Enhance Supply Chain Disclosure
Details about the conditions of production processes are still highly elusive to consumers. The quality of products – as well as workers’ rights, business ethics, and environmental occupation – are all issues that consumers, institutions, and civil society organisations alike must be informed about to make rational purchasing choices. In the past, full supply chain disclosure was technologically impossible; however, the advent of AI and blockchain poses an opportunity for governments to double down on end-to-end transparency.
Solution: Make the supply chain transparent and available
Revealing the supply chain would entail the origin of resources, methods, and conditions of manufacturing, especially for involved workers, as well as the environmental and climatic impact of the entire production process and supply chain. Similarly, information about the durability of a product itself should be revealed where possible. The idea is that readily available information about products will influence the purchasing choices of consumers, who will then avoid badly ranked items. In the long-run, this should encourage the formation of a circular economy, if firms decide to address the problems in their supply chains. All of this information could be conveyed both in short form in the product’s tag, but also at length online. Consequently, everyone will have the opportunity to learn and act upon any violation of the society or its environment.
Solution: Legal enforcement of product labelling
Moreover, there needs to be legal enforcement for labelling products through certificates, such as ISO 14000 family of standards. As it currently stands, CO2 emission labelling is only used on a voluntary basis by producers, largely for eco-friendly marketing purposes. Nevertheless, this method does not guarantee any consistent or coherent labelling. There must be explicit regulations on how environmental impact is measured and reported. Once a legal enforcement is set in place, governments should support businesses in the certification of their products, as it may be too costly for many and increase entry barriers to the markets for newcomers. While accountability must be improved, this does not necessarily have to become a bureaucratic nightmare for the business sector – a streamlined approach would be preferred.
In as much as the business sector often opposes initiatives like these for posing excessive red tape, supply chain transparency could also benefit companies due to increased customer trust and total turnover. According to a recent study conducted by MIT Sloan, consumers that are more empathetic for others’ well-being tend to show preference for brands reflecting those values (because of their pro-social status). Businesses can capitalise on that by reforming their marketing strategy to strengthen their brand value.