*2.1. Methodology*

This work forms part of a PhD programme, funded jointly by a public research agency (EPRSC) and what was until recently a leading private company (Carillion plc), directed at improving understanding of (un)sustainability in supply networks. The research has taken an inductive approach, aiming to develop a theory that is "grounded" in the data from which it has been derived [39,40].

It was important that the research was carried out in a main contractor, Carillion plc, recognised for its sustainability credentials. The company published its first "environmental" report in 1997 and won Price Waterhouse-Cooper's "Building Public Trust" award for Sustainability reporting in three consecutive years. The company has clearly articulated corporate values encompassing economic, environmental and social issues—"we care; we achieve together; we improve and we deliver"—and was already exploring how its existing approaches related to the UN Sustainable Development Goals. Its position as a main contractor made it the main node of the supply network. The company operated in the UK, Middle East and Canada, with an annual international procurement spend of 3.4 billion pounds sterling [41], working with over 8000 accredited first-tier suppliers and many thousands more in second and third tiers. Thus, involvement with Carillion offered an opportunity to examine how Responsible Consumption and Production can be incorporated into the operations of a commercial company.

During the initial phases of the PhD research in 2015, "purposeful sampling" [42] was undertaken to draw on the shared knowledge and experience of sustainable procurement within the company. Discussion with Carillion's Supply Chain Director and Sustainability Manager identified seven members of the supply chain team and two of the sustainability team likely to provide useful insights on interview. This provided a sample including both high and medium level decision makers, to provide a strategic overview of current procurement and sustainability within the company and the wider industry. Interviewees were also selected to offer a mix of job roles, from strategic to joint venture procurement, key project management, supplier accreditation and on-site sustainability monitoring (Table 1).


**Table 1.** Team and Job Role of Orientation Interview Participants.

At this initial stage of the research, the "orientation interviews" used a semi-structured format to prompt responses but to also allow the interviewer to explore themes or comments in more depth (see Appendix A for prompt questions). Open coding of the interview transcripts identified two sustainability issues where participants noted proactive, multi-tier engagemen<sup>t</sup> with the supply network: responsible sourcing of timber through Forest Stewardship Council (FSC) certification and Modern Slavery. Consideration of these two issues by the paper's authors confirmed that they represented contrasting approaches to supply network sustainability (see Table 2). They were therefore selected as suitable cases for further exploration.


**Table 2.** Comparison of Forest Stewardship Council (FSC) and Modern Slavery (MS) supply network approaches identified during "orientation interviews".

> EU timber import regulation introduced in 2010 [43].

To develop understanding of how the company approached FSC certification and Modern Slavery, multiple data collection methods were adopted to allow triangulation of results. Further interviews were added with individuals whose importance was highlighted during the semi-structured interviews:

two supply chain team members responsible for procurement of timber with FSC certification. The researcher was also allowed to observe internal meetings on Modern Slavery by the Carillion Sustainable Procurement Steering Group. To understand the perspective of Carillion procurement teams on FSC certification and Modern Slavery, these issues were included in an on-line survey sent to all 94 supply chain team members and the sustainability manager. A response rate of 72% provided 68 completed surveys. The demographics of the respondents were 75% male, with 6.3% of respondents being aged 15–24, 32.8% aged 25–44 and 60.9% being aged 45–64. Respondents were also classified by decision making level, verified by the Supply Chain Director. High Level decision makers accounted for 18.8% of respondents, medium level 57.8% and 23.4% at the limited decision-making level. Questions were rated by participants using the Likert scale to provide more nuanced answers and these were analysed using SPSS. Team members were also given the opportunity to comment. Transcribed interviews, meeting notes, other observations and materials were coded in MAXQDA software, building on the initial open coding and allowing the emergence of themes and concepts. In the final, selective coding phase [44] illustrative quotes were derived. Additionally, "company" information was supplemented and cross referenced with industry literature, Carillion annual sustainability reports and other materials available publicly online. Carillion staff provided feedback and identified errors and/or omissions. The resulting "bottom-up" and "top-down" cases were then analysed (Section 3) using the methodology for cross-case analysis proposed by Khan and Van Wynsberghe [45] for making deductions from a small number of cases.

#### *2.2. "Bottom-up" Goal Setting: Forest Stewardship Certification*

The Forest Stewardship Council (FSC) Chain of Custody represents an attempt to frame objectives, targets and requirements that can be shared throughout the supply network for forest products. The FSC originated in the early 1990s through discussions between the World Wildlife Fund (WWF, now Worldwide Fund for Nature) and several major UK DIY chains, concerned about the impact their procurement of wood was having on rainforests and the risks this entailed [46]. The group, WWF95+, wanted an industry-wide approach to ensure that the timber they purchased could be "guaranteed" as ethically sourced. This desire was compounded by the failure of governments at the Rio Earth Summit to reach an agreemen<sup>t</sup> to stop deforestation. From the outset, FSC took a non-governmental approach, harnessing commercial drivers to effect change. FSC has striven for, and increasingly achieved, a membership-based approach to forest management. It now provides all interested groups a voice at their membership forum and is overseen by a board elected by the membership. Decisions on forest managemen<sup>t</sup> include indigenous people through local consultation. Local workers are prioritized for employment, which must include training in safety and use of equipment, and must be paid a "decent" salary [47]. Audits are carried out to ensure that the principles behind the approach are met. The social and environmental benefits and the associated reduction in risks resulting from this local, ethical approach to forest managemen<sup>t</sup> are then propagated through the supply network, with the "Chain of Custody" assured by recording each step in the process. Evidence from WWF indicates that many smaller producers have benefited financially from FSC whilst larger scale producers have derived less advantage [48]. Since its inception in 1993, FSC has grown to be a significant market mechanism to promote responsible forest management, now covering 180 million hectares of forest in 112 countries.

