Chain transparency is achieved through cooperation, not rigid punitive measures
'Let's judge companies on how they try to stop wrongdoing in their supply chain, how they know how to correct observed mistakes, and how they know how to minimize risks of wrongdoing.'- Steven van Dalen
Full chain transparency
Supervisors and companies must cooperate more to achieve full chain transparency. This does not mean that supervisors should abandon their monitoring role, but rather that risks of wrongdoing can be communicated without immediate punitive action.
Laws and regulations are important, as is enforcement. But use it as a big stick if it appears that companies are failing in their best efforts.
If supervision and the business community are diametrically opposed, this will inhibit the progress that both parties are striving for. Mind you, when abuses are identified, of course enforcement is important, otherwise we get a regulator with no teeth. The closer to the sphere of influence of the company in question, the stricter the supervision.
Brazilian Heineken case
Chain responsibility is one of the biggest challenges within corporate sustainability efforts. Anyone who has a supplier or distributor that violates the law can be held responsible. In Brazil, a company runs the risk of being blacklisted, as Heineken recently threatened to do when abuses at a transporter came to light. Heineken immediately took its responsibility by tightening procedures, using software to monitor compliance with working hours and investing in better working conditions.
Heineken is leading by example in this case. This is the way forward to become more sustainable as a society. It is good that a company has at least a best-efforts obligation to ensure that within its chain everything is done according to the rules. But we do not gain anything by immediately publicly condemning, fining or worse if we find wrongdoing in a complex part of the chain.
Let us judge companies on the way in which they try to prevent abuses in their chain, how they know how to correct observed errors and how they know how to minimize the risks of abuses.
Cooperation in solving abuses
So if an inspection finds out about (risks of) wrongdoing in a complex chain like Heineken's, it should be given the opportunity to investigate further and fix things. That way, companies, consumers and government can move forward together.
There is good software on the market that automatically scans databases and news reports for wrongdoing. But this can never provide 100 percent certainty. Ultimately, parties in the chain will have to talk to each other. Regulators can play a facilitating role in this. If all parties involved work together, we will make faster progress.