The Societal Pillar

sustainability reporting. The latest reporting guidelines, issued in October 2006, detail how firms can communicate their environmental, social, and economic performance to the public (GRI, 2006)”

(Sloan, 2010). The GRI can also be seen as a ‘Green Supply Chain Management’ methodology. The GSCM has been used as indicator a few times. In principle, this fits into sustainability concerns but we consider GSCM being rather a methodology for administering daily business in an ecological way than as an indicator as such. Furthermore, the use of ecological indicators often results in GSCM.

Similarly, the ‘Commitment of GSCM by senior managers & support for GSCM by mid-level managers’ is seen being redundant, as no company will implement GSCM if there is no commitment from its board of directors and top managers.

Tseng & Chiu (2013a) and Tseng et al. (2009) asserted that a company’s research and development (R&D) capabilities may help to expand its existing technologies and to improve green R&D functions.

Many authors have challenged the green topic and suggested various methodologies to measure the ecological pillar of the sustainability concept. The indicators which come along with these methodologies also vary also according to the researchers’ approaches and their different suggested models’ specifications. Many indicators yield above are considered being important in sustainability concerns but have, nevertheless, to be neglected in this work. This is due to the fact that this work questions the degree of sustainability of a given SC, while some of the above mentioned indicators can only be considered on a country or on a company’s base. The indicators which will be used to calculate the ecological matter of concerns of the SC’s degree of sustainability will be explained more in detail in section 2.3.2.

Sub-pillar ‘Working Environment’ (Work)

It is important to understand that a company must not only pay attention to its external reputation but also to the internal one. In this regard, Norman & MacDonald (2004) and Nikolaou et al. (2013) inserted an indicator to measure the ‘percentage of employees represented by independent trade union organisations or other bona fide employee representatives’. Analogous, beyond other social performance indicators Norman &

MacDonald (2004) inserted the ‘percentage of employees covered by collective bargaining agreements’. In other words, concerns about a company’s reputation lead to several actions increasing the employees’ motivation, well-being and self-esteem. Evidence is given by Norman & MacDonald (2004), measuring how many employees surveyed agree that their workplace is safe and comfortable or how many workplace deaths a company has to register per year. Nikolaou et al. (2013) and Liyanage et al. (2009) agreed on this idea: while Nikolaou et al. (2013) count the number of employees injured during their respective working hours, Liyanage et al. (2009) contemplate companies’ physical working environment.

Nowadays, most companies have a so-called ‘Quality, Safety, Health, and Environment (QSHE) Department’ consolidating the different QSHE tasks. This department is supposed to provide ‘evidence of substantial compliance with Internal Labor Organizations’ (Norman &

MacDonald, 2004). According to Norman & MacDonald (2004) this indicator has been published in some actual social performance reports. In addition, customers are taking an increasingly important role by requiring corporate compliance for health and safety standards (Liyanage et al., 2009). However, some authors mentioned the indicators ‘health’, ‘hygiene’

and ‘safety’, but they only explained the importance concerning social and work related indicators, while abstaining from elucidating their understanding of particularly those KPIs (Nikolaou et al., 2013; Sloan, 2010). This is also true for the ‘hours of training per employee &

existence of programs for skills management / long life learning’ indicator. This indicator is considered being highly important as the hours of training per employee as well as the existence of programs for skills management to support the continued employability of employees are the crux of the societal matter, especially concerning the working environment issue. Maslow's (1943) hierarchy of needs describing the pattern normally induced by human motivations, can be explained by Steere's (1988) quote: ‘What a man can be, he must be’.

Indeed, the need of self-realisation and the need of security are inherent in every individual’s character. To achieve this aim, trainings and skills management as well as long life learning need to be adopted and the feeling of a secured employment needs to be guaranteed.

Hill (2012) highlighted the importance of adult education for green jobs and, contemporaneously, emphasised the oppression to GSCM when adult education only supports the economic status quo. In his second proposition, Sloan (2010) explains that literature on Supplier Codes of Conduct (SCC) provides some evidence related to the fact that “supply chains that explicitly measure social performance will perform better in all dimensions of sustainability”. One of those social performance metrics and indicators is the count of hours of safety training per employee. Obviously, Nikolaou et al. (2013) agreed on this idea, including training and education into their different indicator models, based on the global reporting initiative (GRI) principles. Gimenez & Tachizawa (2012) also put focus on the extension of sustainability to suppliers based on collaboration, whereat collaboration is supposed to refer to working directly with suppliers. This also includes providing them with trainings and support concerning the sustainability matter.

