Towards Responsible and Sustainable Supply Chains - Innovation, Multi-Stakeholder Approach and Governance

Philosophy of Management (2020) 19:267–295
https://doi.org/10.1007/s40926-019-00114-z
Towards Responsible and Sustainable Supply

Chains – Innovation, Multi-stakeholder
Approach and Governance
Agata Gurzawska 1
Published online: 13 June 2019

# The Author(s) 2019
Abstract
Supply chains are an indispensable element of any global economy. At the same time such
supply chains create a societal and environmental burden. Drastic actions are required to
mitigate these effects. Supply chains should become responsible and sustainable (where
responsibility and sustainability are understood in a broad sense) addressing economic,
political, societal, legal, human rights, ethical and environmental concerns. This research shifts
from the question of why companies should implement responsibility and sustainability into
supply chains, to how they should do so effectively. Illustrated by a case study of Sedex, a
collaborative platform for buyers and suppliers, this paper proposes three solutions for
responsible and sustainable supply chain management (SCM). Firstly, supply chains have to
be supported by research and innovation (R&I). Secondly, supply chains should be based on
multi-stakeholder efforts of industry, governmental and non-governmental organisations.
Thirdly, the responsibility should lie not only with an individual company and its employees,
but also with organisations of companies (supra-agency). As a result, responsible and sustain-
able supply chains require technological, political and ethical solutions involving the devel-
opment of sound, multi-stakeholder business and governance models. These models should be
based on the equal consideration of all three dimensions of sustainability (economic, environ-
mental and social), the cooperation of the partners in the chain, strengthening long-term
relationships and legitimate requirements of the stakeholders of a supply chain.
Keywords Supply chain management (SCM) . Responsible and sustainable supply chains .
Innovation . Multi-stakeholder approach . Non-state actor regimes . Governance models
* Agata Gurzawska
[email protected]
1
Department of Philosophy, Faculty of Behavioural Sciences, University of Twente, P.O. Box 217,
7500 AE Enschede, The Netherlands
268 Philosophy of Management (2020) 19:267–295
Introduction
Today’s global economy is based on dynamic and complex networks of businesses known as
supply chains. Thanks to supply chain businesses, suppliers, products and services can be
provided to consumers. Supply chain management (SCM) helps to organise this flow of goods
and service and to manage complex relationships among manufacturers, intermediaries, and
end users. SCM also provides means of developing competitive advantage and positioning
strategy.
Along with globalisation of economies, SCM is generating considerable interest in terms of
responsibility and sustainability. As supply chains grow and become complex and unclear
networks, they increasingly become more difficult to be managed. These challenges are driven
to a greater extent by difficulties in identifying resource scarcity, population growth and
continuing urbanisation, market developments and internationalisation, shifting consumption
patterns, technological advances and disruption risks. Increasingly, the production processes
are broken down into various distinct activities that are organised and performed in distinct
locations spread across different countries or regions (Rangi et al. 20151). With global supply
chains, companies aim to take advantage of differences across places in terms of, for example,
technological development, legal regulations, workforce productivity, labour and production
costs. At the same time, supply chains create a tremendous footprint on scarcely available
resources and cause serious societal and environmental problems. Intensified pressures from
governments, customers, employees, civil society organisation (CSOs) and other stakeholder
groups have prompted companies to address societal and environmental impacts of their
activities (Roberts 2003; Zadek 2004; Seuring and Müller 2008a, b; Björklund 2011). Taking
account of issues like ethical sourcing, workers’ rights, fair wages, intellectual property rights,
carbon and water footprints is becoming a silent feature of discussion. This change is driven by
various forces. Firstly, information flow has become faster, and therefore incidents of envi-
ronmental misconduct, human rights violations or unethical business behaviour are immedi-
ately reflected in the market. This tendency is clearly visible when a striking corporate scandal
occurs, as in the cases of, for example, the Volkswagen emissions scandal; the quality-faking
admission from Kobe Steel (auto and airplane parts provider of Boeing, Ford, Toyota, and
others); Samsung Electronics dealing with exploding Note 7 batteries and bribery charges;
credit rating firm Equifax making profits from selling personal, often sensitive information to
financial institutions and lenders; or recent controversies around misuse of Facebook users’
data by Cambridge Analytica and potential implications for the US presidential elections in
2016. Secondly, we as consumers alter our beliefs, attitudes and buying behaviour due to
societal and environmental concerns, and therefore we scrutinise companies accordingly to
their reputation (Pelsmacker et al. 2006; Newholm and Shaw 2007; Castaldo et al. 2009).
Thirdly, corporate reputation becomes an important factor for companies and plays a crucial
role in attracting employees (both current and future) as well as investors (Maden et al. 2012;
Stammer 2016).
These SCM concerns are not new and have been broadly discussed by industry, govern-
ments and researchers in the fields of SCM and business ethics (BE) from societal,
1
Sedex case study derives from the author’s contribution to the SATORI report BHow Globalisation Is Changing
Research Agendas, Activities and Assessment Procedures within Research & Innovation. Deliverable 3.3^
compiled by Sudeep Rangi (UNESCO), published in September 2015. The report is available online:
http://satoriproject.eu/work_packages/legal-aspects-and-impacts-of-globalization/
Philosophy of Management (2020) 19:267–295 269
environmental, economic, legal, ethical and technological perspectives, which are all closely
interrelated (Carter and Rogers 2008; Seuring and Müller 2008a, b; Pagell and Wu 2009;
Carter and Liane Easton 2011; Ahi and Searcy 2013; Marshall et al. 2015). Yet the current
focus has altered from the question of why companies should implement responsibility and
sustainability into SCM activities, to how they should do so effectively. Therefore, in this
article the author shifts the conceptual focus from a question of Bwhy^ to Bhow^. Accordingly,
the author’s objective is to develop a theoretical account of how supply chains can be managed
in a responsible and sustainable way and test this account by applying it in a case study.
Companies search for solutions which decrease their negative and increase their positive
societal and environmental footprints in their supply chain. Nevertheless, despite intensified
efforts to ameliorate these problems, current solutions are unsatisfactory. Consequently, this
study argues that new business and governance models are needed to manage supply chains in
a responsible and sustainable way. Supported by the case study of Sedex, which is a
collaborative platform for buyers and suppliers, this paper argues that these models should
build on three types of solutions. Firstly, responsible and sustainable SCM requires innovative
technological solutions. Secondly, it necessitates political solutions in the form of multi-
stakeholder collaborative partnerships and cooperation along, as well as across, supply chains.
Thirdly, ethical solutions in the form of responsibility of various tiers of supply chains are
crucial, including the responsibility of organisations of companies (supra-agency). Responsible
and sustainable SCM, therefore, must take a systemic approach.
The main contribution of this paper is a unique proposal for connecting research and
innovation (R&I), a multi-stakeholder approach, and a supra-agent responsibility and gover-
nance as the inevitable interdependent solutions for responsible and sustainable SCM. In
particular, the SCM governance by organisations of companies (supra-agency) is analysed.
Consequently, this research argues for responsible supply chain governance. The remainder of
the paper is structured as follows. Section 2 discusses the methodological approach of this
study. Section 3 provides a theoretical account for SCM laying the groundwork for a
discussion on how supply chains can be managed in a responsible and sustainable way.
Section 4 outlines the main challenges in SCM and possible solutions for responsible and
sustainable supply chains that should be address. Section 5 discusses three technological,
political and ethical solutions for responsible and sustainable supply chains, namely: innova-
tion, multi-stakeholder approach, and supra-agent responsibility and governance. In section 6,
the case study of Sedex is presented to test three aforementioned solutions in practice. Lastly,
section 7 concludes the research and provides further research directions.
Research Methodology
This research is funded by and derives from the results of the SATORI Project.2 The SATORI
Project focuses on ethical impact assessment of research and innovation (R&I). Part of the
SATORI Project’s work addresses the ethical problem of globalisation of R&I exploring how
globalisation is changing research agendas, activities and assessment procedures within R&I. As
part of this research, six topics were investigated to address specific effects of globalisation and
2
The research leading to these results received funding from theEuropean Community’s Seventh Framework
Programme (FP7/2007-2013) under grant agreement No. 612231 (Stakeholders Acting Together On the ethical
impact Assessment of Research and Innovation (SATORI)).
ethical considerations. Responsible Supply Chain was one of the topics. This paper is partially
derived from the SATORI Project’s findings, nevertheless it provides further insight and analysis.
This paper incorporates literature review and synthesis, empirical investigations, and the
development of a conceptual tool. A preliminary literature review was conducted to identify
trends, challenges, ethical implications and recent developments in SCM. Furthermore, the
study provides the outline of recent endeavours, policies and actions to mitigate the undesir-
able and unethical consequences of the SCM.
To identify potential solutions for responsible and sustainable SCM, the paper derives its
findings from the literature review and the empirical studies about responsible and sustainable
