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Principles of Supply Chain Sustainability

Many of today’s manufacturers and importers operate as part of an intricate and complex global web. Goods and services are traded and provided from all over the globe, creating a powerful social and business network.

As businesses and agencies across the world are becoming more aware of Social Compliance and the importance of ethical operations, the matter of supply chain transparency has become increasingly prominent. Although the actual labor might be outsourced, a company cannot transfer and ignore its responsibility to ensure that both workers and the environment are being treated in a manner consistent with national and international laws and regulations—as well as human rights standards.

Accordingly, U.S. Customs and Border Protection (CBP) has incorporated social compliance as part of its overall trade compliance program. This change is part of an agency-wide effort to combat the growing problem of forced labor and shift towards a sustainable and fair market.

Under 19 USC §1484, the importer of record is responsible for using reasonable care to enter, classify and determine the value of imported merchandise and to provide any information necessary to enable CBP to properly assess duties and determine if other legal requirements have been met. Since 1993, CBP reasonable care standard had previously only required that importers have: Merchandise Description & Tariff Classification, Valuation, Country of Origin/Marking/Quota and Intellectual Property Rights.

Following the changes to the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), CBP added to its reasonable care standard for importers the addition that due diligence be exercised governing forced labor. Thus, importers are now tasked with creating and implementing a Social Compliance program in accordance with CBP guidelines.

A sustainable supply chain is a major component of a socially compliant company. Supply chain sustainability is defined by the United Nations (UN) Global Compact as “the management of environmental, social and economic impacts, and the encouragement of good governance practices throughout the life-cycles of goods and services.” The objective of supply chain sustainability is to foster and protect the environment, global trade network, and the people who depend on it. According to the UN Global Compact, supply chain sustainability operates to “create, protect, and grow long-term environmental, social and economic value for all stakeholders involved in bringing products and services to market.” In other words, a sustainable supply chain protects every single worker involved in the creation of a product or service, as well as ensures the appropriate and responsible treatment of the environment.

There are three main principles at the core of supply chain sustainability: human rights, the environment, and anti-corruption. A company dedicated to supply chain sustainability will proactively ensure neither they, nor any of the companies they employ engage in practices that violate human rights, such as forced and child labor. Additionally, a company with a sustainable supply chain will enact and adhere to a policy dedicated to the protection of the environment and the mitigation of hazardous environmental impacts—as well as expect the same quality of care from any of the companies with whom it does business. Lastly, a company dedicated to supply chain sustainability is committed to combating corruption in all forms, notably procurement fraud and direct governmental corruption.

If you have any questions regarding the principles of a supply chain, feel free to message us through the Contact form on the Home Page.


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