Ethical Supply Chain Program: Ensuring Responsible Efforts

As the global market increasingly emphasises ethical standards, the Ethical Supply Chain Program (ESCP) is critical in ensuring responsible procurement practices. The ESCP, previously known as the ICTI Ethical Toy Program (IETP), is designed to promote ethical practices throughout supply chains.

This program offers a comprehensive framework for social and environmental compliance, enhancing transparency and ethical standards across the sector.

It's much more than an ethical rubber stamp; the program is a commitment to respect, fairness, and inclusivity. It's about creating a better life for workers worldwide.

The rebranding reflected its expanded focus beyond the toy industry. This global non-profit, recognised for its expertise in social compliance and labour standards, offers services including Supplier Certification, Social Impact Assessments, Environmental Assessments, supplier capability building, and worker wellbeing initiatives. Over its 20-year history, IETP has developed a program applicable to various sectors. The rebranding, set for 2024, aligns with the organisation’s strategy to diversify and expand its services and geographic reach. Under the new name, ESCP aims to promote integrity and sustainability across all sectors, facilitating communication, certification, and cooperation among manufacturers, suppliers, licensors, and retailers. The program emphasises respect, fairness, and inclusivity, striving to improve workers' lives worldwide.

Key initiatives:

• Factory certification: This ensures that manufacturing facilities comply with ethical standards.
• Remote social impact assessments help identify and mitigate adverse social impacts.
• Environmental assessments: Evaluations focused on minimising environmental footprints.
• Additionally, the ESCP provides capability-building programs and worker well-being initiatives, supporting members in achieving their environmental, social, and governance (ESG) goals and commitments.

Key Features of the ESCP

The ESCP's auditing process is thorough, covering 14 critical elements such as business ethics, employment practices, working hours, compensation, forced labour, discrimination, and environmental, health, and safety standards. These audits ensure adherence to the ESCP's Code of Business Conduct, helping organisations implement effective control measures across their supply chains (SGSCorp).

How does it work in practice?

Carmel Giblin, CEO and  President of the Ethical Supply Chain Program, outlined how the company provides a number of assessments and certification programs for all of its members; designed to improve transparency, create a better life for workers worldwide, and of course meet the requirements of the customer.

It also offers the Social Impact Assessment, which members use to verify the maturity of their suppliers’ social compliance systems and improve the systems in place to support worker wellbeing and ensure safe workplace conditions.

“For our members, assessments like this help to map their supply chain and enable due diligence beyond tier one suppliers, which is becoming essential for companies,” Carmel said. “Most importantly, it can be used to support suppliers by giving them targeted development plans based on the outcome of that assessment. In many cases, it also unearths existing policies that may not be utilised effectively and highlights additional opportunities to benefit their workers.”

Successful implementation

The program has over 1,000 suppliers enlisted.  Carmel  says  it has seen “huge success” with its Family-Friendly Factory Program, which is designed to help factory workers access safe and accessible childcare, all while solving labour shortage issues.

“Funded through ESCP by suppliers and their customers, it has enabled those with manufacturing facilities to significantly increase worker retention and recruitment rates, as well as worker-management trust,” Carmel added.

“Not only do initiatives like these positively impact workers’ lives – they also help increase suppliers’ profitability and improve their delivery and quality performance.

“One of the first Buyer members of Ethical Supply Chain Program, a leading toy company, shared previously that supplier relationship management and working with ESCP “is not about saying we won't work with this factory anymore. Instead, it's all about corrective action. This is best for us, as there’s minimal supply chain disruption, and it’s also best for the supplier, because by partnering together and improving the conditions within the factory, they’re better set up for future success.”

Another company enlisted is Dorling Kindersley, the British multinational publishing company specialising in illustrated reference books for adults and children. Shaun Hodgkinson, Chief Operating Officer there said the company is committed to ethical and responsible sourcing of its operations worldwide. The company aligned with the ESCP since 2008 and became full buyer members in 2017, and has made ESCP certification a mandatory requirement where it can.

“Partnering with ESCP provides us with practical real-time tools and resources which help us to manage, mitigate, and remove ethical risks at factories within our global supply chain,” Shaun adds. “Membership provides us with essential oversight and visibility of culture and conditions within the operations of our supply chain partners. It assures labour standards within our factories, going beyond audit to strengthen supplier engagement and build capacity and understanding to assess root causes and address issues and challenges.”

