United Nations Global Compact

From Wikipedia, the free encyclopedia

UN Global Compact

Formation	26 July 2000
Type	Framework and Mechanism
Legal status	Active
Head	Sanda Ojiambo, CEO & Executive Director
Website	unglobalcompact.org

The United Nations Global Compact is a non-binding United Nations pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation. The UN Global Compact is a principle-based framework for businesses, stating ten principles in the areas of human rights, labor, the environment and anti-corruption. Under the Global Compact, companies are brought together with UN agencies, labor groups and civil society. Cities can join the Global Compact through the Cities Programme.

The UN Global Compact is the world's largest corporate sustainability (a.k.a. corporate social responsibility) initiative with 13000 corporate participants and other stakeholders over 170 countries with two objectives: "Mainstream the ten principles in business activities around the world" and "Catalyse actions in support of broader UN goals, such as the Millennium Development Goals (MDGs) and Sustainable Development Goals (SDGs)". Moving forward, the UN Global Compact and its signatories are deeply invested and enthusiastic about supporting work towards the SDGs.

The UN Global Compact was announced by then UN Secretary-General Kofi Annan in an address to the World Economic Forum on 31 January 1999, and was officially launched at UN Headquarters in New York City on 26 July 2000. The Global Compact Office works on the basis of a mandate set out by the UN General Assembly as an organization that "promotes responsible business practices and UN values among the global business community and the UN System." The UN Global Compact is a founding member of the United Nations Sustainable Stock Exchanges (SSE) initiative along with the Principles for Responsible Investment (PRI), the United Nations Environment Programme Finance Initiative (UNEP-FI), and the United Nations Conference on Trade and Development (UNCTAD).

The Ten Principles

The UN Global Compact was initially launched with nine Principles. On 24 June 2004, during the first Global Compact Leaders Summit, Kofi Annan announced the addition of the tenth principle against corruption in accordance with the United Nations Convention Against Corruption adopted in 2003.

Human Rights

• 1 Businesses should support and respect the protection of internationally proclaimed human rights; and
• 2 Make sure that they are not complicit in human rights abuses.

Labour

• 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
• 4 The elimination of all forms of forced and compulsory labour;
• 5 The effective abolition of child labour; and
• 6 The elimination of discrimination in respect of employment and occupation.

Environment

• 7 Businesses should support a precautionary approach to environmental challenges;
• 8 Undertake initiatives to promote greater environmental responsibility; and
• 9 Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

• 10 Businesses should work against corruption in all its forms, including extortion and bribery.

Facilitation

The UN Global Compact is not a regulatory instrument, but rather a forum for discussion and a network for communication including governments, companies and labour organisations, whose actions it seeks to influence, and civil society organisations, representing its stakeholders. The UN Global Compact says that once companies declared their support for the principles "This does not mean that the Global Compact recognizes or certifies that these companies have fulfilled the Compact’s principles." Instead, as mentioned in a 2015 interview with Executive Director, Lise Kingo, "we are the guide dogs, not the watchdogs", with the organization seeking to prioritize providing resources and support instead of attempting to enforce discipline.

The UN Global Compact's goals are intentionally flexible and vague, but it distinguishes the following channels through which it provides facilitation and encourages dialogue: policy dialogues, learning, local networks and projects. Given recent climate talks and summits, the UN Global Compact stands to play a critical role in helping signatories and governments work in part to achieve the SDGs. Recent studies indicate that businesses are more open than ever to private sector interventions, such as carbon pricing and other mechanics to help curb climate effects within the scope of business solutions. The Global Compact also will periodically create resources and guides that business and non profit organizations may use in their efforts to support the Compact's overall mission. One such example is the SDG Compass, developed in collaboration with the Global Reporting Initiative (GRI) and World Business Council for Sustainable Development (WBSCD), which is a collection of resources (analysis of the goals, indicators for businesses, tools for stakeholders) that companies can utilize in finding out their role in helping to achieve the SDGs. The Sustainable Ocean Business Action Platform of the UN Global Compact has been actively supporting the launch in June 2020 of the Seaweed Manifesto, the result of a collaborative work of seaweed supporters from private sector, research institutions, UN agencies and civil society, initiated by the Lloyd's Register Foundation. Building on the Manifesto's recommendations, the UN Global Compact, in partnership with the Lloyd’s Register Foundation and the French Centre National de la Recherche Scientifique (CRNS), launched the Safe Seaweed Coalition in March 2021, a global coalition to support a safe, sustainable and scalable seaweed industry.

History

The first Global Compact Leaders Summit, chaired by the then Secretary-General Kofi Annan, was held in UN Headquarters in New York on 24 June 2004, to bring "intensified international focus and increased momentum" to the UN Global Compact. The second Global Compact Leaders Summit, chaired by Secretary-General Ban Ki-moon, was held on 5–6 July 2007 at the Palais des Nations in Geneva, Switzerland. It adopted the Geneva Declaration on corporate responsibility. Marking the 10th anniversary of the Global Compact's launch, the Global Compact Leaders Summit 2010 took place on 24–25 June 2010 in New York. On the occasion, the Blueprint for Corporate Sustainability Leadership  identifying leadership criteria linked to implementation of the ten principles, efforts to support development objectives, and engagement in the Global Compact was released. In 2009 Rotary International partnered with the UN Global Compact. This was a very friendly partnership since Rotary International played a role in the chartering of the United Nations. Since its creation in 2000 the Global Compact has been primarily focused on helping support and achieve the Millennium Development Goals, however, after those expired in 2015, their top priority has been updated to the pursuit and progress towards achieving the Sustainable Development Goals, and the SDG's accompanying 2030 deadlines.

UN Global Compact – Cities Programme

Circles of Sustainability image (assessment - Melbourne 2011)

In 2001, the City of Melbourne proposed that cities as well as corporations should be allowed to join the UN Global Compact, arguing that this would provide a clear statement of a city's commitment to positive change, as well as motivating participation in international dialogue. The proposal was accepted, and the UN Global Compact - Cities Programme was launched in 2002. It was formed as an urban-focused component of the Global Compact with its International Secretariat initially located in Melbourne, Australia. The aim of the programme is to improve urban life in cities throughout the world.

