Addressing Risks

In Module 2, you gained a better insight into the structure and complexity of international supply chains. In Module 3, you explored potential sustainability risks in the supply chains of your company's ingredients and raw materials. This module focuses on effectively addressing those sustainability risks.


Addressing Sustainability Risks

Sustainability risks, such as child labour, low wages, and poor working conditions, have various causes. Below are some examples of measures you can take to address the sustainability risks.


Audits in the Supply Chain

There are various types of audits to verify whether suppliers meet minimum requirements for safety and working conditions. Examples include minimum requirement audits (MRQ), Sedex/SMETA, and BSCI audits. Some of these systems are (partly) based on self-assessment, others are third-party verified. It is also possible to visit your suppliers yourself! More and more companies are opting for the instrument of ‘social audits’ to eliminate risks.


Sustainability Certification

There are many different types of sustainability certification, such as for good agricultural practices or organic production. An independent organisation verifies adherence to certain criteria at the level of the farmer, group of farmers, or production site. For many smaller companies, purchasing certified ingredients is a significant step towards sustainable practices in the supply chain. However, certification alone is not enough and often does not address all risks. Therefore, it is important to collaborate with your suppliers.

Sector Examples

 Textile: Living Wage for Workers

Schrijvens is a supplier of work uniforms for companies like Albert Heijn and McDonald's. Schrijvens' work uniforms are produced in Turkey, China, Pakistan, and India, among other places. The company focuses on sustainable production, including achieving a living wage for workers in the supply chain. To support the effort towards a living wage, Schrijvens joined the FairWear Foundation. The initial focus of the commitment was on production in Turkey. Since no minimum living wage benchmark was available for this country, Schrijvens conducted its research and validated it with the FairWear Foundation. The company calculated that by charging an additional 25 cents for their polo shirts, a living wage could be paid to workers in the supply chain. By transparently communicating costs with customers and collaborating with other buyers like Zeeman, Schrijvens actively works towards closing the living wage gap. Read the full story here.

Long-Term Collaboration with Suppliers

A good relationship with suppliers is necessary to address sustainability issues. For many companies, especially in the food and textile sector, the wholesaler is the entry point towards the further supply chain. In some cases, the wholesaler may already have taken action to eliminate sustainability risks. If not, joint discussions about sustainability risks can inspire improvements.


When a company deals directly with suppliers in production countries, it is crucial to make good agreements on social and environmental issues and work towards long-term collaboration.


This can be done by:

  • Respecting contract agreements.
  • Paying on time.
  • Informing the supplier timely when changes to an order are needed.
  • Working towards multi-year agreements to provide the supplier with certainty.
  • Actively seeking joint projects to address a specific risk.
  • Indicating a willingness to invest (time & money) in the relationship and improving supply chain conditions.
  • Giving the supplier a voice in drafting specifications, contracts, and delivery conditions.
  • Being transparent about relevant market developments and joint opportunities.


The OECD Guidelines emphasise that cooperation and dialogue are preferred above ending trade relations. Always look for ways to jointly address risks. Changing suppliers is a last resort solution. In extreme cases, it may be necessary though.

Projects in the Supply Chain

Sometimes, risks in the supply chain can be effectively addressed through targeted projects. For example, financing new coffee trees to increase productivity, investing in transportation to the local school, or promoting mechanisation of specific tasks on the farm. It is essential to involve local experts, local communities, and other involved stakeholders in selecting and implementing such projects. Not only because it creates more ownership and involvement, but also because these stakeholders know best what is appropriate and effective in the local context.

Sector Examples

 Mining: The Impact of a Stakeholder Dialogue

Companies affiliated with the TruStone initiative, together with the NGO Arisa, suppliers of sandstone, and local organisations in Rajasthan, India, initiated a broad stakeholder dialogue about sustainable sandstone. Central to the dialogue was the exchange of challenges and good practices to make the sandstone sector more sustainable. The parties involved agreed to improve record keeping (think about wage payments), work on healthy and safe working conditions, and establish a complaint mechanism. The dialogue had a broader impact in the Indian region. For example, the government has set up e-registration for unregistered workers protecting them better against exploitation. This concrete example demonstrates that engaging with chain partners can lead to clear improvements. Read more about the dialogue here.

Partnerships in the Supply Chain

SMEs sometimes lack the bargaining power to discuss sustainability issues with suppliers. Collaborating with other companies can help. In the textile sector, it is increasingly common for brands to disclose the factories they work with. If multiple companies purchase from the same factory, they can collectively address specific issues. In many high-risk sectors, companies can join collaborations or coalitions. Find out how your SME can participate in existing initiatives.

Useful tools

  • The document ‘Fund against Child Labour (FBK), child labour interventions’ provides practical tips to address child labour.
  • The Living Wage Action Guide of the Sustainable Trade Initiative (IDH) supports companies, governments, and organisations to undertake adequate measures to bridge the living wage gap.
  • The Open Supply Hub: is a tool where companies in the textile sector disclose which suppliers they work with. Companies purchasing from the same suppliers may collaborate on improvements.
  • The IRBC Initiative TruStone brings together the Dutch and Flemish natural stone sector, the Dutch and Flemish governments, NGOs, and trade unions. Together, they make agreements for a more responsible production and procurement of natural stone.
  • The European Partnership for Responsible Minerals (EPRM)is a multi-stakeholder collaboration with the mission to increase the uptake of responsibly produced minerals from high-risk areas.

 Alternative origins and raw materials

When it is not possible to address sustainability risks, you can work with your current supplier to see if raw materials can be sourced from another country. This is usually discouraged because it means you no longer have a positive influence in the country where the risks are present. Another solution may be to replace an ingredient or raw material with an alternative. For example, there is decaffeinated coffee and cocoa-free chocolate. There are alternatives to cotton, such as hemp.

And there are organic glitters, for use in make-up. The question is whether these alternatives improve the situation for low-income families or workers. Ideally, working with suppliers to address the real problems where they occur is the best solution.

Homework assignment

After this assignment, you have a good understanding of the solutions your company is already implementing and could consider adopting to mitigate or address sustainability risks.


In previous modules, you created an Excel spreadsheet with the main products, origins, and suppliers. You assessed whether there is a risk of child labour and whether living wages or living incomes are paid/earned in the supply chains of these products. In this module, you have learned how to address sustainability risks. That is also the topic of this assignment.

  • Create a new tab in the Excel spreadsheet. Make a list of the solutions your company is already implementing and for which products.
  • Now, look at the list of main products again: which solutions can also work for these products? List these in a new column.
  • Which solutions could work for the key products as well? List these in a column titled "Potential Solutions".