stein@opensky
A sustainability-related commentary this time! As an engineer and a telecom business and technology strategist, I had never thought I would be working five years on health & safety, responsible business conduct and sustainability – but I did – and it turned out very well.
In early 2008, the company I had been working for during many years, Telenor Group – a large global mobile telecom operator, faced a reputation crisis starting off from a specific media coverage at sub-supplier level in one of the subsidiaries in Bangladesh, GrameenPhone. A Danish journalist had been travelling around the countryside of Bangladesh – producing a film for Norwegian television showing the work environment in some of the sub-suppliers to the subsidiary. The documentary, which focused on the sub-suppliers building the operator’s telecom infrastructure, contained examples of very poor health and safety conditions, serious environmental contamination and also the employment of underage workers in the steel manufacturing processes at the sub-supplier level. To my surprise, I got the task to “sort it out” globally. The task led to five years of work before I moved on again.
The work implied first leading a global and cross-functional project on “HSSE in Telenor” to establish a group-wide system and framework for responsible supply chain management (or “supply chain sustainability”) – with a wide scope including health & safety, personnel security, human rights, labour rights, environmental management – and also prohibited business practices (e.g. anti-corruption). Following this project, a group-wide “Business Assurance” function was established, with a central unit and local units in every opco. After some years, the area of supply chain sustainability in the Telenor Group was transformed from a crisis to an asset - and Telenor’s work in the area was referenced as good business practice by the Norwegian Government (the Norwegian State’s White paper on industrial ownership) and by the United Nations Global Compact during 2011. 😊
With me in this process were a number of people in Telenor, with a cross-functional team in the project phase from many areas including procurement, legal, HR, communications, sustainability, compliance and internal audit - as well as operational technical people – plus external contractors from DNV. From the internal team I would highlight Ola Ree, who took over when I moved on, and also Eric Ekern, my current associate in OpenSky. In a later phase we also used external auditors from e.g. Deloitte, KPMG and PWC. Several people involved through this process have key sustainability positions in other large Norwegian corporations today.
The whole process and results are very well described in the UN Global Compact’s case study from 2011 – so it will not be repeated here. A few highlights of importance can be repeated, however:
Ahead of the crisis, the company was a good citizen with a lot of good intentions and CSR efforts, but there was no system behind these kinds of issues.
Handling the initial reputation crisis with immediate response and admitting the problem was the right response.
Although most of the work to be done was practical and in the field, the corporate bureaucracy of agreeing on the policies and procedures took a very long time at the start.
It is critical to have top management support for a turn-around like this, not only in the start, but also on an ongoing basis – and with regular top management follow-up.
Implementing mandatory Agreements on responsible Business Conduct (ABC agreements) was an added complication to the procurement process, but it worked. Practically every supplier signed them without any modification.
In this case, it was essential to have an independent Business Assurance unit in charge, since the policy of signing ABCs necessarily is an additional burden on the procurement process. It was also necessary to find a proper balance between ideal CSR requirements and practical execution in the field. Finally, having people with operational experience working in the field and managing the ongoing activities was critical.
It should be noted that what was implemented was not about punishing suppliers. It was all about collaboration and continuous improvement – and suppliers were provided support, awareness and training.
With a risk-based approach, carrying out around 2.000 supplier and sub-supplier inspections or audits per year, we managed gradually to improve the supply chain behavior and risk level across our operations.
What gets measured gets done! With ongoing follow-up from top management – and with regular KPIs and incident reporting from opcos, a sustained focus across the opcos was ensured.
More information can be found in the UNGC case study or through contacting us explicitly. We would offer services in the area.
Finally, it should be noted that the approach chosen by Telenor using ABC agreements is a very strict one – and may not be for all companies. The approach with thousands of supplier inspections also requires a large company. For Telenor and the way it is governed, however, it worked out well. For smaller companies or companies with more centralized structures other schemes may be more appropriate.
Another final remark: In cases like this (which is something I have seen also in some of my other work e.g. on cyber security), it is sometimes necessary to have a crisis (a large incident), in order to get the necessary top-level buy-in, support and funding? “It is not a problem until it is a problem” – and then it is a huge problem! In the long run, it actually pays off being ahead of the problems.