employability of employees’. It is lucid that there is a certain difficulty to measure or calculate those indicators. In the case of ‘net employment creation’, it might be hard to distinct if an employment has been created due to a person’s retirement or job change, or if the position has newly been created. Furthermore, the ‘internal communication with employees’, can only be analysed via internal questionnaires. In other words, the data provided are subjective and the results may thus be intangible for many managers supposed to work with those outputs. The reason why the indicator concerning the representation of formal worker in management is not taken into account by other researchers may be due to the fact that this situation is quite rare. This is not the case for the existence of programs to support the continued employability of labourers. In fact, the current economic crisis – inter alia – has shown that labour unions advocated precisely for the reemployment of the concerned employees. For this reason it seems surprising that this indicator did not appear considerably more often.

‘Occupational Health, Hygiene and Safety’ has also been applied several times. Howbeit most companies own a so-called ‘QSHE’ department, i.e. ‘Quality, Safety, Health, Environment’

Department, considering the just mentioned indicator. Those departments also collect data about

‘Number of workplace injury / deaths per year’. We consider that this indicator can also be calculated on a SC’s base, even though, it needs to be extenuated. In fact, if there is a workplace injury or death, it is not possible for the company to find out on which SC the considered employee has operated at that explicit moment. For this reason, this specific KPI needs to be considered in an alleviated form. All indicators used in the sub-pillar Work will be explained in detail afterwards.

Sub-pillar ‘Ethical Issues’ (Ethics)

Before analysing this sub-pillar, we need to clarify that ‘Ethics’ will not be examined as a research issue in this work. In fact, ‘Ethics’ needs to be understood in the logic of implementing ethical principles into practice. At a first sight most articles dealing with sustainability neglect the societal part. Accordingly, one needs to read in parenthesis to find out that this more intangible section has been covered by many authors, even if this has been done in an unconscious manner.

While Beamon (2005) noted that much of the corporate social responsibility (CSR) literature focuses on the economic, legal, and ethical responsibilities of a company, Roberts (2003) observed that, nowadays, the acronym CSR is well established in the business lexicon, but its actual meaning in practice remains a matter of debate. Both authors have analysed the ethical responsibilities in SCM, but only Roberts (2003) has emphasised the wider group of stakeholders which may have some interest in CSR. These stakeholders are not only suppliers and customers, but also all other business partners, like employees, board of directors, government, journalists, to name just a few. Since many companies accept CSR as a standard, containing the continuous improvement, this indicator will not be considered in this work.

It is evident that each business action taken is preceded by mutual trust. Visser (2010) proved that behaviour significantly impact a logistics collaboration decision. Consequently, some carriers as well as some LSPs do not exploit financial beneficial collaboration opportunities due to a lack of trust, commitment or confidentiality (Richey et al., 2010; Visser, 2010). Furthermore, Gimenez &

Tachizawa (2012) identified norms, trust, and top management’s enthusiasm being enablers of sustainable supply chain management (SuSCM). According to Towers & Ashford (2001), “Trust can be seen as an outcome of good internal service quality within organisations and is seen as a key role within service provision as identified by Chenet et al. (2000)”. Even though, they animadvert that, in terms of linking the internal production control process to the external relationships, trust has not fully been considered. Hoejmose et al. (2012a) explain that “much of the supply chain literature suggests that trust is multifaceted and a particular focus has been placed on two distinctive features:

credibility and benevolence”. They highlight that benevolence “is not focused on trust in the overall

from ‘moral norms’. “Moral norms as a subset of social norms relate to interactions of fundamental importance for the functioning of society” (Lenz, 2008). Lenz (2008) reminded that the required moral behaviour may conflict with the addressee’s self-interests and illustrated this with the well-known one-sided variant of the ‘prisoner’s dilemma game’.

Liyanage et al. (2009) agreed with Keijzers (2002) that nowadays a company is forced to strive for global standardisation of not only for ecological, but also for social standards if it wants to be competitive in the global market.

