Technology is being creatively deployed by businesses to shine a light on environmental and social issues related to the organisation. But this also comes with many challenges. Technology alone cannot ensure transparency for mitigating negative environmental and social supply chain impacts. Cory Searcy, Pavel Castka, Jakki Mohr, and Sönke Fischer developed a model of transformational transparency that couples technology-driven data collection with moral leadership and empowered stakeholders. 

Many companies are eager to improve their supply chains with respect to both social (e.g., human rights and labour) and environmental (negative impacts on biodiversity, illegal harvesting of raw materials, and so on) issues. Technology is being creatively deployed to provide a clearer line of sight into these issues. Here are some examples:

• The apparel industry uses sensors to monitor noise, emissions, or building safety.
• In the agricultural supply chain, satellite imaging monitors activities in collecting raw materials inputs, such as cotton and rubber.
• Remote sensing, vocalisation analysis systems, and imaging technologies automate processes in animal welfare monitoring.

However, technology alone cannot ensure transparency for mitigating negative environmental and social supply chain impacts. Innovative uses of technology can surface important insights, but this also comes with many challenges. These include time, effort, and money, as well as the possibility of exposing companies to unwanted attention. Many industries and individual firms also have long histories of engaging in misrepresentations or outright hypocrisy.

Transformational transparency

Meaningful change to improve social and environmental impacts deep in supply chains requires a new type of transformational transparency that couples technology-driven data collection with moral leadership and empowered stakeholders. In a recent article, we developed a model of transformational transparency.

Grounded in the expectation of sharing timely, accurate information with relevant stakeholders, transformational transparency enables new insights that allow for new strategies and behaviours to drive radical change. A key premise is that critical social and environmental issues deep in the supply chain supersede any one company, supply chain, or industry.

Transformational transparency adopts a virtue-based approach to transparency questions—an explicit normative position based on the premise that managers have an ethical obligation to do the right thing for society. Transformational transparency, therefore, requires firms to recognise that transparency is in the service of something other than the firm itself and that firms contribute to, and benefit from, broader societal and environmental factors.

Our model of transformational transparency is based on three underlying principles: Transparency is motivated by proactive disclosures; it is driven also by a desire to make meaningful impacts; and it is based on credible data that is triangulated across multiple sources.

The heart of our model elaborates on the three synergistic enablers:

• Technology-enabled mechanisms that collect, analyse, and share high veracity data in a timely fashion (see, for example, the Global Forest Watch’s satellite imaging programme).
• Moral leadership—which requires individuals and companies to take a moral stance on an issue, convince others to do the same, and together spur organisational-level change in pursuit of a better world.
• Empowered stakeholders concerned about supply chain impacts, including local communities, NGOs, the media, and the general public, among others (for example, citizen-science initiatives can engage the general public in monitoring issues such as air pollution, tracing locations of medicinal plant species, or food provenance and contamination).

Our holistic model of transformational transparency can enable radical change, such as improved working conditions and a regenerative approach to extraction and manufacturing that improves natural ecosystems.

Implications

What does our model mean for leaders? First, radical change is fundamentally grounded in the need to move from symbolic to substantive institutional practices that meaningfully address problems, including their root causes. Leaders must commit to shifting transparency initiatives from instruments of accountability to instruments of meaningful change.

Second, managers must think holistically: transformational impacts will not be possible with isolated initiatives. Viewing the issues as intertwined can surface new solutions to address multiple issues simultaneously.

Third, any given firm may follow various possible pathways to transformational transparency. Some pathways may originate within the firm, others through pressure from supply chain partners or NGOs. The key is that firms identify and pursue pathways that make sense in their unique context, keeping in mind the moral obligation to surface and address the crucial social and environmental issues that plague supply chain performance.

Managers who are willing to take principled stances to drive meaningful change and who can think holistically not only will improve transparency; they also will realize transformative social and environmental outcomes — including solutions for poor working conditions, deforestation, and myriad other social and environmental concerns — that benefit not just individual firms, but society as a whole.

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Notes:

• This blog post is based on Transformational Transparency in Supply Chains: Leveraging Technology to Drive Radical Change, California Management Review.
• The post represents the views of its authors, not the position of LSE Business Review or the London School of Economics.
• Featured image by Reproductive Health Supplies Coalition on Unsplash
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