The Benefits of Creating a Company-Wide Ethics and Risk Management Framework

There are many benefits to this type of formal, enterprise-wide approach to ethics and risk management. A formal written policy, dedicated resource, and high-level sponsorship all help to create a framework for differentiating between acceptable and unacceptable behavior, and for demonstrating to employees, suppliers, investors, and customers the company s intentions to require their suppliers to behave in an ethical way. It also ensures that company employees understand the importance of corporate ethical values and are actively encouraged to identify potential risks in the supply chain as they arise. -

In short, this type of formal ethical framework is a company s best opportunity for early identifi-cation of risk, and its first line of defense against accusations of indifference or unethical behavior. After all, employees, particularly in the procurement and sourcing functions, are a company s closest contact with suppliers and business partners , and need to understand that as front-line employees they have a responsibility to identify social or environmental issues in the supply chain.

Intel s Ethical Supply Chain Framework

Intel provides a good example of this type of ethical supply chain framework. The company s board and senior management have been actively engaged in the development and implementation of their CSR program, and they have a dedicated CSR Manager to coordinate and champion all ethical supply chain activities. The company has had various longstanding environmental, health, and safety programs, and has already been completing some form of compliance auditing for some time, including some 200 assessments done each year worldwide on their suppliers. They already maintain control of waste products, and ship these back from their various sites in developing countries in order to avoid having to burn the materials. Their Product Ecology group looks at all issues concerning manufacturing, use, and disposal of products, and these efforts are coordinated with their Issues Prevention and Management group, which serves as the company s risk management function, providing both the early alert and incident management activities for the company. That group is also tied directly into Intel s customer service centers, which screen for any social, environmental, or ethical issues, and forward those issues on to the Issues Prevention group and other appropriate departments. These several departments then meet with the Corporate Social Responsibility department on a regular basis to coordinate activities company-wide.

 

Let s turn now to the specific elements of this ethical framework.