supply chain conducted for the purposes of the SATORI Project. Two empirical methods were
used, namely a stakeholder dialogue and a case study. Studies were conducted to verify the
preliminary literature review results, to determine and structure the effective conditions of
responsible and sustainable supply chain.
Firstly, a stakeholder dialogue session about responsible supply chains was held in June 2015
as one of the sessions at the SATORI Project’s conference titled BPolicy and Legal Options for
Developing Ethics Assessment for Research and Innovation Within the Context of
Globalisation^. The stakeholder dialogue involved twenty participants representing industry,
academia, policy makers and civil society organisations (CSOs). A stakeholder dialogue is a
commonly accepted method to develop solutions acceptable to all parties, by incorporating
public values and concerns into decision making (Gurzawska et al. 2017). Therefore, the
session brought together stakeholders to enable discussions and gather concrete feedback on
the preliminary literature review studies disseminated among the participants beforehand. The
ultimate goal was to develop potential policy, legal and/or other options for responsible and
sustainable supply chains. The dialogue enabled deliberation on challenges within supply chain
that have arisen due to globalisation practices and proposed mechanisms to address the lacunae
which exists presently. As a result, the stakeholder dialogue paired with a literature review
allowed for the identification of three potential solution that participants agreed are typically
effective or have a potential to enhance responsibility and sustainability in supply chains.
The second empirical method – the case-study, was conducted to test the findings of the
literature review and stakeholder dialogue. This research extends the objective of identifying
potential solutions by providing an empirical validation based on a case-study of Sedex, where
focus was placed on specific incidents, actions, and policies. The case study employed an in-
depth interview with Jo Webb (Head of Stakeholder Relations at the time of the interview) and
an online information exchange with Sedex employees from the departments of Stakeholder
Relations and Marketing Communications. Furthermore, the content analysis of the secondary
data was conducted, including Sedex documents, policies and tools provided by the organi-
sation members as well as available online. As a specific example of responsible supply chain
network organisation – Sedex, its structure and operations represent a response to SCM
challenges and implementation of the proposed underlying solutions for responsible and
sustainable supply chain. This research examines Sedex by applying a conceptual framework
developed explicitly for the purposes of this paper.
Theoretical Background
In order to identify conditions under which supply chain can be perceived as responsible and
sustainable, firstly a question of what makes supply chain responsible and sustainable needs to
be addressed. This section provides a theoretical account for understanding and analysing
responsible and sustainable SCM.
In terms of the scientific endeavours to tackle this question, a considerable body of literature
examining various aspects of SCM has been produced. Carter and Jennings (2002) and Murphy
and Poist (2002) were one of the first to connect supply chain issues to a broader concept of
corporate social responsibility (CSR) placing environmental as well as social activities within
the context of social responsibility (Carter and Liane Easton 2011). Under the CSR framework,
responsibility in the supply chain falls into the conceptual discussion about the nature and,
thereby, the definition of CSR. Broadly speaking CSR refers to responsibility, thereby duties
and obligations or motivation and opportunities of the companies towards society (Rangi et al.
2015). There is a great number of theories and a wide array of understanding of the responsi-
bility of a company. According to a comprehensive review of CSR definitions by Dahlsrud
(Dahlsrud 2008), CSR can be characterised by five dimensions, namely environmental, social,
economic, stakeholders and voluntarism (Dahlsrud 2008). Garriga and Mele (Garriga and Melé
2004) group CSR theories into instrumental, political, integrative, and ethical theories (Garriga
and Melé 2004). Firstly, CSR when understood instrumentally is about a company’s responsi-
bility for wealth creation, where economic objectives are achieved through social activities (e.g.
Friedman 1962). Secondly, CSR can be understood as a responsibility in the political arena
related to a company’s political power and relationship with society (political theories) (e.g.
Matten and Crane 2005; Scherer et al. 2016; Scherer 2018). Thirdly, a company’s responsibility
focuses on the integration of social demands and operating according to social values (integra-
tive theories) (e.g. Carroll 1979; Wood 1991). Finally, social responsibility can refer to ethical
obligation to achieve good society, reflected in such approaches as universal rights and
sustainable development. Regardless the perception of a company’s responsibility nature as
either economic, political, integrative or ethical, CSR concerns two aspects: the relationship
between business and the larger society, and a company’s activities in the area of environmental
and social issues (Andersen and Skjoett-Larsen 2009). CSR refers to all company’s activities
and therefore also SCM as one of them.
Much of the supply chain research pertains to the CSR literature, however the last decade
has seen a growing body of a standalone research on the theory and practice of sustainable
supply chain management (SSCM) (Svensson 2007; Carter and Rogers 2008; Seuring and
Müller 2008a, b; Carter and Liane Easton 2011; Wolf 2011; Wu and Pagell 2011). Carter and
Liane Easton (2011) argue that even though previous work on supply chain in the context of
CSR addresses environmental and social issues, it fails to connect SCM with the economic
performance (Carter and Liane Easton 2011). Therefore, they advocate for a separation of
SSCM from the CSR framework. Carter and Rogers (2008) link sustainability in the SCM
context to Elkington’s (1998) triple bottom line (TBL) based on the integration of social,
environmental, and economic aspects of SCM (Seuring and Müller 2008a, b; Carter and Liane
Easton 2011). In other words, sustainability practices help to unfold opportunities and manage
economic, environmental and social risks resulting in a long-term value creation (López et al.
2007). Moreover, Carter and Rogers (2008) claim that while corporate responsibility is
perceived as discretionary, the engagement in sustainability, particularly SSCM, is a require-
ment for any company. Nevertheless, similarly to CSR, the term ‘sustainability’ has been
inconsistently defined and applied in the literature (Carter and Rogers 2008). A recent review
of the literature on the state of sustainability and CSR in supply chains literature by Quarshie
et al. (2016) found significant differences between SCM and BE fields. According to their
study, while a vast amount of the SCM literature stream focuses on environmental dimensions
of SCM using sustainability as an umbrella term; the BE literature stream is centred around
social and/or ethical aspects of SCM, with a main reference to CSR (Quarshie, Salmi et al.
2016). Furthermore, while social responsibility and sustainability have been addressed in both
SCM and BE research, it has been often done from a narrow perspective dealing with specific
issues such as product safety, fair labour practices, modern slavery, child labour, environmental
stewardship focused on climate change, carbon and water footprints or other issues that relate
to socially and environmentally desirable outcomes (Ferrell et al. 2013). Most of the SCM
research has focused on specific topics – and in this sense has been fragmented.
This discrepancy is also reflected in practices of companies, industry associations and
governmental organisation (Rangi et al. 2015). For instance, the International Chamber of
Commerce (ICC) refers to Bsupply chain responsibility^ (also understood as responsible
sourcing), as ‘a voluntary commitment by companies to manage their relationships with
suppliers in a responsible way’ (ICC 2008). On the other hand, United Nation Global Compact
(UNGC) calls for Bsupply chain sustainability^ to ‘create, protect and grow long-term envi-
ronmental, social and economic value for all stakeholders involved in bringing products and
services to market’ (UNGC 2015). While the first definition emphasises the voluntary character
of companies’ commitment to undertake responsible approach to supply chain (Rangi et al.
2015), the second definition focuses on management of impacts that a company may have on its
stakeholders and strives for a proactive approach to incorporating good societal, environmental
and governance practices into supply chains (UNGC Australia). The inconsistency in defini-
tions and approaches could be caused by the fact that the field of SCM is relatively new, both in
the context of CSR and sustainability. Overall, the varying interpretations of the terms ‘CSR’
and ‘sustainability’ make it difficult to delineate exact boundaries and linkages around them, but
certainly the concepts overlap considerably (Quarshie et al. 2016). Unquestionably, both
concepts are now well established in the academic research as well as in the business lexicon.
One can conclude that there is a need for integration of various approaches.
This research continues to leave unresolved fundamental antecedent questions concerning
the ultimate definitions of CSR and sustainability, and takes a holistic understanding of
responsible and sustainable SCM, drawing from the crucial aspects of both concepts. The
paper takes a comprehensive view, where responsible and sustainable SCM is about the
management of material, information and capital flows, cooperation among companies along
the supply chain while combining three sustainability goals i.e., economic, environmental and
social goals, which are derived from customer and stakeholder requirements (Seuring and
Müller 2008a, b). These goals should be taken due to the corporate social responsibly resting
with companies, in the forms of responsibility for wealth creation, a responsible use of
business power in the political arena, integration of social demands and acting according to
ethical values (Garriga and Melé 2004). Despite differences in terminology, as well as in focus,
between different researchers, there is a growing consensus around the crucial elements of
responsible and sustainable SCM. Deriving from Beske et al. (2014), these elements include
the equal consideration of all three dimensions of sustainability (economic, environmental and