Melbourne became the first city to engage the Global Compact in June 2001.

In April 2003, under the directorship of David Teller, a framework called the Melbourne Model was developed that went beyond the Ten Principles. It begins by drawing the resources of government, business and civil society into a cross-sector partnership in order to develop a practical project that addresses a seemingly intractable urban issue. In 2007, the then Director, Paul James (2007–2014) and his colleagues Dr. Andy Scerri and Dr. Liam Magee, took this methodology further by integrating the partnership model with a four-domain sustainability framework called 'Circles of Sustainability'.

In 2007, the Secretariat moved from the Committee For Melbourne to the Global Cities Institute at RMIT University, itself affiliated with UN-HABITAT. There, projects associated with city-based responses to global climate change and globalization became increasingly important. The Melbourne Model was further elaborated, with a sustainability indicators program developed as a way of assessing and monitoring progress. In 2012, the Circles of Sustainability method was elaborated to guide a city or urban region through a rigorous assessment process. As one of the outcomes it provides a figurative image of the overall sustainability of that city to illustrate its strengths and weaknesses.

In 2015, RMIT Professor Ralph Horne became the third director of the UN Global Compact Cities Programme and in February 2016 an Urban Thinkers Campus was organised at RMIT Melbourne in collaboration with World Vision International as part of the buildup to UN Habitat III. The theme of the Urban Thinkers Campus was Ethical Cities: Locking in Liveability. This was followed by the organisation of an Urban Innovation Forum on Ethical Cities in July 2016 in Barcelona, Spain as a collaboration between the UN Global Compact - Cities Programme, RMIT Europe and UN-Habitat.

As of August 2020 there are 120 participants in the City Network, 85 of them in Latin America and the Caribbean. Milwaukee and San Francisco are the only U.S. member cities. The Cities Programme ended in 2021. 

Local networks

Local networks of the Global Compact advance the initiative and its ten principles at a country level. Currently there are approximately 85 Local Networks in total. These networks help companies and non profit organizations understand what responsible business means within diverse national, cultural, and linguistic contexts. Additionally, there are related programs for particular topics of interest, such as the Business for Peace initiative, that bring awareness to businesses and other organizations about instability and conflict, such that organizations can help to address these concerns from their own perspective and with the assistance of their local networks. Local connections to supplement the international connections made by the Global Compact at large can help to broaden the engagement and impact of members. Local Networks are independent, self-governed and self managed entities, and work closely with the UN Global Compact's New York headquarters, and coordinate as points of contact for UN Global Compact signatories in their respective countries. The Local Networks of the Global Compact are showcased, but not limited to the interactions chronicled below:

Australia

• The Global Compact Local Network in Australia was established in 2009 by a steering committee drawn from the Australian business community and stakeholder groups. It was formally incorporated in 2011. as the Global Compact Network Australia Limited, and elections were held for the inaugural board of directors. In 2011 it established two business-led leadership groups dealing with human rights and anti-corruption. The GCNA draws its funding directly from members and member-based activities, in contrast to many networks who rely in part on government funding.

Bulgaria

• The Global Compact Local Network in Bulgaria was founded in January 2003, under the auspices of President Georgi Parvanov. The voluntary initiative unites 120 Bulgarian companies, non-governmental organizations and academia into a unique network. All members are united around the idea to apply the ten principles of the UN Global Compact in their daily practices and to be responsible corporate citizens. In 2006, to strengthen and enhance the role of the initiative, a management structure was introduced consisting of Advisory Board and a Secretariat. For the period 2006-2010 the network activities were supported by the United Nations Development Program Bulgaria. With the active participation and financial contribution of its members Global Compact Bulgaria organized numerous initiatives related to environment, health, education and youth. Among them are the projects: "Unleashing Entrepreneurship"; "Love Bridge"; "Sharing Best Practices in Corporate Social Responsibility".
• With the end of the support from UNDP Bulgaria, the Global Compact Local Network in Bulgaria had to identify and formulate a new strategy for sustainability. So, between 2009 and 2010 the members signed an institutional framework for future organizational development. As a result, on 10 September 2010 a new independent organization was founded – Association Global Compact Network Bulgaria. Its members are 20 leading companies and organizations in Bulgaria, members the UN Global Compact as well. The Association is managed by a steering committee and control committee. Their main goals are to learn from each other, to communicate, to generate an advocacy impact and initiate dialogue or partnerships with other actors such as the government, local authorities, labour organisations and civil society organizations.

France

• The Global Compact Network France was established in 2004. It is the second largest local network of the UN Global Compact after Spain, with more than 1,100 participants in 2017. The main aim of the Global Compact Network France is to add personalized value to the French participants of the Global Compact, in order to help them to make progress in their CSR approach and enlarge the Global Compact network. The local network is entirely financed by its members.

Germany

• The GCN Germany was created in the year 2000 on the initiative of German companies as one of the first national platforms. Its tasks and obligations as an official local Network are defined in a Memorandum of Understanding with the UN Global Compact; it may only bear the name of the Global Compact Network Germany as long as it carries out these tasks and fulfils these obligations.
• The GCN Germany brings together all German signatories of the UN Global Compact. The network comprises more than 780 German companies and organizations from civil society, science, and the public sector and serves to provide information on issues of corporate responsibility, exchange ideas, and develop joint practical solutions. (https://www.globalcompact.de/en/about-us/global-compact-network-germany)

India

• The Global Compact Network (GCN) India was formed by organizations from India who participate in the Global Compact. It was registered on 24 November 2003, with Registrar of Societies, NCT, Delhi, as a non-profit body. The main objective of the Network is to provide a forum to various Indian Companies/ Organizations to exchange experiences, network and work together on activities related to CSR. This is expected to promote sustainable growth besides encouraging good corporate citizenship. The Network, acts as an Apex level nodal agency representing various Indian Corporate bodies/ Institutions/ NGOs/ SMEs, who are committed to the UN Global Compact principles.
• The Global Compact Network India has been one of the pioneering local initiatives of the Global Compact. It is one of the first local networks to be set up as a legal entity. Over the last nine years the network has seen modest growth and has been able to create a niche for itself within efforts by the business community directed towards realising the vision of sustainable development in India. At present Dinesh Kumar Sarraf, CMD, ONGC, is the President of the Global Compact Network India for the term 2015-17 and is managed by a Governing Council.