The ‘equal opportunity policies or programmes’ indicator is the one which has been revealed the most often during the literature review. It needs to be alluded that this indicator may conflict with peoples’ self-interest, since by human nature one strives to accomplish more compared to others. Nevertheless even the European Commission implements directives in order to foster equal opportunity policies and programmes. In their Factsheets, Communication Papers and Press Releases, the European Commission argued and required the gender balance in business leaderships (European Commission, 2012; European Commission, 2013; European Commission, 2014). In addition to this, the DDHC stands for equal rights for every human being too. To ensure legal and proper way of working, many companies execute ‘(Anti) Corruption Campaigns’ (Gimenez & Tachizawa, 2012; Roberts, 2003b). Nikolaou et al. (2013) concentrated on the reverse logistics and found out that there is only a limited number of academic works evaluating reverse logistics’ social performance. In his work, he used ‘equal opportunity policies’ as well as ‘non-discrimination’ as indicator, but did not explain what those indicators consist of. Bellizzi & Hasty (2001; 2003), in contrast, proved that top sales performers are disciplined less severely than poor sales performers and that a subordinates’ gender may be used in making disciplinary judgments: While female managers disciplined salesmen and saleswomen in a quite uniform way, this was not the case for male managers. In their work, Bellizzi & Hasty (2003) showed that the discipline administered by male sales managers toward saleswomen was much less severe than toward salesmen.

To facilitate mutual respect among employees, ‘National Culture / Values’ (Daniels, 2010a, 2010b; Gimenez & Tachizawa, 2012), as well as ‘(Ethical) Code of Conducts’ (Brink, 2008; Daniels, 2010a; Roberts, 2003b) have been applied in many business environments. In their studies, Nikolaou et al., (2013), and Norman and MacDonald (2004) mentioned the

‘Involvement / Contributions to Projects with Value to the Greater Community / Benevolence’.

Some companies want to contribute to projects with value to the greater community, as for example training programs or humanitarian projects (Nikolaou et al., 2013; Norman and MacDonald, 2004). Those indicators will, nevertheless, be neglected in this work. In fact, in a business perspective, it is hard to measure such an indicator as it is not possible to really estimate the outcome to the greater community resulting from such a working behaviour.

Besides, it is evident that such contributions or involvements can only be done on a company level, but not based on a SC.

Norman & MacDonald (2004) listed some indicators found in several companies’ social reports. They classified them into 5 groups, namely [1] diversity, [2] unions / industrial relation, [3] health and safety, [4] child labour, and [5] community. The KPI “Child Labour” can be mentioned as an example for the before mentioned kind of KPIs which are inseparable as they are simultaneously related to the pillars ‘Work’ and ‘Ethics’. Surprisingly, Norman &

MacDonald (2004) were the only researchers considering indicators like ‘percentage of staff

local contractors and suppliers’. It is as well surprising that only Sloan (2010) considers ‘healthcare benefits’, ‘supplier evaluation including social factors’ and ‘regulatory compliance’ as important.

Nikolaou et al. (2013) used the indicators ‘evaluation of respecting human rights’ and

‘prevention of discrimination’. Nowadays, one could argue that those KPIs are not efficient anymore, as each company respects the DDHC. One must concede that this is not always true as for example the freedom of opinion included in the DDHC is not always given. For this reason, Nikolaou et al.

(2013) included ‘employee training on practices concerning human rights’ as indicator into their KPI Model. Gimenez & Tachizawa (2012) found out that supplier compliance are difficult to set up, compared to CSR codes of conduct. In their point of view, a company needs to enter into a collaborative partnership if it wants to implement CSR. Moreover, they stated that hierarchy relational norms would have an impact on code compliance, whereas marked governance would not. Roberts (2003) pointed out that some clothing companies are members of the Fair Labor Association (FLA), which binds them to an industry wide ethical code of conduct and to external monitoring of compliance. It has to be noted that the FLA is a worldwide association committing to ensure fair labour practices and safe humane working conditions (Fair Labor Association, 2012).

Daniels (2010b), Gimenez & Tachizawa (2012) and Elkington & Trisoglio (1996) identify the diversification of cultures and human values as an enabler for implementing SuSCM. Effectively, the greater the number of persons employed in a company, the larger the probability that different national cultures and values meet within their daily work firm. It is important that each employee respects his colleagues. Daniels (2010a) explained that values, ethics and practices of a religious world view may indicate some insights into the economic and environmental behaviour.

Furthermore, as stated before, this may lead to a non – financial ROI, namely the company’s reputation. According to Roberts (2003), and Porter & Kramer (2011), external pressure and reputational concerns may be seen as drivers and success factors for ethical sourcing initiatives and thus for the optimisation of SCM, leading to SuSCM. Milne & Gray (2012) define sustainable development reports “as public reports by companies to provide internal and external stakeholders with a picture of corporate position and activities on economic, environmental and social dimensions”. Hence, to increase their reputation, some companies report their societal performance publicly.

The indicators used to calculate the importance of the ethical sub-pillar in the matter of the whole sustainability issue will be explained more in detail in section 2.3.3.