Wednesday, 8 October 2014

Supermarket supply chain sustainability: what are you buying into?

By Laura Spence and Leonardo Rinaldi

When did you last buy something from a supermarket? Chances are it wasn’t long ago: most retail spending goes through a supermarket checkout. In a recent article, we present a detailed case study of one UK supermarket’s long reach down its supply chain, examining its work on embedding sustainability in the (nine-step) supply chain for lamb. We use the concept of governmentality to examine systematic ways of exercising power and authority, paying attention to the way sustainability is promoted within the company. We explore how senior decision-makers frame and use sustainability accounting to embed sustainability in the supply chain, but find that they reformulate their arguments primarily in economic (rather than social or environmental) terms. Whilst this is unsurprising, the inability of a supermarket publicly committed to sustainability to change the conversation suggests that using ‘sustainability’ to reconfigure business priorities could turn out to be a wolf in sheep’s clothing.

Spence, L. and Rinaldi, L. (2014) Governmentality in Accounting and Accountability: A case study of embedding sustainability in a supply chain, Accounting, Organizations and Society. 39(6): 433-452.   

Click to read more about this paper below the cut

Credit: GrahamPics1; used under CC licence.
Around 60% of retail spending goes through a supermarket checkout, whether online or in store, and the figure is growing. Grocery food retailers, to give them their full name, have the potential to influence not just the consumers who purchase their goods, but the many, many thousands of companies who supply them. This is not really news – we have long heard stories about how big supermarkets influence their suppliers to drive down prices. What is newer, however, is the idea that supermarkets can influence the sustainability of the companies that put products on their shelves. Coupled with this, the global focus on food security means that pushing sustainability up supply chains is a hot topic indeed.  In an article recently published in the journal Accounting, Organizations and Society, we present detailed research of how one UK supermarket sought to embed sustainability in the – relatively simple - lamb supply chain. In trying to tease apart what might go on in such a process, we used the theoretical lens of governmentality from the work of French philosopher, Michel Foucault. Applying four analytics, or aspects of governmentality identified by Mitchell Dean, enables us to make visible the hidden meaning, power and controls embedded in a process of change such as the implementation of a supply chain sustainability programme.

“Our single biggest impact (on the environment) is the goods we source”

The potential impact that they could have on sustainability was not lost on our supermarket case study, they recognized the power they had to improve sustainability throughout their supply chain and were engaged in a programme to implement such a change. Even in a relatively simple supply chain like that for lamb, there is much more to it than a connection from farmer to supermarket shelf. This chain, for example, includes a whole host of companies which process the meat, and may also involve several different farming operations which specialise in different aspects of the animal’s growth.

So the first point to note is that with the best will in the world, accessing and influencing all the suppliers in a chain - which is just one of tens of thousands of products which a supermarket might stock – is no mean feat. How, then did this relatively successful supermarket make an discernible progress? Table 1 summarises what we found, but to cut a long story short, there were four aspects which we drew from governmentality. First we identified how the visibility of sustainability was heightened by the actions of the supermarket, by for example, packaging sustainability as an econompic issue and thereby giving it immediate credibility as a discussion point for the business. Second we noted the technical ways in which sustainability was embedded in the system through training, auditing, compliance programmes and financial incentives for suppliers. Third we looked at the nature of knowledge, language and rhetoric around sustainability and how these were used by the supermarket, covering for example the way in which qualitative measures were translated into easier to grasp and convey quantitative ones. Fourth we unpacked how different identities were adopted and assigned by the people involved in the supply chain validate the embedding of sustainability.

Table 1: Analytics of the governing of sustainability within the supermarket’s lamb supply chain
1. Fields of visibility
2. Techne
Sustainability as an economic issue
Diagrammatic representations of power and authority
Investment in embedding sustainability process
Self-portrayal and external recognition as sustainability leaders
Meetings, training and surveying
Operating engagement
Auditing and monitoring
Rule compliance
Financial incentives
3. Episteme
4. Identify formation
Quantification of qualitative measures
Quality, competition and risk
Cost-benefit analysis
Compensatory relationship between aspects of sustainability

Agents framed as stakeholders
Stakeholder labelling and ranking:
·  Customer as principal
·  Supermarket as agent of customer desires
·  NGOs as customer-influencers
·  Processor as conduit of message to farmers
·  Farmers as a valuable commodity

“We set our targets by focusing on materiality”

Ultimately what we have found in our case study is that the way that sustainability can – to a degree at least – be embedded in a supply chain is to reconfigure sustainability issues in financial terminology, which they don’t always comfortably fit. But without this the topic lacks credibility and visibility and is not seen as significant or relevant. On one level this is no great surprise. On another, it shows just how far we are from a new business model around sustainability when even a powerful company apparently committed to sustainability can’t really change the conversation. It does seem a pity though, that the hopes around sustainability as a way to reconfigure business priorities and address responsibilities around runaway climate change, resource depletion and social injustice could turn out to be – excuse the irresistible pun – just a wolf in sheep’s clothing. 

Laura J. Spence is Professor of Business Ethics and Director of the Centre for Research into Sustainability. Leonardo Rinaldi is Lecturer in Accounting and Director for the MSc in International Accounting. They are both based in the School of Management, Royal Holloway, University of London.

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