The Knowledge: Companies urged to interrogate supply chains

Factory collapses, sweatshops, child labour and supermarket bullying are just some of the ethical supply chain issues that have damaged brands and reputations in recent years. 

In February, UK groceries code adjudicator Christine Tacon launched an investigation into Tesco’s treatment of suppliers over suspicion that it had breached the groceries supply code of practice. 

It comes as the Federation of Small Businesses (FSB) revealed that one in five small firms had suffered “supply chain bullying”. 

The FSB said the results indicated a serious deterioration of payment practices, including late payments and ‘pay to stay’ (also known as ‘supplier assessment charges’).

“Small businesses are fast approaching breaking point,” FSB national chairman John Allan said. 

“They are no longer prepared to put up with these sharp practices. Brands that think they can continue to squeeze their suppliers with impunity may get a nasty shock when what they are doing comes to the attention of their consumers.”

Operating ethically and profitability are no longer mutually exclusive concepts, consultancy Accenture said. 

“Social media is enabling customers to gain greater transparency, faster. A company that looks away as factory workers are exploited by a sub-supplier will feel the ire of their customer base,” it warned.