So, Ferrero has made a stand against child slavery. It has ended a contract with one of its Kinder Egg toy suppliers following allegations of child labour, ripping up the agreement that linked the confectionery brand to exploitation.
The announcement came after an exhaustive enquiry by Ferrero, following allegations last week that Kinder Egg toys were being made by Romanian ‘slave’ workers.
But what if, instead of sacking the supplier, Ferrero had instead told the world: bear with us, we’re working on it? There are good reasons why it should have.
Obviously, the problem needs to be addressed, and no one wants their brand associated with exploitative practices. Brands like Ferrero have a lot to lose and risk being demonised if they are not seen to be taking drastic action.
On the other hand, it’s a huge lost opportunity to improve supply chains if major brands cut ties with suppliers the minute a scandal hits headlines. A big brand has just the kind of sway and expertise that’s needed to engage suppliers on better standards, and encourage and incentivise ethical practices.
This dilemma crops up time and again in fmcg. The palm oil industry, for example, has long been controversial for issues of sustainability in its supply chain. Following a recent sustainability scandal, Anita Neville, vice president for external affairs at palm oil grower Golden Agri-Resources, was emphatic about the need for big buyers to hold their nerve and drive change instead of running away as soon as there’s a problem.
“Just cutting suppliers out of the palm oil supply chain straight away gives so much leakage into markets such as China and India where these standards aren’t important, where they’re really trading on price. You’re not addressing the real issue that we’re all concerned about.”
Behind Neville’s plea, there’s a simple truth: the problem won’t just disappear if contracts cease. It will most likely continue to persist in another place. Or, worse still, the full extent of it could remain concealed unless suppliers have an incentive to do better.
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