Mexico

• The Global Compact Network in Mexico in December 2014 endorsed the commitment of the private sector towards improving gender equality. Echoing the sentiments of initiatives such as the "HeforShe", and the large support of individuals in the region for promoting gender equality and empowering women. Much of this progress is being achieved by practical guidelines for how private entities can make a more diverse, inclusive workplace that create codes of global business.

Spain

• The Global Compact Network Spain is the largest local network of signatories to the UN Global Compact. As an independent legal entity launched in 2004, it is managed by a steering committee with a chairman, deputy chairman, secretary, treasurer and 16 directors elected by the network’s general assembly. The steering committee includes representatives from large companies, small- and medium-sized enterprises (SMEs), the public sector, educational entities and non-governmental organizations (NGOs). In order to abide by the rules of Spanish legislature, the general assembly holds a vote each year on budgetary issues and resolutions and nominates the steering committee. The Global Compact Network Spain has been successful in involving SMEs, developing interactive resources and reporting tools and emphasizing human rights through the commitment of the local companies.

Syria

• The Syria initiative aims at enhancing civic engagement and corporate social responsibility of private sector by promoting the ten principles of the UN Global Compact as well as forging partnerships between private sector organizations, public sector institutions and civil society. This initiative is a partnership between the Syrian Government represented by the State Planning Commission and the UNDP Country Office in Syria. It was launched under the patronage of the Head of State Planning Commission and in the presence of the Deputy Chairperson of the UN Global Compact in July 2008. The Syrian Global Compact Local Network has 26 businesses, five NGOs, and five federations of commerce and industry. It was displayed among 10 selected ones from around the world in the Global Compact Sixth Annual Local Networks Forum. The Syria story was called a "leadership case" and the Syria Network growth ratio was ranked first among the global top ten in 2008.^[29] The UNGC National Advisory Council has been formulated and held its founders’ meeting on 15 October 2008, with the participation of leaders from the Syrian private sector, international corporate representatives, local and international civil society organizations, UNDP, the Syrian Government, media and education sectors.

Criticism

Some critics believe that without any effective monitoring and enforcement provisions, the Global Compact fails to hold corporations accountable. Moreover, these critics argue that companies could potentially misuse the Global Compact as a public relations instrument for "bluewash". Bluewashing refers to the alleged practice of companies claiming their membership or participation in philanthropic and charity based activity as an excuse, and perhaps as an entry door to increase corporate influence upon international organizations. An informal network previously known as Global Compact Critics leveled a variety of criticisms at the Global Compact, citing a lack of mechanisms for sanctioning non compliance or lack of progress. The Global Compact critics formally disbanded in February 2015, recommending that interested parties consult the Centre for Research on Multinational Corporations (SOMO) website. Similarly, the Alliance for a Corporate-Free UN, which also no longer exists, was a campaigning organization of several international NGOs, led by Corpwatch, which highlighted weaknesses in the principles underlying the Global Compact. The Global Compact was criticized by Maude Barlow, senior adviser on water issues to the President of the United Nations General Assembly in December 2008, accused the Global Compact of bluewashing. David Andrews, senior adviser on Food Policy and Sustainable Development, and Peter Utting, deputy director of UNRISD. Leaders of the tribe Ayoreo Indians in Paraguay wrote to the UN Global Compact saying they are "concerned and frustrated" by the inclusion in it of a controversial Brazilian ranching company. The company, Yaguarete Porá, was charged and fined for illegally clearing the Ayoreo's forests, and concealing evidence of uncontacted Ayoreo living there. The Ayoreo asked that it be expelled from the Global Compact.

Support

The Global Compact provides a list of its 20,000+ participant organizations, composed of roughly 16,000 businesses and 4,000 non-business entities on its website. The site provides a brief overview of each participant, and a link to their Letter of Commitment (if new), Financial Overview and Contributions (if applicable), and Communication on Progress (COP). Notable companies who have signed on the Global Compact include, but are not limited to, Starbucks, L'Oreal, Bayer AG, Coca-Cola, 3M, Deloitte, and Zurn. In addition to its signatories, the Global compact has been repeatedly supported by the UN General Assembly, honoring its 15th anniversary in June 2015 alongside the Secretary General, Ban Ki-Moon, himself who claims that "Business can be a global force for good" and that "advocacy and example can drive action to achieve a life of dignity for all people".

Global supply chain management

From Wikipedia, the free encyclopedia

In commerce, global supply-chain management is defined as the distribution of goods and services throughout a trans-national companies' global network to maximize profit and minimize waste. Essentially, global supply chain-management is the same as supply-chain management, but it focuses on companies and organizations that are trans-national.

Global supply-chain management has six main areas of concentration: logistics management, competitor orientation, customer orientation, supply-chain coordination, supply management, and operations management. These six areas of concentration can be divided into four main areas: marketing, logistics, supply management, and operations management. Successful management of a global supply chain also requires complying with various international regulations set by a variety of non-governmental organizations (e.g. The United Nations).

Global supply-chain management can be impacted by several factors who impose policies that regulate certain aspects of supply chains. Governmental and non-governmental organizations play a key role in the field as they create and enforce laws or regulations which companies must abide by. These regulatory policies often regulate social issues that pertain to the implementation and operation of a global supply chain (e.g. labour, environmental, etc.). These regulatory policies force companies to obey the regulations set in place which often impact a company's profit.

Operating and managing a global supply chain comes with several risks. These risks can be divided into two main categories: supply-side risk and demand side risk. Supply-side risk is a category that includes risks accompanied by the availability of raw materials which effects the ability of the company to satisfy customer demands. Demand-side risk is a category that includes risks that pertain to the availability of the finished product. Depending on the supply chain, a manager may choose to minimize or take on these risks.