social), the cooperation of the partners in the chain (Seuring and Müller 2008a, b), strength-
ening long-term relationships (e.g. Sharfman et al. 2009) and legitimate requirements of the
stakeholders of a supply chain, including customers, NGOs, suppliers or legal authorities (e.g.
Coe et al. 2008; Johnston and Linton 2000).
From this section we have learned that responsible and sustainable SCM should consist of
two elements. Firstly, it should include socially responsible SCM and SSCM. Secondly, the
key elements of responsible and sustainable SCM should be taken into consideration, namely
all sustainability dimensions (economic, environmental and social), cooperation and strong
relationships between the partners of supply chain, as well as proactivity and responsiveness
towards various stakeholders and their needs. These, then, are two elements of the theoretical
account which define responsible and sustainable SCM and its crucial elements.
SCM Challenges
In order to specify and understand avenues for a responsible and sustainable SCM, we need to
understand what challenges they should respond to. Therefore, potential solutions are deter-
mined by the challenges for both, the management of supply chains and for incorporating
responsibility and sustainability into SCM.
Storey and Godsell (2006) point out that the main issue related to SCM, is the very idea of
‘management’ of the supply chain, and the question of who could and should be responsible
for it. The formula for assigning the responsibility is a challenge, because of an unambiguous
definition of the ‘scope of responsibility’ including the duration and severity of the impact
(Van Opijnen and Oldenziel 2011). According to Amaeshi et al. (2008) a company should not
bear indefinite responsibilities for the actions of the suppliers, nevertheless should strive for a
positive influence on their suppliers. Except the assignment of responsibility, a successful
SCM requires strategy and measuring key parts to understand and take control of the supply
chain, which involves processes, people and technology (Bala 2014). In this regard, effective
management of supply chains raises further questions, such as transparency of information and
knowledge (Abeyratne and Monfared 2016), the formation of appropriate relationships, and
the design and use of appropriate measurements (Storey and Godsell 2006).
Nevertheless, Pagell and Wu 2009 emphasise that best practices and managerial systems
traditionally associated with well run supply chains may support, but also hinder sustainably
and responsibility of SCM. Therefore, responsibility and sustainability goals, practices and
cognitions require changes in the management style and integration into day-to-day SCM
(Pagell and Wu 2009). This raises two main challenges, namely a reconceptualisation of the
chain to include non-traditional members such as NGOs, community members and even
competitors, as well as a proactive approach of managers that understand that responsibility
and sustainability are an organisational commitment (Pagell and Wu (2009). In the context of
responsible and sustainable SCM challenges, Seuring and Müller (2008a, b) determine a
number of challenges by dividing them between factors that are external and factors that are
internal to the supply chain. The external challenges involve legal demands/regulation,
customer demands, response to stakeholders, competitive advantage, environmental and social
pressure groups and reputation loss. The internal factors relate to costs associated with the
increasing complexities of supply chains, monitoring, communication and information ex-
change. Barbosa-Póvoa (2009) highlight the difficulties in establishing measures for sustain-
ability within the sustainable supply chains; facilitation of collection, refurbishment, recycling
or disposal of returned products; uncertainty and risk modelling; and trading-off the different
issues in supply chain. Van Opijnen and Oldenziel (2011) discuss a level playing field related
to power relations (e.g. MNCs versus SMEs or small farmers) and transparency with regard to
disclosure and monitoring of sustainable practices further down the supply chain. Beske et al.
(2014) identify five categories of practices, both strategic and operational, which remain a
challenge for responsibility and sustainability within SCM: a strategic orientation following
sustainability strategy; continuity of relationships among supply chains’ partners (long-term);
collaboration in terms of logistics and organisation; risk management in order to mitigate risks
related to stakeholder pressures; pro-activity for sustainability including actively engaging
stakeholders. Boström et al. (2015) capture this variety of challenges to achieve responsible
and sustainable global supply chains in six comprehensive groups, namely (1) geographical
distance between the consumption of commodities and their production related to complexity
of the supply chain, issues with communication with suppliers, traceability and generic
standards; (2) information and knowledge gaps diminishing transparency; (3) collaboration
and communication along the chain; (4) compliance or implementation gaps; (5) power gaps
due to the fact that responsible and sustainable supply chains require power symmetry or more
equal distribution of power among actors in the chains; (6) a credibility or legitimacy gap
related to unsustainable activities under the name of ‘sustainability instruments’. These six
challenges reflect the key elements of responsible and sustainable SCM defined in the previous
section. On the one hand, they address strategic, operational and technical challenges for the
arrangement of well-functioning management systems for supply chains. On the other hand,
they raise a question of the nature and scope of companies’ responsibility and the elements of
sustainability. They focus on the dimensions of sustainability (economic, environmental and
social), the cooperation of the partners in the chain, strengthening long-term relationships and
legitimate requirements of the stakeholders of a supply chain.
With the focus on the establishment of responsibility and sustainability within SCM, this
section does not directly contribute elements to the theoretical account, but rather defines the
challenges that solutions proposed in section 5 respond to. Therefore, the next section applies a
theoretical account for responsible and sustainable SCM to provide solutions that address the
SCM challenges, identified in this section, from a responsibility and sustainability point of
view.
Solutions for Responsible and Sustainable SCM: A Proposal
Taking into consideration the characteristics of modern supply chains (the theoretical account
including the responsible SCM and SSCM, as well as the challenges for establishing respon-
sibility and sustainability in SCM), this section identifies and discusses potential avenues for
managing supply chains in a responsible and sustainable way. These solutions consist of three
interdependent provisions, that is to say: innovation; multi-stakeholder approach; and supra-
agent responsibility and governance of supply chains. This study argues that these solutions
serve as an effective response to SCM challenges discussed in the previous section and have
the potential to enhance responsibility and sustainability in SCM.
Innovation
Increasingly, companies are facing disruption and change in managing their supply chains.
Global competition, frequently shifting markets, rapidly changing customer requirements and
new continuously emerging technologies force major changes in SCM. The dynamic and
complex nature of supply chain urges companies to innovate in SCM. SCM is on the cusp of
major technological transformation, which is already altering how businesses exchange and
share information and assets. Traditional linear supply chains are insufficiently flexible in
responding to highly dynamic conditions and to the ever-changing ecosystems (Deloitte 2017).
Therefore, SCM strategies shift to support global competitiveness, new products, process and
service innovation and introduction, in addition to, rapid market responsiveness (Shen and
Norrie 1999). The next generation supply chains should then be strongly time-oriented, while
still focusing on cost and quality. Furthermore, growing stakeholder pressure to realising more
responsible and sustainable paths in SCM requires changes of behaviour and organisational, as
well as technological, innovations (Isaksson et al. 2010). As shown by Chakrabarty and Wang
(2012) high research & development (R&D) intensity provides a positive platform for the
development and long-term sustenance of sustainability practices bringing both financial
returns and a positive impact on the natural environment, society, and economy. R&D, which
is a part of innovation situated at the front end of the innovation life cycle, equips companies
with technologically innovative capabilities and skills to fulfil the sustainability requirements
(Chakrabarty and Wang 2012). New technologies expand and bring new forms of work and
collaboration, like virtual networks (Zink and Zink 2008). According to Deloitte (2017), next
generation technologies will allow for new and more advanced collaboration, that ultimately
will enhance efficiency, transparency and data sharing. As the result, supply chains are
managed, largely, in a digital way.
Technology, research and innovation offer the necessary solutions for efficiency, account-
ability and governance of supply chains. At the same time technological advances help to
address and reduce negative societal and environmental consequences that a company may
cause, while still maintaining economic competitiveness (Lee et al. 2006; Golicic and Smith
2013). Quickly developing technologies such as internet of things (IoT), smart sensor net-
works, business intelligence, smart distribution techniques, information sharing, robotics and
3D printing bring opportunities for more responsible and sustainable supply chains. Never-
theless, to take advantage of the possibilities created by digitisation in supply chains, the
business community, government and scientists will have to utilise ICT opportunities together
(Dutch Blockchain Coalition 2018a, b, c). The next subsections discuss two examples of
innovative technologies, namely big data and online platforms and blockchain technology,
which have a potential to revolutionise supply chains and contribute to robust responsibility
and sustainability.
Big Data and Online Platforms
Big Data is increasingly becoming a vital factor and resource for companies in the innovation
of products, processes, services, and business models. The definition of Bbig data^ refers to the
size or volume of the organisation’s data, but also to the variety and velocity (Hazen et al.
2014). Big data is perceived as an emerging competitive area that will transform the way in
