resources efficiently. The resources may include, fuel, energy and minerals. They should encourage their suppliers to set their reduction targets for their major materials and resources (Amaeshi and Nnodim, 2008). It is obvious that a great number of their suppliers require minerals in manufacturing their products. As such, the companies should have a policy that assures it that the suppliers do not directly or indirectly finance armed groups perpetrating human right abuses in the warring countries. d) Health and safety In addition to their current conditions, the companies’ health and safety conditions should also include a clause on sanitation, food and housing. They should expect their suppliers to provide their employees with access to clean toilets and sanitary food preparation, clean drinking water and eating facilities. The housing provided by the suppliers to their employees should be clean and safe with proper emergency egress. The companies should also expect their suppliers to evaluate all their machinery for safety hazards. The machines should also have physical guards, interlocks and barriers provided where the machinery poses a hazard to workers. Social and environmental costs that are supplier related As indicated above, business today is placing a lot of conditions regarding their social and environmental responsibility activities. Sustainable procurement involves taking into consideration environmental and social factors alongside financial factors in procurement. In fulfilling the conditions set by the business, suppliers incur some costs as well as some benefits from their actions. These are the environmental and social costs or the costs and benefits incurred by the supplier in ensuring environmental and social responsibility in line with the business’ conditions. These costs include: a) Costs related to promotion of human rights –the business is concerned with the suppliers handling of human rights. As such, suppliers are forced to come up with policies and processes that ensure that they uphold human rights towards their employees and the communities in which they operate. The benefit of this is that as they fulfill this condition, they minimize risk associated with being sued for human rights violation as well as spoilt reputation. b) Costs related to enforcement of labor rights- suppliers incur costs in ensuring that their supply function serves to protect workers rights. The costs may include ensuring proper remuneration, ensuring good working conditions, employee health and safety, rest and leaves among other labor rights related issues. c) Costs related to prevention of environmental pollution and degradation –suppliers incur costs in promoting sustainable production and consumption. These are costs related to ensuring that they meet the buyers demand for environmental sustainability such as prevention of pollution, cleaner production, eco-designs, incorporation of transport logistics, end of life collection, product re-use and material recycling and eco-innovation (Damundu, 2012). Thus, suppliers will incur costs in supporting a precautionary approach to environmental challenges, making efficient use of resources and reduction of pollution and risks for both humans and the environment. d) Costs related to social responsibility –the business often encourage suppliers to favorably contribute to community welfare. As such, they incur costs towards promoting social welfare by engaging in various activities. As observed above, the supplier incurs numerous costs towards ensuring they meet the social and environmental responsibility conditions placed upon them by the buyer. This goes a long way in environmental conservation and is beneficial not just to the business but also to the suppliers. The benefits associated with supplier social and environmental costs include; increased efficiency savings, effective and efficient use of natural resources, reduction of pollution and wastes’ harmful impacts, reduction of the impact of hazardous substances to humans and the environment, innovation and production of sustainable products. References: Coleman, G2010, Supply chain social and environmental responsibility, London, Rutledge. Weinstein, D2011, Supplier corporate social and environmental responsibility training, International Management Journal, vol. 20, no.3, pp.25-30. Toyota, 2007, Social and environmental report, Retrieved May 20, 2013, from http://www.btforklifts.com/SiteCollectionDocuments/PDF%20files/TICO%20Social%20 and%20Environmental%20Report%202007.pdf Amaeshi, K&, Nnodim, P2008, Corporate social responsibility in supply chains of global brands: A boundary less responsibility? Clarifications, Exceptions and Implications, Journal of Business Ethics, vol. 81, no. 1, pp. 223-234. Damundu, J2012, Environmental accounting, issues, concept and practice, Sheffield, Greenleaf Publishers. Read More