Successful global supply-chain management occurs after implementing the appropriate framework of concentration, complying with international regulations set by governments and non-governmental organizations, and recognizing and appropriately handling the risks involved while maximizing profit and minimizing waste.

Areas of concentration

Marketing

Marketing should be emphasized by global supply chain managers to create customer value, satisfaction, and loyalty. Customer value, satisfaction, and loyalty lead to improved profit margins, which in turn leads to overall corporate growth. Managers need to think about their strategies and the implication of the strategy on the entire supply chain. One market strategy that is commonly used among businesses with global supply chains is the customer perspective strategy.

Taking a customer perspective towards marketing strategy means focusing mainly on customers. This perspective focuses on understanding the complexity of customer values. This perspective involves understanding and how a customer defines and develops their values. By understanding how a customer sets their values, a company is able to make changes to appeal to the customer base's values which in turn leads to greater profit.

There are four common and critical challenges that managers face when attempting to design and implement a marketing strategy that best relates to customer values. The first issue that managers face is the challenge of understanding exactly what customers value in a global supply chain. Understanding customer values in a global supply chain focuses on the task of identifying what supply streams customers value most.

The second challenge is having to understand the constant changes in customer values throughout global supply chains. Since customers are constantly changing what they value, staying ahead of the trend and attempting to predict changing values is increasingly difficult. The third challenge is having to deliver values in a new environment that has never seen this level of marketplace. The global market is becoming increasingly prevalent which companies are taking advantage of, therefore the challenge of attempting to deliver values in a country/region that has never been exposed to a marketplace such as this before arises.

The final challenge is creating and staying committed to the solutions designed to address these issues. Solutions to these challenges are implemented and it is a challenge within itself to stick to these solutions especially as businesses have increased emphasis on cost reduction efforts.

Logistics

When managing a global supply chain, it is important to place emphasis on logistics performance as there has been an increase in business-to-business international marketing. Logistics is inherently difficult and complex for a global supply chain as it deals with trade regulations, shipping distances, and cross-currency issues. Companies and/or organizations who place an emphasis on logistics management can find themselves with a serious competitive advantage as it has a clear visible impact on customers.

Focusing on customer preferences when implementing and managing a companies logistic services has proven to provide the organization with several benefits. One of the major benefits is cost reduction. Costs can be reduced if the company identifies all the necessary logistic segments and then eliminates unnecessary and redundant. Customizing logistics not only reduces cost, but it also increases revenue by appealing to the customer base which in turn stays loyal to the business.

To stay competitive, organizations need to develop global logistic strategies that appropriately and effectively appeal to the customer's needs. By doing this, companies are able to take advantage of the increasingly profitable global market.

Supply management

Supply management deals with the development and management of the critical business and supplier relationship. Some companies will use supply chain management software to help manage the flow of products and information. Notable companies that provide supply management services include Oracle, Epicor, Infor, and IBM. As the market becomes progressively global, the strategy of outsourcing suppliers is increasingly used. Outsourcing suppliers has several benefits for a business if they can effectively develop the relationship. In 2020 the global supply chain management market was valued at $18.7 million and was projected to reach $52.6 million by 2030.

Management theories

The 21st-century logistics framework

Closs and Mollenkopf's "21st-century logistics framework" is a global supply-chain management theory that was developed at Michigan State University and was introduced to the business world in 1999. The framework identifies six business competencies that are necessary to operate a global supply chain, with multiple underlying capabilities for each competency which influence management decisions. The six competencies are:

• customer integration,
• internal integration
• material/service supplier integration
• technology and planning integration
• measurement integration, and
• relationship integration.

The capabilities that are attached the competency of customer integration are: segmental focus, relevancy, responsiveness, and flexibility. Segmental focus refers to the ability to develop customer aimed programs that are specifically designed to achieve maximum customer success. Relevancy refers to the ability to maintain and modify customer focuses to reflect the constant changing expectations. Responsiveness refers to the ability to accommodate unique and unforeseen customer requests/requirements. Flexibility refers to the ability to appropriately adapt to any unexpected circumstance.

Cross-functional unification, standardization, simplification, and compliance are the underlying capabilities that are associated with the internal integration competency. Cross-functional unification refers to the ability to put potential co-operative activities into manageable operational processes. Standardization refers to the ability to implement policies/procedures that address any concurrent operations. Simplification refers to the ability to identify, adopt, implement, and improve the best possible business practices. Compliance refers to the ability to follow any established policies.

The capabilities that are related to material/service supplier integration are: strategic alignment, operational fusion, financial linkage, and supplier management. The ability to develop a corporate culture or common vision that create a shared responsibility is defined as strategic alignment. The ability to fuse systems together to reduce redundancy is defined as operational fusion. Financial linkage refers to ability to join financial ventures with suppliers to achieve common goals. Supplier management refers to the ability to extend management to include the hierarchical structure of suppliers.

Information management, internal communication, connectivity, and collaborative forecasting and planning are the capabilities that encompassed by technology and planning integration. The ability to use seamless transactions across the entire chain to allocate resources throughout the chain is called information management. Internal communication refers to the ability to communicate within the business in appropriate manner. The ability to communicate and exchange information between the business and the external supply chain partner is called connectivity. Collaborative forecasting and planning refers to the ability to collaborate with customers to identify and develop shared visions.

The capabilities that underlie measurement integration are: functional assessment, comprehensive metrics, and financial impact. Functional assessment refers to the ability to develop and implement an appropriate performance measurement tool. Comprehensive metrics refers to the ability to implement cross-business performance standards. Financial impact refers to the direct link between overall supply chain performance and the results of the financial measurement.

The capabilities that underlie relationship integration are: role specificity, guidelines, information sharing, and gain/risk sharing. Role specificity refers to the ability to clearly define leadership and establish a set of shared and individual responsibilities. Guidelines refers to the ability to create and implement policies/rules that govern everyday interactions. Information sharing refers to the willingness to share important information (often including financial, technical, or strategic information) throughout the supply chain. Gain/risk sharing refers to the appropriately divide and allocate rewards/penalties.