which supply chains are managed and designed (Manyika et al. 2011; Cecere 2013; Waller and
Fawcett 2013; Zhou et al. 2014). Companies struggle with the question how to deal with
massive amounts of data, and how to leverage and apply predictive analytics (Schoenherr and
Speier-Pero 2015). The widespread use of digital technologies and an increasing amount of
data has led to the emergence of big data business analytics (BDBA) that enables companies to
make better decisions (Muhtaroglu et al. 2013), particularly in SCM (Wamba et al. 2015).
While Big Data is still in its infancy, it already provides several promises for SCM. Big data
responds to a number of challenges for responsible and sustainable SCM identified in section
4. Real-time risk management and dynamic resource optimisations (Schoenherr and Speier-
Pero 2015) improve the visibility, flexibility, and overall integration of global supply chains
processes (Wang et al. 2016). Therefore, big data analytics could help to facilitate the
geographical distance, the complexity of the supply chain and communication with suppliers
by filling the information and knowledge gaps. This would lead to enhanced transparency and
traceability supporting monitoring and auditing. Furthermore, big data analytics could enable
strategic planning in terms of sourcing and supply chain network design, as well as product
design and development. Such enhancements would lead to improved compliance and stake-
holder relationship, since these activities are based on collaboration and communication along
the chain (Wang et al. 2016). Increasingly Bdata^ is perceived as an important driver of
innovation and a significant source of value creation and competitive advantage (Tan et al.
2015). Using advanced analytics, companies can study big data to understand the business
environment (Russom 2011) and then connect these insights directly into their business
processes in real time. The smart collection, analysis and use of data can provide unique
insights into maintenance cycles, ways of lowering costs and enabling more targeted business
decisions as well as provide feedback into market trends and customer buying patterns (Wang
et al. 2016). These attributes of big data respond to the key elements of responsible and
sustainable SCM. Big data could ensure the realisation of economic goals, while putting
attention to environmental and social objectives. At the same time, it could facilitate collab-
oration among supply chain actors enhancing stakeholder relationships. Big data is particularly
useful when applied in the digital platforms known as platform business models. Such
platforms use technology to connect people, organisations, and resources in an interactive
ecosystem and exchange value (Parker et al. 2016).
Academic research into big data in SCM has been scarce (Schoenherr and Speier-Pero
2015), nevertheless practitioners and consultancy companies have already started using big
data analytics to improve SCM. One example is a full-service Big Data cloud platform created
by the SAP Ariba (SAP), one of the world’s largest platform business models, which supports
over 3.3 million companies in over 190 countries (CIO 2018). The platform uses enabling
technologies and trends such as artificial intelligence (AI), IoT and blockchain technology to
analyse a companies’ data and enhance their operations (SAP). SAP has placed a large
emphasis on Bprocurement with purpose^. Data from commerce transacted on the platform
and suppliers on the network, is used to enhance responsible and sustainable supply chains,
particularly regarding corruption, child labour, slavery/forced labour, conflict minerals, human
trafficking and poverty (CIO 2018). The SAP Ariba is doing so in two ways. Firstly, a supplier
risk module makes risk due diligence a natural part of the procurement process (CIO 2018).
The module is fed by syndicated data from more than 600,000 sources and uses continuous
monitoring and machine learning techniques to analyse over 200 environmental and social
factors that companies can use to profile their suppliers against (CIO 2018). Secondly, to help
clients gain real-time, actionable insights into their supplier network, SAP teams up with
several partners such as Made in A Free World (CIO 2018). The organisation is a supply chain
risk management software provider, which built the world’s first ever Slavery Footprint
platform (Made in Free World).
Despite great promises of big data, there are significant challenges in its application. Firstly,
Tan et al. (2015) argue that despite a variety of analytical techniques that companies can use to
mine and analyse unstructured data (i.e. predictive analytics, data mining, case-based reason-
ing, exploratory data analysis, business intelligence, and machine learning techniques), we
lack ‘analytical tools and techniques to assist firms to generate useful insights from data to
drive strategy or improve performance’ (Tan, Zhan et al. 2015). Secondly, as emphasised by
Hazen et al. (2014) ‘management decisions informed by the use of these data analytic methods
are only as good as the data on which they are based’ (Hazen, Boone et al. 2014). Therefore,
while the technological solutions might work perfectly, the data quality problem may occur in
terms of accuracy, timeliness, consistency and completeness (Hazen, Boone et al. 2014). Since
BDBA is a relatively new area, a responsible application of Big Data requires training of next-
generation data scientists (Schoenherr and Speier-Pero 2015) and further research and testing
to ensure their robustness.
Blockchain Technology
Recently, distributed computing platforms, also known as blockchain technology, are increas-
ingly being touted as an answer to ongoing challenges in a whole range of disciplines.
Blockchain is a decentralised online database that permits a master ledger of data and
transactions to be accessed securely by multiple stakeholders (Pilkington 2016). Blockchain
has been much in the news because of the cryptocurrency market and Bitcoins, however one of
the most promising application of blockchain is for SCM. As claimed by Dickson (2016), it
has a potential to ‘transform the supply chain and disrupt the way we produce, market,
purchase and consume our goods’. This technology can offer various opportunities to trans-
form products, services and processes into digital supply chain networks and platforms,
particularly through safer and more efficient ways to connect with business partners
(Deloitte 2017). It serves as a database for recording transactions and events, which are then
shared through a peer-to peer community.
Blockchain technology has a potential to address a number of responsible and sustainable
SCM challenges. Blockchains could enable the tracking and tracing of products as well as
components (Dutch Blockchain Coalition (a)). Therefore, it responds to the call for responsible
and sustainable SCM regardless of the geographical distance and complexity of the supply
chain, through improved communication with suppliers, traceability, covering the information
and knowledge gaps strengthening transparency. As emphasised by Abeyratne and Monfared
(2016), blockchain allows for collection, storage and management of key product information
of each product throughout its life cycle. All members of the network can verify the
transactions in the block (Hackius and Petersen 2017). This approach ensures more equal
distribution of power among actors in the chains. Since every member of the network has
access to the same data, blockchain provides a single point of truth (Tapscott and Tapscott
2016). This technology involves peer-to-peer interactions based on the digital signatures,
thereby it enables communication and trust among the involved parties (Anjum et al. 2017).
Therefore, blockchain improves relationships with stakeholder, firstly, among suppliers, con-
tractors, and joint-venture partners resting on information sharing and collaborative partner-
ships; secondly, among customers, governments and the society thanks to reduced information
and power asymmetry. Blockchain also enhances responsibility within the tiers of supply
chain. It ensures the quality and safety of a product by reducing counterfeits (e.g. in the
pharmacy supply chains) (Apte and Petrovsky 2016; Hackius and Petersen 2017). Blockchain
serves as a tool for identifying misconduct from any part of the supply chain’s tier, and reduces
supply chain carbon footprints addressing the environmental dimension of responsibility and
sustainability in SCM (Dutch Blockchain Coalition (a)). Blockchain provides a full audit trail
of record along a supply chain thanks to real-time data and deep insights into a production
process means (Beck et al. 2017). As a result, blockchain technology has a potential to
enhance compliance with responsibility and sustainability requirements and objectives. Since
blockchain transactions are timestamped and tamper-proof, they provide a single source of
data integrity and therefore allow for greater oversight and control. One of the blockchain
applications is smart contracts, which execute commercial transactions and agreements
automatically and enforce the obligations of all parties in a contract without intermediaries
(Deloitte 2016). Furthermore, blockchain could ensure credibility of responsibility and sus-
tainability standards (e.g. Fair Trade and Organic) by verifying the integrity of the claims made
by these certifications (Abeyratne and Monfared 2016). Blockchain technology can result in
greater levels of performance generating economic benefits. At the same time, it is also
expected to enhance environmental and social goals through improved collaboration and
relationships with stakeholder.
Over recent years, there has been a proliferation of projects applying blockchain technology
to strengthen SCM. One of them is the Blockchain Supply Chain Traceability Project using
digital technology in the fresh and frozen tuna industries of the Western and Central Pacific
region (WWF Global 2018). The objective is to improve tuna traceability to help stop illegal
and unsustainable fishing practices in the Pacific Islands tuna industry (WWF Global 2018).
The World Wildlife Fund (WWF) pilot project tracks fish from vessel to the supermarket,
using a combination of radio-frequency identification (RFID) tags, e-tags/quick response (QR)
code tags and scanning devices to collect information about the journey of a tuna at various
points along the supply chain (WWF Global 2018). The information is automatically uploaded
to the blockchain. Tuna industry struggles with illegal and environmentally dubious fishing
practices, as well as forced labour. Blockchain technology is expected to improve traceability,
compliance, flexibility and stakeholder management of tuna supply chain and enable con-
