Following growing public concern and an aim to increase awareness of the issue, Oxfam recently released its second yearly ranking of supermarkets and their approach to human rights within their supply chain.
The "behind the barcodes" campaign titled "Does your supermarket food contain human suffering?" scores the UK big six supermarkets in the areas of transparency and accountability, prosperity of workers and farmers rights and the fair treatment of women.
With the recent surge in awareness of workplace issues following the #MeToo campaign, the increased focus on modern slavery, and several reports into poor working conditions and human rights violations at big retail brands, this campaign has potential to damage supermarkets' reputations.
Jennifer Agate and Catherine Turpin consider how retailers can protect their brand and deal with the reputational fallout that is associated with these types of reports.
How poor conditions in the supply chain can damage reputation and profits
Poor supply chain and workforce management can damage the reputation of all retail businesses, of any size and within any sector. In 2018 GAP and H&M came under fire following a number of interviews with their factory garment workers which revealed that in countries such as Cambodia, India and Sri Lanka women workers faced daily physical and verbal abuse. The reports resulted in a huge amount of media coverage and criticism for the companies involved. They responded publicly by announcing an investigation and due diligence process into their supply chains and condemned the abuse.
They aren't the only ones. There have been reports documenting the abuse of women at supplier factories for Walmart and most recently Amazon have come under the spotlight following a Guardian investigation into the conditions at US based warehouses, where workers are reportedly sustaining workplace injuries and returning to work whilst injured.
All of this negative publicity can have not only a damaging effect on the company's reputation but also to revenue growth. Following the extensive media coverage of ethical and workplace-related issues in Apple's supply chain in 2012, their revenue growth was reported to have dropped significantly from 43.6% in 2012 to 9.55% in the following year, although commentators have also cited wider factors.
Unfounded allegations can also have a serious impact on reputation. Primark faced a huge backlash with protestors outside of its Oxford street store in 2008, following the BBC Panorama documentary alleging that some garments were being produced by child labour. Following a complaint escalated to the BBC Trust, the footage was revealed to be "not genuine" and the BBC was forced to issue a public apology to Primark. The company has since released an interactive online map providing details of their supplier factories and information on the number and gender of their workers, in an effort to increase transparency and recover from negative publicity surrounding their supply chain.
What steps can you take?
- Identify risks in your supply chain – Ensuring a good relationship with employees and suppliers will help to identify any potential issues and allow you to be more effective in anticipating and addressing problems.
- Increase transparency and disclosure practices – Increased reporting on your supply chain will help to improve your businesses' reputation. Following the press coverage of the Walmart controversies, the company released its 2018 Global Responsibility Report aiming to reinforce its commitment to eliminating abuses in the supply chain. This provides the impression of a well-run business which is open about its business practices.
- Improve reporting in associated areas such as modern slavery – Modern slavery in businesses and supply chains is a topic that is closely aligned with the issue of equality and human rights abuses. The publication of a modern slavery statement has been a requirement for large commercial organisations in the UK (those with a minimum total turnover of £36 million) since 2015. The statement must contain the steps that the company has taken to ensure their business and supply chains are trafficking and slavery free. There has been great variance in the quality of the statements produced to date, due to the minimal mandatory requirements within the legislation. A comprehensive statement which demonstrates that the efforts to reduce issues in the business and supply chain are embedded into the culture of the business will help achieve this, and support other initiatives on similar issues.
- Plan your media/ internal communications – in the face of any media storm, pre-planning is key. Ensure your crisis management plan specifically deals with reputational issues, setting out the team who will take responsibility for responding and advising, stakeholders who will need to be notified and possible statements. Honesty and transparency will be key, the days of "no comment" being long gone. Remember that in the event of a trial, the media will be free to report matters raised in open court.
- Social media – disgruntled employees will often take to social media to express their grievances and allegations can be spread rapidly on these platforms. Social media monitoring will allow you to respond quickly to online chatter and allow you to take a response offline where appropriate.
- Legal steps - in the event of inaccurate and unfounded allegations, as in the Primark example, regulatory and legal channels can rectify the harm caused.
- Reflect – regularly review your company's track record. Is a pattern emerging?