The 21st-century logistics framework allows managers to identify and implement the most important underlying capabilities that are encompassed in the six business competencies. The framework gives managers the freedom to decide what they believe to be the most important capabilities that need to be implemented to run a successful global supply chain.

Human collaboration theory

The human collaboration theory suggests that there is strong evidence to prove that investment in supply-chain management have the largest impacts when they focus on enabling supply chain collaboration. This management theory focuses on the manager's ability to invest in and promote human collaboration between employees throughout the global supply chain.

Human collaboration is defined as the use of skills through harmonization of individuals, teams and organizations to achieve greater things not achievable by an individual person. The human collaboration theory/framework lays out four key components. The first component deals with the forces that drive change, the second focuses on people-technology-process assets that create network collaboration, the third deals with resisting forces which encourage people to resist collaboration, and the fourth component looks at the desired collaboration performance. The theory states that to implement and operate a successful global supply chain, a manager must understand and use these components.

The theory states that to implement and operate the best collaboration system, a manager must build trust between the different players of the chain (supplier and manufacturer), establish a culture which supports decision making and work, implement a proper reward system, and use synergistic activities.

According to the theory's creators, a manager must follow four steps to transform their network into a more collaborative network. The first step is to recognize that to be competitive the company will require innovations which can be proposed by people outside the corporate boundary and therefore to access these people they need to be more collaborative with external partners. They then must alter their views of achieving collaboration by acknowledging the different types of collaboration (transactional, co-operative, coordinated, synchronized). Next, a manager must develop a collaborative plan that achieve the goals he/she sets out to achieve. Finally a manager must develop the right controls to ensure the goals/mission can be met. If a manager follows the recommendations made by this theory, then they will have implemented a proper global supply chain that focuses on human collaboration which in turn will yield better results.

International regulations

Role of government

Governments can play a large role in regulating certain aspects of a global supply chains. Governments have a wide range of policy instruments that they can use to implement regulations. These instruments include but are not limited to: taxation, financial incentives, regulation, liberalization, infrastructure, land use planning, and advice and exhortation. However, before designing and implementing a regulation, it is important for governments to properly analyze any second-order effects that might occur. Second order effects are defined as the offsetting effects that happen elsewhere because of the implementation of a policy.

Recently, there has been a steady incline of governments creating and implementing regulations to promote green supply chains.

To design and implement the appropriate government's need to take into account the five aspects of sustainable logistics. The first is reducing freight transport intensity as it is becoming necessary for governments to introduce explicit policies to encourage companies to reduce the amount of freight movement within their system. The second aspect is freight modal split, which the author describes as shifting freight to greener transport modes. Governments can promote this by using policy instruments (usually taxation, financial incentives, regulation, and infrastructural measures).

The third aspect is vehicle use which governments must attempt to promote companies to improve their use of road freight. This can be done through taxation, regulation, liberalization, and advice committees. The fourth aspect is increasing energy efficiency which often is seen with the introduction of general efficiency programs. Governments can raise fuel duty, subsidize driver training schemes, reduce and enforce speed limits, impose fuel economy standards, incentivize scrappage of old vehicles and give advice to promote a higher standard of energy efficiency. The fifth and final aspect is cutting emissions relative to energy use which needs to be addressed through a policy.

Role of the United Nations

The United Nations plays a big role in designing and implementing international regulations that have huge impacts on the operation and management of global supply chains. The United Nations created the UN Global Compact which is an organization that aims to mobilize a global movement of sustainable companies and stakeholders.

The UN Global Compact attempts to mobilize a global movement by supporting companies to be responsible and to advance societal goals. The organization has created a set of ten principles which they expect companies to abide by. The ten principles fall under the broader categories of human rights, labour, environment, and anti-corruption.

With regards to human rights the organization encourages businesses to support and respect human rights, and make sure they are not abusing any established human rights laws. The labour principles deal with the recognition of collective bargaining, elimination of forced labour, abolition of child labour, and elimination of discrimination. The environment principles focus on being cautious to environmental challenges, promoting greater environmental responsibility, and encouraging the development of environmentally friendly technologies. The anti-corruption principle states that businesses should work against corruption. They have published two guides which illustrate how businesses can implement the ten principles throughout their supply chains and integrate sustainability. These guides state that companies can achieve supply-chain sustainability by taking certain steps which include: committing, defining, implementing, assessing, measuring, and communicating to effectively become sustainable.

Risks of operation

Supply-side risk

Supply-side risk is a category that includes risks accompanied by the availability of raw materials which affects the ability of the company to satisfy customer demands. Several issues can arise from operating a global supply chain. Common supply side risks include the fact that it takes a long time to receive products from around the world, and that suppliers may not necessarily operate to the same quality standards.

Outsourcing suppliers may provide a business several benefits but a lot of risk comes attached to it. One major risk is the fact that global currencies are constantly changing, a small change in foreign currency could have a large impact on the overall profit a business receives. Supplier order processing time variability is another supply-side risk that comes increasingly risky when outsourcing suppliers. This risk is defined by the fact that the time it takes a supplier to fulfill an order can change for every order. Businesses are not exactly sure how the supplier is going to deal with the order and whether they will be able to deliver products on time.

Demand-side risk

Demand-side risk is a category that includes risks that pertain to the availability of the finished product. Demand-side risks mainly occur when companies are unable to deal with the demands of the customer base. This can happen when customer demand is higher than supply, and the company does not have enough stock to appropriately deal with the customer demand. Since customer demand changes so frequently it is tough for managers to forecast what is needed for the next month which creates the risk of running out of stock.

Food system

From Wikipedia, the free encyclopedia

The term food system describes the interconnected systems and processes that influence nutrition, food, health, community development, and agriculture. A food system includes all processes and infrastructure involved in feeding a population: growing, harvesting, processing, packaging, transporting, marketing, consumption, distribution, and disposal of food and food-related items. It also includes the inputs needed and outputs generated at each of these steps. Food systems fall within agri-food systems, which encompass the entire range of actors and their interlinked value-adding activities in the primary production of food and non-food agricultural products, as well as in food storage, aggregation, post-harvest handling, transportation, processing, distribution, marketing, disposal, and consumption. A food system operates within and is influenced by social, political, economic, and environmental contexts. It also requires human resources that provide labor, research and education. Food systems are either conventional or alternative according to their model of food lifespan from origin to plate.

