Shared growth with business partners is one of the essential areas we need to address in discussing sustainable management. More recently, with the shift in global market competition from business-to-business competition to ecosystem-to-ecosystem competition, there is a growing emphasis on the sustainability of the entire business ecosystem encompassing the entire supply chain. Many global corporations have already started to consider social and environmental impact, including human rights policy, labor environment and environmental management, in transactions with their partners.
How can these activities contribute to corporate business? In this episode, we will explore what kinds of activities Amorepacific and other global companies do to expand their positive social and environmental impact on the supply chain.

In going global, a company faces increased complexity in the supply chain due to an increase in outsourcing and diversifying purchase items. As a consequence, it will inevitably face limitations in its social and environmental responsibility activities limited to internal business activities. Thus, corporations need to strengthen sustainability across the end-to-end business ecosystem by expanding the scope of management to include subcontractors and even sub-subcontractors.

Have you heard about the Rana Plaza collapse that occurred in 2013 in Bangladesh? Rana Plaza is an eight-story commercial building containing many garment factories, and clothes made here were delivered to global brands such as H&M and Zara. The building showed some warning signs of danger, including cracks, before the collapse but the factory owners ignored warnings, such was the pressure to deliver goods to the agreed upon due dates. This resulted in the terrifying building collapse with a death toll of over 1,000 workers and approximately 2,200 injured people.

This collapse revealed the terrible working conditions of garment workers and there were growing criticisms on low incomes of workers and poor sustainability management of global fast fashion brands. "We don't want to wear clothes weaved with blood!" "H&M must answer to Bangladesh!" H&M's Facebook was inundated with criticisms from customers. The companies raised funds of approximately KRW 3 billion to improve labor working conditions in Bangladesh, and some of them chose to withdraw their business from the market.

From the initial stage of partner selection, L'Oréal considers environmental and social capabilities of candidates, in addition to QCD (Quality, Cost and Delivery). The company not only selects partners through evaluation in areas such as environmental management and social responsibility, but also helps partners to improve sustainability activities through the "Buy & Care" program.

L'Oréal established a goal of evaluating social and environmental performance across all its strategic suppliers by 2020. Partners designated as a strategic supplier will conduct self-evaluation and improvement activities with regard to sustainability under the support of L'Oréal. In addition, L'Oréal has encouraged its strategic suppliers to participate in its "Solidarity Sourcing" program, which the company has operated since 2010 to provide reliable jobs and quality of living to socially and economically disadvantaged people.

Global retailer Marks & Spencer has made considerable efforts to improve the sustainability of its supply chain and disclose related information to consumers and NGOs transparently. This June, the company launched an online map through which consumers can easily find information on the company's partners, which was previously difficult to access. Anyone can go to the map and search a country and a region and view supplier information, including their address, business areas, products and human resources.

As part of its "Plan A (sustainability management)" activities, Marks & Spencer operates "Global Sourcing Principles" setting forth principles on human rights, gender equality, fair trade and more in order to strengthen the sustainability of the entire supply chain. In addition, the company recommends that its partners monitor compliance on a regular basis and submit a report on corrective measures for non-conformance, if any.

The definition of a "good company" is now changing. In the past, a good company was one which engaged in volunteer activities or various donations for local communities. Now, companies need to fulfill more intensive social responsibilities to become a good company, including human rights, labor environments, environmental protection and transparent management system. There will be more stringent demands and evaluation on global companies and it will not be easy to ensure that our suppliers fulfill their environmental and social responsibilities. Yet, we must prioritize realizing shared growth across our supply chain, even as it increases in complexity. Strengthening the sustainability of our business partners is not only directly related to our business competitiveness, but also our own social responsibility. We look forward to your continued participation in Amorepacific's efforts to further our positive impact on society and environment along with our business partners by building a sustainable supply chain.