Supply chains – ESG Feature
Forced overtime, low pay, restricted movement, physical and psychological injuries as well as exposure to hazardous condi- tions – it’s all, allegedly, in a day’s work making vacuum clean- ers for Dyson.
These are the reported conditions that some workers have endured while working at ATA Industrial in Malaysia, which makes products for the company that gave the world bagless vacuum cleaners.
Dyson denies any claim of “negligence” and is no longer work- ing with ATA but is one of many corporates facing allegations of human rights abuses in its supply chain. They are being held responsible for the actions and working culture of compa- nies they do not own. Suppliers are no longer invisible, no longer just in the back- ground. They are now on the radar of ESG-focused consumers and stakeholders.
This means that companies have to choose who they do busi- ness with more carefully. Picking the wrong partner could be expensive and cost more than money.
“The risk in supply chains is increasing. If there is an incident, the damage to your brand could be significant,” says Fred Isleib, global head of ESG integration at Manulife Investment Management
“These could be related to human trafficking, child labour, unfair wages – there are numerous issues that happen within a supply chain that elevates risk.
“Where it resides inside ESG policies is in the social pillar,” he adds. There have long been cultural practices in some parts of the world that many in the western world do not agree with, so why are institutional investors pushing their portfolio companies for greater transparency now? For one, consumers and other stakeholders have become much more socially aware. “Then we have social media,” Isleib says. “Once these issues arise, they are quickly disseminated throughout the world. Then your customers move somewhere else. That’s what is driving the risk within supply chains.” The main outcomes of these risks are reputational damage and disruption to operations. And they do not only stem from human rights abuses. They could be the result of pollution, mis-using natural resources, damage to local communities and corruption. Supply chains are not typically front and centre of a corporate’s ESG policy. Yet they account for up to 40% of corporate ESG impacts, according to the ESG Working Group white paper that analysed 1,600 MSCI World Index companies.
Issue 118 | November 2022 | portfolio institutional | 33
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56