sumers to shop ethically, legally-caught, sustainable tuna with no slave labour or oppressive
conditions involved (WWF Global 2018).
Another example of the blockchain application in the SCM is a Responsible Cobalt Initiative
in Congo, which has been joined by tech giants such as Apple and Samsung. The initiative aims
to ensure that cobalt, one of the minerals used in electronics, come through supply chains free of
rights abuse, especially child labour (Reuters 2018). The electronic sector is a highly compet-
itive, and companies’ existence and a success depends on innovations (Rangi et al. 2015). The
complexity of links in the supply chain that include extraction, production and disposal, have
spurred sectoral initiatives such as Ethical Trading Initiative (ETI), Conflict-free Tin Initiative
or Conflict Free Sourcing Initiative. Nevertheless, Responsible Cobalt Initiative is different in
this regard, because of the blockchain application. Blockchain technology is already used in the
diamond industry, where gems are given a digital fingerprint, which is then tracked by
blockchain (Reuters 2018). Nevertheless, tracking cobalt is far more complex since cobalt is
being processed in the supply chain. Therefore, the pilot project experiments with already
proven approaches from other industries, especially from the food industry, e.g. a mass balance
approach used for Fairtrade certification of products like cocoa, indelible marks that survive the
refining process, or bolting blockchain onto computer technology (Reuters 2018).
Despite the enthusiasm about great opportunities that the blockchain technology may
generate, it also raises concerns (Yli-Huumo et al. 2016; Xu 2016; Anjum et al. 2017).
According to the Dutch Blockchain Coalition, large-scale blockchain applications can only
be realised if all relevant stakeholders are willing to collaborate and appropriate political,
administrative, legal, economic and social conditions are in place (Dutch Blockchain Coalition
(b)). These conditions are necessary to reduce risks related to the use of the technology,
including regulations and the creation of markets, legal liabilities, privacy, consumer protec-
tion, conflict mediation and arbitration and contract law. Such conditions are also needed in the
establishment of new roles of trusted third parties, roles of identifying and certifying parties,
functioning of smart contracts, the right to erasure (former Bthe right to be forgotten^), and new
possibilities and roles for compliance and audit functions (Dutch Blockchain Coalition (c)). As
emphasised by the Wold Economic Forum (2018), blockchain technology is at relatively early
stage; ‘anchoring on blockchain without consideration of associated risks, including, among
others, cost, security and the relevant industry’s regulatory environment, can be detrimental.’
Therefore, even though technological advances could enhance responsibility and sustain-
ability of SCM, issues such as conflicts, climate change, and modern slavery – are political
questions and they cannot be resolved without political, social, ethical and economic solutions.
Technological answers alone are unlikely to be sufficient. Ferrell et al. (Ferrell et al. 2013)
argue that ‘the unbalanced focus on technological innovations requires oversight by supply
chain members to develop programs that inform about mutual ethical risks and to address
solutions to ethical and social issues. This makes it necessary to have communication and
coordination about ethical decisions throughout the supply chain’ (Ferrell et al. 2013).
Therefore, despite technological solutions, responsible and sustainable SCM requires the
engagement of various stakeholders. The next section discusses the second potential avenue
for responsible and sustainable supply chain, thereby multi-stakeholder approach.
Multi-Stakeholder Approach
Research, innovation and technology can improve efficiency and sustainability of supply
chains e.g. reduce resource utilisation (empty miles) through smart logistics. Nevertheless,
without the intensified coordination and cooperation between the tiers of supply chains,
technological innovations cannot improve the impact on the society and environment by itself.
The main characteristic of supply chains is their multi-tier nature, engaging various
stakeholders from manufacturers, intermediaries, and end users, to a host- and home country’s
government and local community. Increasingly, collaboration in the forms of stakeholder
engagement and multi-stakeholder approaches in SCM, also known as cross-sector social
partnerships (CSSPs) (Doh et al. 2010; Van Huijstee and Glasbergen 2010; Ritvala et al.
2014), is considered as the most effective way to achieve more responsible and sustainable
SCM. Multi-stakeholder approaches are expected to overcome the limitations of top-down
approaches toward promoting responsibility and sustainability (Vurro et al. 2009). Now we
observe the proliferation of such initiatives as the Ethical Trading Initiative (ETI), an alliance
of companies, trade unions and NGOs that promotes respect for workers’ rights, and the
Initiative to improve the Food Supply Chain, the European Commission’s initiative to improve
the governance of the food supply chain with regard to unfair trading practices, producer
cooperation and market transparency. The engagement of various stakeholders in the discus-
sion about responsibility and sustainability of supply chains was a response to disillusionment
with previous CSR initiatives and codes of conduct. As pointed out by Utting (2002), they
were designed and implemented exclusively by companies, and as a result they were ineffec-
tive and often aimed at marketing purposes rather than substantial improvements in societal
and environmental performance (Utting 2002). Multi-stakeholder approaches encourage stake-
holder dialogue and Bsocial learning^ (Utting 2002). The success of working towards more
responsible and sustainable management of supply chains heavily depends on the involvement
and contribution of other actors, such as governments, suppliers, NGOs and communities (Van
Opijnen and Oldenziel 2011).
The multi-stakeholder approach is rooted in the stakeholder theory and a relational view,
where companies’ success depends on building and maintaining sustainable and durable
relationships with the members of its stakeholder network (Tencati and Zsolnai 2009). The
widely used definition by Freeman (1984) describes stakeholders as ‘those groups who can
affect or are affected by the achievement of an organisation’s purpose’ (Freeman 1984). The
identification of stakeholder should be structured and exhaustive (Achterkamp and Vos 2008).
The multi-stakeholder approach in the SCM derives from the concept of collaboration and
collaborative enterprise, where companies ‘seek to build long-term, mutually beneficial
relationships with all stakeholders and want to produce sustainable values for their whole
business ecosystem’ (Tencati and Zsolnai 2008). Collaboration enhances companies’ relation-
ships with stakeholders through better coordination of the company with its suppliers,
customers, or other stakeholders to jointly improve social outcomes (De Bakker and Nijhof
2002) and try to generate long-lasting Bwin–win^ solutions (Tencati and Zsolnai 2009). Thus,
the sustainability of the company depends on the sustainability of its stakeholder relationships
(Tencati and Zsolnai 2009). This understanding of the multi-stakeholder approach clearly
addresses responsible and sustainability challenges in terms of collaboration and communica-
tion along the chain as well as equal distribution of power among actors in the chains.
Through engaging in collaborative multi-stakeholder initiatives, companies may be better
equipped to monitor and trace supply chain activity, while an individual company may not have
the resources to consider the societal and environmental impacts of its activities (Clarkson 1995).
Nevertheless, multi-stakeholder collaboration requires deeper relationships which might need a
much longer time horizon to develop, implement and yield performance benefits and monitoring
capabilities (Klassen and Vereecke 2012). The role of NGOs is crucial, as they bring ‘on the
ground’ knowledge and experience from working with a particular group of stakeholders e.g.
consumers or local communities. This knowledge provides companies with data allowing for
more accurate decisions and adaptation in the dynamic SCM context. Furthermore, the engage-
ment of various stakeholders ensures greater credibility of company operations. Multi-stakeholder
collaboration encourages companies to participate in initiatives setting societal, environmental,
ethical and human rights standards. Such collaboration also encourages monitoring compliance,
promoting social and environmental reporting and auditing, and certifying good practice (Utting
2002). Furthermore, the interaction with various stakeholders assists in risk management, e.g.
local NGOs can help companies to identify and understand the risks and opportunities in a
particular country, develop plans for mitigating those risks, conduct outreach to local communi-
ties, and assess compliance with laws and responsibility and sustainability requirements. This
learning process is not unilateral. Through a collaborative approach, working together and sharing
information, stakeholders are better equipped to address various supply chain concerns collec-
tively. Shared learning and joint problem-solving enables the development of best practices
around SCM challenges. Each group of stakeholders brings their own unique perspective and
contribution. The management of responsibility and sustainability along the supply chain is more
feasible when a company considers specific stakeholder demands instead of broad societal or
environmental issues (Maignan et al. 2002). High levels of cooperation and integration between
partners strengthens trust and reduces or eliminates abuse of power among companies in the
supply chain (Drake and Schlachter 2008). Studies of the processes by which sustainability is
integrated and managed along the supply chain agree that the best performers are able to build and
maintain integrated approaches toward SCM, on the basis of long-term cooperation, shared
knowledge, and joint development of competence both upstream and downstream (Maignan
et al. 2002, Shepherd and Gunter 2006, Strand 2009). Stakeholders are the agents that bring broad
societal, environmental, ethical and human rights demands to the attention of individual
company’s (Maignan et al. 2002). A multi-stakeholder approach incorporates elements of
responsible and sustainable SCM by allowing the equal consideration of all three dimensions
of sustainability (economic, environmental and social), the cooperation of the partners in the
chain, strengthening long-term relationships and responding to requirements of the stakeholders