According to the IPCC, the global food system, including all of the various industries involved in sustainable and conventional food systems, provide employment for 1 billion people. This global food system is facing a number of challenges created by impeding global food security issues created by climate change and non-climate change stresses on the system. About 34% of total greenhouse gas emissions are attributable to the global food system. In 2020 an EU evidence review found that food system gas emissions are on course to increase by 30–40% by 2050 due to population growth and dietary change. According to FAO, it is crucial to build the resilience of agrifood systems so that they have the capacity over time, in the face of any disruption, to sustainably ensure availability of and access to sufficient, safe and nutritious food for all, and sustain the livelihoods of agrifood systems' actors.

Transitioning to sustainable food systems is critical for addressing global challenges such as climate change, hunger, biodiversity loss, and deforestation. Addressing issues at each stage in the system, can have system-wide effects for 30-40 percent of food produced is lost from post-harvest up to retail and the consumer. Reducing food waste then reduces the environmental impacts of agriculture, such as land use impacts, and reducing food prices or preventing shortages. International policy has increasingly approached policy from a food systems perspective: Sustainable Development Goal 2: Zero Hunger and Sustainable Development Goal 12: "responsible consumption and production" focus on sustainable food systems and Sustainable and in September 2021 the United Nations hosted the first Food Systems Summit.

Conventional food systems

Conventional food systems operate on economies of scale. These food systems are geared towards a production model that requires maximizing efficiency in order to lower consumer costs and increase overall production, and they utilize economic models such as vertical integration, economic specialization, and global trade. The growing soil quality degradation, climate change, and growing world population put pressure on agricultural land, leading to innovations to increase agricultural productivity on the limited available land and urban space. Though conventional farming practices have increased crop yield through the use of climate-smart agriculture (CSA), smallholder farming systems and limited knowledge of CSA remain constraints for enjoying economies of scale and sustainable crop production and food security.

The term “conventional” when describing food systems is largely due to comparisons made to it by proponents of other food systems, collectively known as alternative food systems.

History of conventional food systems

See also: Timeline of agriculture and food technology

The development of food systems can be traced back to the origins of in-situ agriculture and the production of food surpluses. These surpluses enabled the development of settled areas and contributed to the development of ancient civilizations, particularly those in the Fertile Crescent. The system of trade associated with the exchange of foodstuffs also emerged in East Asia, North America, South America, and Subsaharan Africa with common commodities of exchange such as salt, spices, fish, grains, etc. Through events in world history such as the conquests of Alexander the Great, the Crusades, the expansion of Islam, the journeys of Marco Polo, and the exploration and colonization of the Americas by Europeans led to the introduction and redistribution of new foods to the world at large, and food systems began to intermingle on a global scale. After World War II, the advent of industrialized agriculture and more robust global trade mechanisms have evolved into the models of food production, presentation, delivery, and disposal that characterize conventional food systems today.

Impacts of conventional food systems

See also: § Effects on climate change

Lower food costs and greater food variety can be directly attributed to the evolution of conventional food systems. Agronomic efficiency is driven by the necessity to constantly lower production expenses, and those savings can then be passed on to the consumer. Also, the advent of industrial agriculture and the infrastructure built around conventional food systems has enabled the world population to expand beyond the "Malthusian catastrophe" limitations. According to the IPCC, food supply per capita has increased by more than 30% since 1961.

However, conventional food systems are largely based on the availability of inexpensive fossil fuels, which is necessary for mechanized agriculture, the manufacture or collection of chemical fertilizers, the processing of food products, and the packaging of the foods. The increase in the availability of food since 1961 has primarily been driven by an 800% increase in the use of nitrogen fertilizers (which are fossil fuel dependent) and high water usage (an increase of over 100% since 1961).

The impacts of these intense resource processes are many a varied: food processing began when the number of consumers started proliferating. The demand for cheap and efficient calories climbed, resulting in nutrition decline; and industrialized agriculture, due to its reliance on economies of scale to reduce production costs, often leads to the compromising of local, regional, or even global ecosystems through fertilizer runoff, nonpoint source pollution, and greenhouse gas emission.

The need to reduce production costs in an increasingly global market can cause the production of foods to be moved to areas where economic costs (labor, taxes, etc.) are lower or environmental regulations are laxer, which are usually further from consumer markets. For example, the majority of salmon sold in the United States is raised off the coast of Chile, due in large part to less stringent Chilean standards regarding fish feed and regardless of the fact that salmon are not indigenous in Chilean coastal waters. The globalization of food production can result in the loss of traditional food systems in less developed countries, and have negative impacts on the population health, ecosystems, and cultures in those countries. As a result of these forces, 2018 estimates suggest that 821 million people are currently undernourished, and 2 billion adults are overweight and obese.

The issue of having minimal access to food, or access to primarily unhealthy food, is often described in terms of food security. The 1996 World Food Summit defined food security as a state in which "all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life. " Many groups argue that food security is largely determined by a given person's socioeconomic status, race, ethnicity, or other socially defined categories, making food access a social justice issue. This has given rise to numerous social movements whose goal is to increase access to healthy and culturally appropriate foods, among a wide variety of groups. These movements are often described as belonging to a more significant food justice movement.

Scientists estimated the extensive pesticide pollution risks worldwide with a new environmental model and found that a third of global agricultural land is at high risk for such pollution, of which a third are high-biodiversity regions.

Sustainable food systems

A sustainable food system is a type of food system that provides healthy food to people and creates sustainable environmental, economic and social systems that surround food. Sustainable food systems start with the development of sustainable agricultural practices, development of more sustainable food distribution systems, creation of sustainable diets and reduction of food waste throughout the system. Sustainable food systems have been argued to be central to many or all 17 Sustainable Development Goals.