“Our values are centred around customers, collaboration, and creativity – and ESCP perfectly aligns  with this strategy. “The program ensures that delivery of our product is  with integrity to its customers. It also facilitates collaboration both with the factories we use and other ESCP members, which benefits everyone. “One measure of ESCP’s success is we are now seeing potential new supply partners stating that they have ESCP certification, or are willing to obtain it, as part of their pitch to work with us.”

A desire to do the right thing

Visibility and ethical conduct are integral to procurement for several reasons. They ensure process transparency , fostering trust among stakeholders and mitigating risks such as fraud and corruption. Ethical conduct promotes fair competition among suppliers, enhancing cost efficiency and compliance with regulatory standards. By upholding ethical standards, organisations safeguard their reputation and build stronger, more sustainable supplier relationships, contributing to long-term success in procurement management. Carmel adds she sees  the need for visibility and ethical conduct growing amongst its members. “There is a genuine desire from companies to do the right thing and make improvements that will positively impact workers. “That’s also being driven by a societal shift that emphasises ethical and sustainable practices. “Consumers are already demanding more from the brands they engage with, and are mirroring several new directives and initiatives that encourage greater responsibility across supply chains.”

Kenvue pioneering supplier relationships.

Pamela Gill Alabaster, Global Head of ESG & Sustainability, at Kenvue, outlined the Kenvue Supplier Code of Conduct (SCOC).

Kenvue Inc. is a prominent American consumer health company, formerly the Consumer Healthcare division of Johnson & Johnson. Renowned for its portfolio of well-established brands such as Aveeno, Band-Aid, Neutrogena and Tylenol.

Pamela serves on the Ethical Supply Chain Program's Governing Board.  She moved from Mattel (an ESCP member) to Kenvue. Kenvue is just establishing its supplier oversight program so not yet a member but the intention is that they will be once they start implementation. Kenvue was part of Johnson & Johnson but became totally independent last year, and is only about a year old in their new format. 

The code is the ethical, social, and environmental standards expected from suppliers and business partners. It is being incorporated into new and renewed contracts, demonstrating Kenvue's commitment to aligning with suppliers who share their values. These values include supporting Kenvue's Healthy Lives Mission, environmental, social, and governance strategies, and maintaining high standards for responsible sourcing and corporate citizenship.

“Our SCOC is validated via our monitoring and audit approach, aligned with international standards,” Pamela adds. 

“To position us to achieve Kenvue’s science-based climate targets, we are working with our top suppliers by emissions to support them on their journey to set their  science-based targets, the first step in collaborating to decarbonize our value chain.  

“We are also asking suppliers to share relevant data with us, including, for example, on supply chain transparency, to ensure that we can comply with the complex legal and regulatory requirements that apply to us.”

In May, Kenvue convened with its closest suppliers to discuss its priorities, including the commitments to the health and well-being of people and planet, and ways in which the company might partner to advance progress.

This social responsibility and environmental stewardship is central to Kenvue’s Healthy Lives Mission, essential for managing business risks, seizing opportunities, and delivering value to stakeholders. Pamela says:  We recognize that healthy people need a healthy planet on which to thrive and that we must partner with like-minded organisations, including our suppliers, to accelerate and scale our progress.” 

Pamela adds that  the “rapidly evolving” ESG regulatory landscape is intensifying focus on source traceability and human rights diligence.

“More than ever, companies need to collaborate  with their suppliers to establish greater chain of custody visibility to meet heightened regulatory requirements and to manage the risks associated with complex global supply chains.

Tighter regulations impacting manufacturers?

It's more than  just a want for companies, as tighter regulations, along with the introduction of new legislative acts, are being introduced to make manufacturing supply chains more sustainable and ethical. Some of these include the Corporate Sustainability Due Diligence Directive, which will require larger companies to guarantee that their supply chains do not cause environmental damage or use forced labour. The Supply Chain Due Diligence Act, which imposes similar responsibilities on companies in Germany, came into force at the beginning of 2024. Bills introduced in both the United States and Canada are also aimed at ending forced labour in global supply chains.  “For manufacturers, this is creating a new level of accountability and responsibility – one where they will need to ensure that their supply chain visibility and reporting procedures are watertight,” Carmel adds. “Carrying out a simple audit will no longer be enough; instead, manufacturers will have to take greater ownership when rectifying any areas of weakness that may have been identified.

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