of a supply chain.
Multi-stakeholder approaches to SCM are co-produced by multiple stakeholders, public
and private, and increasingly change the notion of governance and regulation, as well as the
traditional understanding of business and politics (Hofferberth 2011).
Effective Governance and Supra-Agent Responsibility
It is increasingly recognised that responsible and sustainable SCM requires effective gover-
nance. Nevertheless, modern supply chains are characterised by the fact that they involve
many distinct stakeholders operating in various countries and across many legal jurisdictions.
Ideally, all agreements up and down a supply chain, and across borders, should be subjected to
the same governing law provisions and have the same court jurisdiction, however in practice
companies deal with a tangle of law and regulation at multiple levels (Haufler 2001). This
situation raises a question of responsibility for maximal positive supply chain impacts and
adverse effects such as unfair wages, disregard of occupational health and safety standards,
violation of privacy, product quality and product safety or deforestation. The multi-tier nature
of supply chains deepens the problem of responsibility by creating a vacuum of responsibility.
The problem of Bmany hands^ may lead to a situation when no one is responsible for either
preventing and mitigating negative impacts or exercising a positive influence.
Over the past decades, a number of efforts have been made to answer these needs at
national and international levels. At the national level, states have expanded the nature and
scope of their legislative control and changed the nature of regulation, mostly through
extending national law into extraterritorial jurisdiction in order to impose some form of
corporate liability (Backer 2012). Furthermore, states have transformed their policies from
corporate charity to concrete policies addressing the need to change the legal regulation of
corporations (Backer 2012). At the international level the UN BProtect, Respect and Remedy^
Framework for Business and Human Rights and Guiding Principles on Business and Human
Rights (UN, 2008) provide the first global standard for preventing and addressing the risk of
adverse impacts on human rights linked to business activity (OHCHR). This rests on three
pillars: The State duty to protect against human rights abuses by third parties, the corporate
responsibility to respect human rights (to act with due diligence) and greater access by victims
to an effective remedy (UN, 2008). Nevertheless, these responsibilities are seen as comple-
mentary, rather than shared (Wettstein 2015). Clapham suggests that companies’ responsibility
to respect human rights is conceived as a moral rather than legal responsibility. Companies’
responsibilities are understood as a negative responsibility Bnot to infringe on the rights of
others^, in other words Bto do no harm^ (Pogge 2008; Wettstein 2012). However, Wettstein
(2015) argues that silent complicity, a situation that does not involve an active contribution by
the corporation to a specific wrongdoing, may challenge the effectiveness of the Framework,
because positive obligations are not included (Wettstein 2015). Furthermore, companies
cannot be held responsible in cases ‘in which they were not a causal agent, direct or indirect,
of the harm in question’ (Ruggie 2004). In complex supply chains the attribution of harm to
specific tier of supply chain becomes increasingly difficult (Green 2012). As Louise Arbour, a
former United Nations (UN) High Commissioner for Human Rights, points out ‘the growing
recognition that the private sector has responsibilities to respect human rights is also welcome.
But means of holding States and non-States actors accountable for their actions in relation to
human rights are still wanting’ (Clapham 2006).
Globalisation of markets, rapid growth of transnational corporations, and new technologies