Life-cycle assessment of GHG emissions for foods

Moving to sustainable food systems, including via shifting consumption to sustainable diets, is an important component of addressing the causes of climate change and adapting to it. A 2020 review conducted for the European Union found that up to 37% of global greenhouse gas emissions could be attributed to the food system, including crop and livestock production, transportation, changing land use (including deforestation) and food loss and waste. Reduction of meat production, which e.g. accounts for ~60% of GHG emissions and ~75% of agriculturally used land, is one major component of this change.

The global food system is facing major interconnected challenges, including mitigating food insecurity, effects from climate change, biodiversity loss, malnutrition, inequity, soil degradation, pest outbreaks, water and energy scarcity, economic and political crises, natural resource depletion and preventable ill-health.

The concept of sustainable food systems is frequently at the center of sustainability-focused policy programs, such as proposed Green New Deal programs.

Local food systems

See also: International trade § International trade versus local production

 

A map of wheat production (average percentage of land used for its production times average yield in each grid cell) across the world.

Local food systems are networks of food production and consumption that aim to be geographically and economically accessible and direct. They contrast to industrial food systems by operating with reduced food transportation and more direct marketing, leading to fewer people between the farmer and the consumer. As a result, relationships that are developed in local food systems emerge from face-to-face interactions, potentially leading to a stronger sense of trust and social connectedness between actors. In addition to this, consumers can also encourage farmers to be environmentally friendly by teaching them about practices such as organic farming. As a result, some scholars suggest that local food systems are a good way to revitalize a community. The decreased distance of food transportation has also been promoted for its environmental benefits. Also, farmers can enjoy a better quality of life because producing healthier food will allow them to be paid more, and not live under the poverty line.

Both proponents and critics of local food systems warn that they can lead to narrow inward-looking attitudes or ‘local food patriotism’, and that price premiums and local food cultures can be elitist and exclusive. In contrast, many food sovereignty activists argue that local production of food is essential to achieving food security, especially among indigenous communities, and thus are crucial to the public health of those communities.

Examples of local food systems include community-supported agriculture, farmers markets and farm to school programs. They have been associated with the 100 Mile Diet and Low Carbon Diet, as well as the slow food movement. The food sovereignty movement is also related to local food production. Food sovereignty activists argue that local communities should not only have access to nutritious and culturally appropriate foods, but that those communities should also be able to define the means by which their food is produced. Various forms of urban agriculture locate food production in densely populated areas not traditionally associated with farming. Garden sharing, where urban and suburban homeowners offer land access to food growers in exchange for a share of the harvest, is a relatively new trend, at the extreme end of direct local food production.

An FAO study on food transport networks of 90 countries finds that where food is transported more locally and where the network is denser – such as in high-income countries and densely populated countries like China, India, Nigeria and Pakistan –, systematic disturbances (i.e., adverse events), have a much lower impact on increases in travel time and food costs than where food is transported further distances.

Organic food systems

An organic certification

Organic food systems are characterized by a reduced dependence on chemical inputs and an increased concern for transparency and information. Organic produce is grown without the chemical pesticides and fertilizers of industrial food systems, and livestock is reared without the use of antibiotics or growth hormones. The reduced inputs of organic agriculture can also lead to a greater reliance on local knowledge, creating a stronger knowledge community amongst farmers. The transparency of food information is vital for organic food systems as a means through which consumers are able to identify organic food. As a result, a variety of certification bodies have emerged in organic food systems that set the standards for organic identification. Organic agriculture is promoted for the ecological benefits of reduced chemical application, the health benefits of lower chemical consumption, the economic benefits that accrue to farmers through a price premium, and the social benefits of increased transparency in the food system.

Organic food systems have been criticized for being elitist and inaccessible like local food systems. Critics have also suggested that organic agriculture has been conventionalized such that it mimics industrial food systems using pesticides and fertilizers that are organically derived. 

Cooperatives in food systems

A greenhouse with salad of a cooperative

 

An organic food box of a organic food delivery service

 

A farmers' market offering food produced by community-supported agriculture that is also delivering online orders

Cooperatives can exist both at the farmer end of food production and the consumer end. Farming cooperatives refer to arrangements where farmers pool resources, either to cultivate their crops or get their crops to market. Consumer cooperatives often refer to food cooperatives where members buy a share in the store. Cooperative grocery stores, unlike corporate grocery stores, are socially owned, and thus surpluses cannot be taken from the store as profit. As a result, food co-ops do not work for profit, potentially keeping prices more cost representative. Other forms of cooperatives that have developed more recently include community-supported agriculture, where community members buy a share in a farm's harvest, and may also be engaged in farm labor, operating at both the consumer and producer end of food systems. Garden sharing pairs individual landowners and food growers, while variations on this approach organize groups of food gardeners for mutual assistance.

Producer associations and cooperatives reinforce small-scale agricultural producers’ livelihoods by allowing the pooling of resources to achieve scale, facilitating access to productive resources, and enhancing  marketing power. Coordination with other actors is also key to managing market risks. Mutual benefits can be achieved, for example, through forwarding contracts: farmers receive guaranteed prices for their outputs regardless of market conditions, while processors and distributors receive products of a desired quality. For farming cooperatives that share resources, the burden of investment is disbursed to all members rather than being concentrated in a single individual. A criticism of cooperatives is that reduced competition can reduce efficiency

Fair trade

Main article: Fair trade

See also: Global supply chain management

 

Fair trade may require decisions that lead to relevant supply-chain management.

Fair trade has emerged in global food systems to create a more excellent balance between food price and the cost of producing it. It is mainly defined by more direct trading and communication systems whereby producers have greater control over the conditions of trade and garner a greater fraction of the sale price. The main goal of Fair Trade is to "change international commercial relations in such a way that disadvantaged producers can increase their control over their own future, have a fair and just return for their work, continuity of income and decent working and living conditions through sustainable development"  Like organic food systems, fair trade relies on transparency and the flow of information. Well-known examples of fair trade commodities are coffee and cocoa.

Novel agricultural technologies

Vertical farms, automation, solar energy production, novel alternatives to pesticides, online food delivery ICTs, and other technologies may allow to localize or modify food production alongside policies such as eco-tariffs, targeted subsidies and meat taxes.