require us to rethink some of the certainties of the Westphalian age and state-dominated order to
come up with new normative visions and concepts to deal with the new problems with which
we are faced in a transnational world (Backer 2012). This changing state of affairs brought up
the question of international governance framework that would guide and regulate the activities
of companies, and therefore ensure responsibility and sustainability of supply chains. In the
absence of effective national and international intergovernmental organisational regulation,
nowadays we observe an expansion of Bprivate^ alternatives, such as voluntary, self-regulatory
initiatives and shared governance by non-state actors where responsibility lies at the supra-agent
level (Howlett 2000; Haufler 2001; Gunningham et al. 2003; Ruggie 2004; Bernstein and
Cashore 2007; Haufler 2013). These initiatives are also referred by some authors as Transna-
tional Private Regulation (TPR) (Bartley 2007; Bomhoff and Meuwese 2011; Scott et al. 2011;
Cafaggi 2013). Supra-agency takes the form of ‘coalitions of non-state actors which codify,
monitor, and in some cases certify firms’ compliance with labour, environmental, human rights,
or other standards of accountability’ (Bartley 2007). Regulation increasingly becomes co-
produced by public and private actors and occurs on different levels (Hofferberth 2011). These
private governance mechanisms involve companies, NGOs, and sometimes other actors, such
as governments, academia or unions, networks of companies and industry associations, episte-
mic communities and technical experts to tackle societal and environmental challenges across
industries and on a global scale (Utting 2002; Gilbert and Rasche 2007; Büthe 2010; Mena and
Palazzo 2012). There is a variety of models engaging businesses, associations of companies and
NGOs, sometimes in hybrid form and often including governmental actors (Scott et al. 2011).
These initiatives in the majority embody the multi-stakeholder approach (as discussed in the
previous section) creating multi-stakeholder initiatives (MSIs). They reflect the idea that it is
possible to regulate behaviour without doing so (Bomhoff and Meuwese 2011), thereby direct
intervention and enforcement are replaced with ‘allegedly lighter demands on economic actors
to institutionalise processes’ (Jordana and Levi-Faur 2004). Although, companies adopt TPRs
voluntary, these regulations may be supported with a variety of formal and informal enforce-
ment mechanisms, such as codes of conduct (Haufler 2001). Hutter (2006) identifies two main
types of non-state actor regulations, either by the economic actors, or civic actors. Three main
sources of regulation in the economic sector include: (1) industry or trade organisations; (2)
companies themselves; and (3) those whose business is selling regulatory and risk management
advice or cover to companies (consultancies); while the civic sector consists of NGOs and
standards organisations (Hutter 2006).
In terms of enhancing supply chain responsibility and sustainability, non-state actor regimes
offer a number of advantages addressing SCM challenges. Non-stake actors regimes may have
an advantage in information gathering, hence collation and provision of information about
policy issues and problem areas (Hood et al. 2001; Hutter 2006). Therefore, they address the
problem of complexity of the supply chain, communication with suppliers and traceability, as
well as information and knowledge gaps diminishing transparency. Hutter (2006) draws on
Hood et al.’s (2001) work on risk regulation regimes, and argues that economic non-state
regulators may have higher level of expertise and technical know-how, e.g. compliance
officers may be better trained than the state inspectors (Hutter 2006). Moreover, compared
to the public sector, businesses have higher level of financial capacity which impacts levels of
expert knowledge and training (Hutter 2006). Nevertheless, there is a risk that companies may
be reluctant to share information due to competition and risk of revealing business secrets. The
majority of non-state initiatives use innovative technologies to improve information and data
sharing, for instance through networks of online platforms. Combining non-state actors
initiatives with technological advances, such as big data analysis and blockchain, enables
real-time monitoring and decision-making ensuring improved compliance and implementa-
tion. Regarding compliance and implementation of responsible and sustainable SCM require-
ments, non-state regimes have a triple role to play. Firstly, they can serve as standard settings
processes aimed at setting goals through standards and targets, particularly because non-state
actors regulation is more flexible and sensitive to the market and technological innovation than
traditional state regulation (Hutter 2006). Secondly non-state actor regimes could play a
significant role in behaviour modification of companies and individuals e.g. deterrence or
mixed enforcement (Hood et al. 2001). A positive motivation comes from the idea of a Brace to
the top^ and becoming a leader in the sector. Since non-state actors regimes are composed of
various organisations, control emerges from both cooperation and competition (Scott et al.
2011). As emphasised by Scott and his colleagues (Scott et al. 2011) ‘these networks stimulate
mutual control the competition for members or, more broadly, regulatees can increase the
standards to the extent that information is adequate to support the making of choices. The use
of public oversight and procedural rules is one among the many potential strategies that TPR
can use to increase accountability without reducing effectiveness’ (Scott et al. 2011). Self-
regulation has the potential to generate compliance through so-called Bregulation-by-
information^, where the compliance of one member is monitored by another member. As a
result, the network creates an informal feedback and sanctions mechanisms. Lastly, non-state
actor regimes are to a great extent risk regulation regimes, that Hood et al. (2001) define as ‘the
complex of institutional geography, rules, practices, and animating ideas that are associated
with the regulation of a particular risk or hazard’ (Hood, Rothstein et al. 2001). Nevertheless,
one of the crucial concerns is a potential lack of enforcement, which is related to the question
of the effectiveness of collective actions ensuring that all companies participate and eliminate
‘free riders’ (Brunsson and Jacobsson 2000).
Non-state actors regimes question the traditional legal order of norms creation and their
enforcement. They are part of a broader discussion about better regulation (Bomhoff and
Meuwese 2011) and good governance. These new governance models reflect the shift from
hierarchical to heterarchical governance and recognise the need to reconceptualise the bases of
legitimacy for such regimes at both national and supranational level (Teubner 1997; Scott et al.
2011). Curtin and Senden (2011) investigate an accountability perspective of TPRs and
propose two distinct alternatives for the top down approach to the control and accountability
of TPRs. Firstly, the advantage of Bchoice^ of regulators who regulates them and of consumers
which self-regulatory regimes protect (Curtin and Senden 2011). Secondly, networks of
mutuality, rooted in the interdependence of actors, not only between regulatees but also
between regulators and those protected by the regime (Scott et al. 2011). Non-state actors
regimes have a potential to improve collaboration and relationships with stakeholder, and
become a realisation of two key elements of responsible and sustainable SCM – meaningful
multi-stakeholder relations and stakeholder engagement where preferences of all stakeholders
and the varieties of perspectives are addressed (Scott 2010). As a consequence such an
approach may lead to novel forms of democratic governance, at transnational level, which
are not tied to national electoral politics (Scott et al. 2011). These changes into outsourcing and
privatisation of public management functions reflect changes in broader patters of social
control (Cohen 1985; Hutter 2001).
These regimes can serve as powerful governance mechanisms. Nevertheless, they are
unlikely to govern effectively if they are based exclusively on companies’ strategic interests
for compliance (Meidinger 2017). While the responsibility of companies in the form of
accountability and legal liability is broadly discussed in the literature as well as among
practitioners, non-state actor regimes are not accountable to states. As a result, organisations
leading non-state actor systems cannot be held responsible either for its own misconduct or
misconduct of its members. In order to be effective they must establish Bpolitical legitimacy^
uniting companies, NGOs, and other SCM stakeholder into a community that accepts ‘shared
rules as appropriate and justified’ (Bernstein and Cashore 2007).
Summary of the Proposed Solutions
Section 5 identifies three potential solutions for challenges to responsible and sustainable SCM
taking into consideration the theoretical account for responsible and sustainable SCM. This
consists of the concepts of CSR and SSCM with three key elements of responsible and
sustainable SCM, namely the equal consideration of all three dimensions of sustainability
(economic, environmental and social), the cooperation of the partners in the chain, strength-
ening long-term relationships and legitimate requirements of the stakeholders of a supply
chain. Moreover, the potential avenues are determined by the challenges for responsible and
sustainable SCM. Firstly, innovative technologies, such as big data and blockchain, offer
solutions for the enhancement of positive and reduction of negative societal and environmental
consequences that a company may cause, while still maintaining economic competitiveness.
Through digitalisation of supply chains they enable communication and collaboration among
supply chains stakeholders leading to deeper relationships. Secondly, a multi-stakeholder
approach ensures inclusion of various supply chains stakeholders and their legitimate require-
ments. Thirdly, non-state actor regimes provide new governance models for more responsible
and sustainable SCM. These solutions address the claim, that companies should be responsible
for issues of public concern not only within their company boundaries, but also along the
complex and dispersed supply chains (Scherer 2018). Since companies’ responsibility may
have a different nature, the solutions address this diversity. Innovative technologies serve as a
technological instrument enabling realisation of responsibility and sustainability within SCM.
Multi-stakeholder approach has a political character, focusing on a company’s political power
and relationship with society. Supra-agent responsibility and effective governance responds to
the call for the ethical responsibility of companies and building a good society.
This paper argues that there is a potential interplay between the technological, political and
ethical solutions. Innovative solutions, such as big data and blockchain, could be used to
facilitate multi-stakeholder initiatives and non-state actor regimes by providing a forum for the
involvement and collaboration of various supply chain actors. Many non-state actor initiatives
use innovative technologies to support information and data sharing among various stake-
holders, particularly through multi-stakeholder digital platforms connecting people, organisa-
tions, and resources. This approach enhances compliance and implementation through mutual
control. Digital platforms applied in the context of multi-stakeholder non-governmental
initiatives, enable transparency leading to cooperation and integration between partners
strengthens trust and reduce or eliminate abuse of power. At the same time, technological
innovations require oversight by multiple supply chain stakeholders to enable communication
and coordination about ethical decisions throughout the supply chain (Ferrell et al. 2013).
Moreover, non-state actor governance models should be based on multi-stakeholder collabo-
ration and mutual control to ensure a credibility and legitimacy of the initiative. Lastly, a
combination of technological, political and ethical solutions involving the development of
sound, multi-stakeholder business and governance models supported by innovative technolo-

gies, have a potential to address a variety of challenges in SCM from a responsibility and
sustainability point of view.
Case Study: Sedex
To illustrate the application and effectiveness of solutions for responsible and sustainable SCM
(innovation, multi-stakeholder approach, and effective governance and supra-agency), this
section presents the case study of Sedex. Formed in 2004, Sedex (The Supplier Ethical Data
Exchange) is a not for profit membership organisation working with buyers and suppliers
worldwide to deliver improvements in responsible and ethical business practices in global
supply chains (Sedex Global (a)). Sedex is the world’s largest collaborative platform providing
leading-edge services for managing and sharing ethical supply chain data, which multinational
companies use to understand, monitor and manage supply chains risks and improve standards
(Sedex (a)). Sedex brings together more than 38,000 companies (buyers, suppliers and audit
firms) from across 28 sectors (e.g. chemicals, engineering, IT, telecom & electrical, drugs and
pharmaceutical products) in over 150 countries (Sedex (b)).
Innovation
Sedex offers a secure, online database that allows members to store, share and report on
information in four key areas: labour standards, health & safety, the environment, and business
ethics (Sedex (a)). Sedex has three groups of members that reflect the different levels of
functionality available in the Sedex system – Buyer membership, Buyer/Supplier membership
and Supplier membership (Sedex (c)). Sedex’s electronic system collects and analyses infor-
mation on ethical and responsible business practices in the supply chains (Sedex (d)).
Moreover, Sedex offers a variety of reporting tools that enable buyers to keep track of their
suppliers’ performance, in addition to an advanced Risk Assessment Tool (Sedex (d)).
Suppliers, who participate in the Sedex network, can share information with multiple cus-
tomers in an efficient and cost-effective way (Sedex (d)). By enabling sharing the same data
with many customers, Sedex helps reduce the need for multiple audits. As a result, the Sedex
online system may enable greater traceability, transparency and flexibility of supply chains
with improved stakeholder relations and communication. With regard to the main ethical risks
in the supply chain, Sedex notes that the key risks can be very varied. Common non-
compliances in social audits include health and safety issues as well as non-compliance related
to wages and working. Other issues such as discrimination, bullying and bonded labour can be
harder to tackle, because they are not always as easy to find through the audit process. Data
from a briefing by Sedex shows that fire safety non-compliances make up a 1/3 of all health
and safety non-compliances globally (Sedex (g)). This level of data mining helps companies
understand global trends and scale of issues. Sedex works to ease the burden on suppliers
facing multiple audits, questionnaires and certifications; but at the same time, it drives
improvements in the ethical performance of global supply chains (Sedex (a)). At the time
the case study was conducted, Sedex was working on increasing the capacity within its
technology team to help support the quality and timings of delivery. In addition, Sedex has
been researching an online extranet that will allow members to collaborate and continue
discussions more efficiently (Sedex 2017).
Multi-Stakeholder Approach
Sedex aims to drive collaboration, increase transparency and build the capacity that is needed
to raise standards across all tiers of the supply chain (Rangi et al. 2015). The Sedex
Stakeholder Forum (SSF) (previously known as the Associate Auditor Groups (AAG)) brings
together leaders from across the ethical trade and responsible sourcing industry to discuss the
challenges they face and solve them collaboratively (Sedex 2017). SSF’s mission is to drive
convergence and best practice in auditing (Sedex 2017). The Forum is based on a participation
of multiple stakeholders (brands, retailers, suppliers, NGOs, industry experts, associations and
monitoring firms) significantly involved in ethical trade auditing (Sedex 2017). The SSF is
composed of a collection of dynamic working groups (Sedex 2017). The SSF working groups
cooperate to develop responsible sourcing content and methodologies solutions that are Bfit for
purpose^ (Sedex 2017). These solutions are designed for all users and stakeholders (Sedex
members, non-members, workers and their communities) with the aim of improving business
performance and workers’ lives (Sedex 2017). Moreover, SSF provides guidance and direction
to Sedex staff. They helping develop the products and services to manage responsible sourcing
in the supply chains (Sedex 2017). Through SSF, Sedex seeks to engage a more global
audience to help develop and review effective responsible sourcing solutions (Sedex 2017).
The SSF wants to be seen as inclusive, global and interactive.
Effective Governance and Supra-Agency
Sedex is not a standard setting body; it does not have a code of conduct and does not provide
certification. Sedex’s role is rather to enable companies to effectively share and manage supply
chain information, with the aim of driving continuous improvement (Sedex (a)). Nevertheless,
Sedex advocates for applying Ethical Trading Initiative (ETI) provisions in two areas: labour
& health and safety standards, and additionally environmental standards and business ethics
(Sedex (g)). Sedex is code neutral; therefore, it does not require prospective members to adhere
to specific criteria in order to become members. Sedex membership is about showing the
commitment to drive improvements in a company’s supply chain. Sedex allows companies to
decide themselves how they want to proceed and assists companies in this process by
providing them with a number of tools to facilitate the assessment. The assessment consists
of six key steps leading to greater traceability, transparency, flexibility, legal compliance and
stakeholder management, namely:
1. Supply chain mapping – Sedex helps companies to understand who their suppliers are,
allowing them to map their suppliers down to multiple tiers.
2. Sedex on-line member only Self-Assessment Questionnaire (SAQ) – Through the ques-
tionnaire, Sedex asks members common questions regarding internationally accepted
Labour Standards, Health & Safety, The Environment and Business Ethics requirements.
Members also provide input through addressing key indicators of risk and maturity in
terms of managing social, governance and environmental issues. Sedex is a cross-sector/
multi-sector organisation, therefore while there is only one SAQ, depending on the
suppliers profile the questionnaire filters questions that are relevant for that specific
profile. At the time the case study was conducted, Sedex was working on introducing a
new modular functionality to provide greater specification for certain customers or sectors.
3. The Risk Assessment tool – Sedex has developed this tool in partnership with global risk
experts Maplecroft. The tool analyses hundreds of indices and factors including human
rights violations, political risk, corruption risks, and child labour alongside management
proficiency and ability to mitigate risk of the individual site (Sedex (e)). The risk
assessment is especially important for large companies with complex supply chains,
because it can help them to understand where to prioritise their focus.
4. Audit (assessment) – The Sedex Stakeholder Forum developed the Sedex Members
Ethical Trade Audit (SMETA),3 as a response to member demand for an ethical audit
report format that could be more easily shared (Sedex (f)). SMETA aims to reduce the
duplication of effort in ethical trade auditing, thus benefitting retailers, consumer brands,
and their suppliers (Sedex (f)). According to Sedex, SMETA is ‘not a code of conduct, a
new methodology, or a certification process’ (Sedex (f)). It is an audit procedure reflecting
the compilation of good practice in ethical audit techniques (Sedex (f)). Around 10,000
audits are uploaded to the Sedex platform per year. When Sedex first launched the
SMETA methodology, 90% of the audits uploaded onto the platform were based on
company codes for audits whereas now 90% of the audits are performed against SMETA,
demonstrating the success of the initiative. SMETA is now one of the most used audit
methods worldwide. According to Sedex, ‘a part of its success is that we included audit
companies, brands, retailers and suppliers in its development.’ SMETA consists of three
elements: (1) a common corrective action plan format; (2) best practice guidance on
conducting ethical trade audits; (3) a common audit report format (Sedex (i)).
5. Reporting – According to Sedex, improving awareness of a company about its supply
chain can help to mitigate risk and protect its reputation. In order to enhance a company’s
supply chain visibility, Sedex offers in-depth, analytical reports that highlight trends, alerts
a company to potential risks and help it to prioritise its resources. The huge amount of data
stored by Sedex offers not only the ability to address risks but also provides examples of
good practices that can inspire and guide change.
6. Capacity building – Sedex offers various capacity building tools, such as the Sedex
Supplier Workbook. The workbook is a free, publicly available document offering
practical guidance to help suppliers across the world to understand what ‘good practice’
looks like when working towards the Ethical Trading Initiative (ETI) and other Code
requirements. The Workbook also offers advice on how suppliers can reach these require-
ments. Therefore, Sedex aims to build capacity at the bottom of the extended supply
chain.
The SMETA methodology allows the auditor to raise issues regarding non-compliance against
both the ETI base code (a measurable version of ILO conventions) and local laws. The first thing is
to understand where issues exist against local law versus international frameworks. The next step
involves working with a supplier to address and meet the minimum legal standards. However, if a
supplier does this already, it can be challenging to move them to aim for an aspirational, higher
level standard. Nevertheless, different approaches exist that companies can use. First, it is the
purchasing power based on a customer requirement. Secondly, it is about demonstrating the
business benefit to the supplier addressing them. Furthermore, cooperation and working with
others can bring about great change. Sedex is an example of an organisation in which companies
3
Note: The case study was conducted between May and August 2015. The latest version of SMETA was
launched in April 2017, with an implementation date of June 1, 2017.
work together on the same aligned framework. The collective effect of a number of companies
asking for the same information, may significantly influence the behaviour of an individual
company. Nevertheless, according to Sedex, there is a strong need for standardisation around
international frameworks. Different legislation and standards in different countries only fragment
the issue for the supply chain and can make it more confusing for suppliers. This fragmentation
also reduces the willingness of companies and other actors to respond to lots of different standards.
Regarding the effectiveness of the current legal framework of corporate responsibility, in the
opinion of Sedex, there are a lot of companies and organisations that would say voluntary standards
are effective instruments. Some larger companies are in favour of legislation, because they feel it
will level the playing field. However, as emphasised by Sedex, there are clever ways of looking at
how legislation works. For instance, there has been quite a lot of debate within the legal profession
about the modern slavery bill that was launched in the UK. This discussion focuses on the
effectiveness of a disclosure-based rule versus strengthening of existing legislation to expand it
to require reporting to cover human rights in the supply chain. The interviewee emphasised that this
is a question of the effectiveness of voluntary standards. Legislation has a role to play in levelling
the field, however, the additional administration burden placed on the supply chains, and partic-
ularly SMEs, should be taken into account. The crucial point is that legislation should be enforced.
Many of the supply chain risks are addressed in legislation, however, the legislation is not enforced.
There is a strong need of a balance between appropriate legislation combined with effective
enforcement. As noted by Sedex, a cross-sector approach to responsible and sustainable supply
chain management should be based on collaboration. Furthermore, such an approach should not
try to Breinvent the wheel^, but look at different legislation, initiatives, mechanisms and standards
that already exist. Supply chain policies should be grounded in implementation, because a policy
has to be implemented in order to succeed.
Conclusions
This study provides an investigation into potential avenues for responsible and sustainable
supply chain management (SCM) to extend the domain of ethical decision-making and
provide a theoretical account to facilitate future research in this area. To identify the solutions
for responsible and sustainable SCM, this study integrates current knowledge on supply chain
management (SCM) with resent theoretical and empirical developments in the field. The
theoretical account consists of two elements. Firstly, it involves a notion of responsible
SCM that is built up out of the concepts of ‘responsible supply chain management’ and
‘sustainable supply chain management’. Secondly, it requires key elements of responsible and
sustainable SCM, namely the equal consideration of all three dimensions of sustainability
(economic, environmental and social), the cooperation of the partners in the chain, strength-
ening long-term relationships and legitimate requirements of the stakeholders of a supply
chain, including customers, NGOs, suppliers or legal authorities. The theoretical account
combined with the stakeholder dialogue allowed the identification of three solutions for
challenges to responsible and sustainable SCM that companies face in practice. Firstly, to
enhance responsibility and sustainability, supply chains stakeholders should use innovative
organisational and technological solutions that offer greater monitoring and assessment op-
portunities, efficiency, and communication between tiers of supply chain. The paper provides
two examples of technologies that have a potential to revolutionise SCM, namely big data
analysis and blockchain technology. Secondly, supply chains should be managed in a
collaboration of multiple stakeholders built on trust and mutual learning. Thirdly, this research
argues for new SCM business and governance models. These models should be based on
shared responsibility and collaboration of multiple supply chain stakeholders supported by
innovative technologies. Therefore, this paper offers a unique normative proposal for
connecting technological, political and ethical solutions (innovation, a multi-stakeholder
approach, a supra-agent responsibility and governance) as the inevitable interdependent
solutions for responsible and sustainable SCM. This article underlines the need for research
that reflects the interconnected nature of the economic, societal, environmental, and ethical and
human rights dimensions of SCM. The case study of Sedex shows how non-state actors
governance models may effectively address SCM challenges and ensure SCM responsibility
and sustainability. Sedex enhances responsibility and sustainability of supply chains through
applying three solutions identified in this paper. Sedex invests in innovative technological
solutions helping to share and analyse supply chain data; it brings together multiple stake-
holders to develop Sedex functionalities; and it serves as a governance platform encouraging a
positive behaviour change among its members.
Acknowledgments The research leading to these results received funding from the European Community’s
Seventh Framework Programme (FP7/2007-2013) under grant agreement No. 612231 (SATORI).
Compliance with Ethical Standards
Conflict of Interest The author declares that she has no conflict of interest.
Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International
License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and repro-
duction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a
link to the Creative Commons license, and indicate if changes were made.
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Publisher’s Note Springer Nature remains neutral with regard to jurisdictional claims in published maps and
institutional affiliations.
Ms. Gurzawska is a PhD Candidate at the Department of Philosophy, University of Twente. She has worked on
a number of projects funded by the European Commission, including SATORI (Stakeholders Acting Together On
the ethical impact assessment of Research and Innovation), Responsible Industry and SHERPA Project. Ms.
Gurzawska holds an M.A. in Law from the University of Lodz and an M.A. in Human Rights and
Democratisation from the European Inter-University Centre for Human Rights and Democratisation (E.MA.).
Her main research areas include international law, in particular human rights and business; corporate social
responsibility (CSR); strategic CSR; ethics of technology; and responsible innovation and new technologies in
the business context. In her career, Ms. Gurzawska has cooperated with Danish Institute for Human Rights
(Copenhagen), Helsinki Foundation for Human Rights (Warsaw), Centre for Business, Organisations & Society
(University of Bath) and 4TU.Centre for Ethics and Technology (The Netherlands).

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Philosophy of Management (2020) 19:267–295

Towards Responsible and Sustainable Supply

Published online: 13 June 2019

Solutions for Responsible and Sustainable SCM: A Proposal

Big Data and Online Platforms

chain, strengthening long-term relationships and responding to requirements of the stakeholders

Effective Governance and Supra-Agent Responsibility

Globalisation of markets, rapid growth of transnational corporations, and new technologies

Summary of the Proposed Solutions

sound, multi-stakeholder business and governance models supported by innovative technolo-

Case Study: Sedex

Effective Governance and Supra-Agency

Compliance with Ethical Standards

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