Climate change

Main article: Effects of climate change on agriculture

Effects of climate change

The IPCC Special Report on Climate Change and Land describes the current global food system as potentially having major food security risks due to changes created by climate change, including changing local weather conditions, socioeconomic effects of climate change, vulnerability of certain types of agriculture (such as pastoral) and changes in diets due to availability.

Effects on climate change

The heavy industrialization of USA, Europe and China is responsible for 90% of the world's pollution.

 

Deforestation in Indonesia is mainly driven by nonintervention in processes related to the production and consumption of palm oil and has a large impact on climate change.

 

Deforestation in Europe, 2020. The continent reduced its original vegetation cover to less than 30% in order to carry out its agriculture and livestock.

The food system is one of the largest sources of greenhouse gas emissions, attributable for between 21 and 37% of global emissions. In 2020, an evidence review for the European Union's Scientific Advice Mechanism found that, without significant change, emissions would increase by 30–40% by 2050 due to population growth and changing consumption patterns, and concluded that "the combined environmental cost of food production is estimated to amount to some $12 trillion per year, increasing to $16 trillion by 2050". Another 2020 study concluded that reducing emissions from the global food system to be essential for achieving the Paris Agreement's climate goals.

The IPCC's and the EU's reports concluded that adapting the food system to reduce greenhouse gas emissions impacts and food security concerns, while shifting towards a sustainable diet, is feasible.

Public policy

See also: Economic policy, Education policy, Science policy, and Eco-tariff

European Union

The European Union's Scientific Advice Mechanism has published a systematic review of all European policies related to sustainable food systems, and their analyses in the academic literature.

In September 2019, the EU's Chief Scientific Advisors stated that adapting the European food system for the future should be a high priority for the EU:

Although availability of food is not perceived as an immediate, major concern in Europe, the challenge to ensure a long-term, safe, nutritious and affordable supply of food, from both land and the oceans, remains. A portfolio of coordinated strategies is called for to address this challenge.

In January 2020, the EU put improvements to the food system at the core of the European Green Deal. The European Commission's 'Farm to Fork strategy for a sustainable food system', due to be published in spring 2020, is expected to lay out how European countries will reduce greenhouse gas emissions, protect biodiversity, reduce food waste and chemical pesticide use, and contribute to a circular economy.

In April 2020, the EU's Scientific Advice Mechanism delivered to European Commissioners a Scientific Opinion on how to transition to a sustainable food system, informed by an evidence review report undertaken by European academies.

Transparency

Transparency within food systems refers to the full disclosure of information about rules, procedures, and practices at all levels within a food production and supply chain. Transparency ensures that consumers have detailed information about the production of a given food item. Traceability, by contrast, is the ability to trace to their origins all components in a food production and marketing chain, whether processed or unprocessed (e.g., meat, vegetables) foods. Concerns about transparency and traceability have been heightened with food safety scares such as bovine spongiform encephalopathy (BSE) and Escherichia coli (E. coli), but do not exclusively refer to food safety. Transparency is also important in identifying foods that possess extrinsic qualities that do not affect the nature of the food per se, but affect its production, such as animal welfare, social justice issues, and environmental concerns.

One of the primary ways transparency is achieved is through certification and/or the use of food labels. In the United States, some certification originates in the public sector, such as the United States Department of Agriculture (USDA) Organic label. Others have their origin in private sector certification (e.g., Humanely Raised, Certified Humane). Some labels do not rely on certification, such as the USDA's Country of Origin Label (COOL).

Participation in local food systems such as Community Supported Agriculture (CSA), Farmers Markets, food cooperatives, and farmer cooperatives also enhances transparency. Diverse program are promoting purchase of locally grown and marketed foods.

Labeling

USDA Organic Label	Organic (USA) – The USDA Organic label indicates that the product has been produced in accordance with the USDA's Federal Organic Standard, part of the National Organic Program federal regulatory framework. This label is applied to fruits, vegetables, meat, eggs and dairy products. Some states, such as California, have their own organic label. Organic labelling is prominent internationally as well.
Fair Trade Show in UK	Fair Trade – Indicates that the product has been grown and marketed in accordance with Fair Trade standards. This is an independent certification, awarded by FLO-CERT and overseen by FLO International. Major food items that are marketed under Fair Trade are coffee, tea and chocolate. Many items other than food are sold with a Fair Trade label.
	Food Alliance Certified – Food Alliance is a nonprofit organization that certifies farms, ranches, and food processors and distributors for safe and fair working conditions, humane treatment of animals, and good environmental stewardship. Food Alliance Certified products come from farms, ranches and food processors that have met meaningful standards for social and environmental responsibility, as determined through an independent third-party audit. Food Alliance does not certify genetically modified crops or livestock. Meat or dairy products come from animals that are not treated with antibiotics or growth hormones. Food Alliance Certified foods never contain artificial colors, flavors, or preservatives.
Examples of COOL Labeling	Country of Origin – This label was created by enactment of the 2002 Farm Bill. The US Department of Agriculture is responsible for its implementation, which began 30 September 2008. The bill mandates country of origin labeling for several products, including beef, lamb, pork, fish, chicken, perishable agricultural commodities and some nuts. USDA rules provide specifics as to documentation, timetables and definitions. There is not one specific label to indicate the country of origin; they will vary by country.
	American Humane Certified – This certification is provided by the American Humane Association, and ensures that farm animals are raised according to welfare standards that provide for adequate housing, feed, healthcare and behavior expression. Antibiotics are not used except for therapeutic reasons; growth promoters are not used. Other issues including transport, processing and biosecurity are addressed as well. Species covered are poultry, cattle and swine.
	Certified Humane Raised & Handled – This label ensures that production meets the Humane Farm Animal Care Program standards, which addresses housing, diet (excluding routine use of hormones or antibiotics) and natural behavior. Additionally, producers must comply with food safety and environmental protection regulations. They must meet standards set by the American Meat Institute, that are more stringent than those laid out in the Federal Humane Slaughter Act. Certification has been applied to beef, poultry and eggs, pork, lamb, goat, turkey, veal, dairy products and wool.