By 1998, WWF95+ had grown to 86 participants including Tarmac (from which Carillion (Wolverhampton, UK) emerged in 1999). Tarmac was the first construction company to be engaged in the WWF95+ group and was seen by WWF as an important agen<sup>t</sup> to bring benefits to both construction and forest industries. Carillion, driven primarily by corporate environmental values and reputational risk management, published a Sustainable Timber Policy, ratified by the Carillion board, to purchase only timber and wood-derived products with FSC Chain of Custody certification or, where this could not be achieved, to use sources that were independently verified as legal and sustainable. Requiring procurement teams to source only certified sustainable timber represents

a major commitment, and it is clear from interview comments that this continued irrespective of client demand: "no client ever requested FSC apart from occasionally" (high-level decision maker). The principle was communicated to clients, sub-contractors and other suppliers.

Carillion accepted that, without a certified standard, it could not guarantee it was not colluding with or procuring timber from illegal logging operations; FSC provided a way for Carillion to ensure that its supply network did not contribute to illegal and destructive deforestation and thereby to avoid potential reputational risk. However, it was also made clear that Carillion's aim reached beyond its own network, "to promote demand and improve competitive pricing for FSC timber within the construction industry as a whole" [49]. Indeed, this was seen most recently in Oman, when Carillion's joinery workshop was the first in the country to have FSC Chain of Custody certification [41]. Carillion continued to support FSC and its incorporation into its procurement and operational processes. In 2013, Carillion updated its Timber Policy as part of a wider corporate 2020 sustainability strategy.

Operating the FSC "Chain of Custody" demanded additional commitment. This included guidance and training material for Carillion procurement and operations staff and ongoing, intensive engagemen<sup>t</sup> with suppliers and subcontractors bringing timber onto site as part of contract works packages. As noted by a high-level decision maker, "whilst it remains outside the industry norm you just have to continuously communicate it. People still don't really know what they are buying. They don't know how to maintain chain of custody". The company set up internal systems to manage the monthly reporting of timber usage and report this annually in its independently audited Annual Sustainability Report. Nevertheless, even after twenty years of commitment to the FSC Chain of Custody, Carillion continued to experience several major challenges in requesting FSC timber as its primary option and propagating this principle through the supply network. These included influencing or controlling sub-tiers in the supply network where there is a lack of contractual status, ensuring record keeping met Chain of Custody requirements and, linked to this, committing staff and managemen<sup>t</sup> time to resolving reporting anomalies such as "they'd used more FSC timber on the job than the whole of the UK in a year" (high-level decision maker) [49].

Despite these concerns, this "bottom-up" ethical approach to timber managemen<sup>t</sup> delivered some successes. By 2009, timber with no certification represented only 7.9% of Carillion's total purchases and continued to reduce, with annual fluctuations, to 5% during 2015 [50,51]. Carillion was committed to 100% purchases of certified sustainable timber and wood by 2020. Increased availability of FSC or a similar Chain of Custody organisation, the Programme for the Endorsement of Forest Certification (PEFC), has enabled more wholesalers and suppliers to offer Chain of Custody products. Increased internal monitoring and awareness supported and were supported by this change. Carillion continued to place an emphasis on the role of FSC in preventing deforestation [41]. For example, the 2017 Carillion supply chain team survey identified that 67.7% believed that the most important reason for the company supporting responsible sourcing of timber was its alignment with Carillion's environmental and social values, ensuring that forests remained "alive for future generations" [52]. Minimisation of reputational risk due to unethical sourcing was also identified as a major benefit of FSC Chain of Custody, rated as highly important or important by 65% of respondents. Whilst still facing challenges in procuring FSC timber, the company worked to identify and support improvement in its supply network, focusing on "temporary" wood products where there is less awareness of FSC materials amongs<sup>t</sup> subcontractors. Carillion promoted FSC certification to its upstream suppliers, but engagemen<sup>t</sup> was more limited in the sector's downstream value chain: whilst certified timber does gain credits within building standards such as BREEAM, few clients directly specify FSC or other responsibly sourced timber materials. Furthermore, unlike companies supplying the consumer market, there is no direct communication between main contractors in the construction sector and the end users of the structures, most of whom will be unaware of timber sources.

#### *2.3. Top-down Goal Setting: Modern Slavery*

The issue of forced labour, employed directly or more remotely through supply networks, has for some time been addressed through voluntary codes of conduct such as that promoted by the International Labour Organisation (ILO) or the UN Global Compact. However, the UK Government, in 2015, passed the Modern Slavery Act [53], requiring all UK companies to address the issue of modern slavery in their own businesses and their supply networks. Modern slavery is considered to be delineated by bonded labour, poor wages, working and living conditions, intimidation and violence or human trafficking. Companies with a turnover of more than £36 m must demonstrate the action they are taking and publicly report this on an annual basis. The act affects all UK-based companies and is also generally accepted to apply to all non-UK based subsidiaries. In setting this legislation, the governmen<sup>t</sup> has imposed values and specified the process by which all UK companies must engage with this issue, in marked contrast to the way FSC certification has developed more organically.

The UK Government initially suggested that there could be between 10,000 and 13,000 people enduring modern slavery in the UK [54]. The worldwide figure has been estimated at 45 million [27], with construction identified as a major area of concern because of its high reliance on flexible, temporary labour and highly diverse global supply networks.

Globally it is estimated that 7% of the world's workforce is employed in the construction sector [27]. The complexity of labour issues in construction is compounded by the large number of different materials used (see Section 2.2), with up to 10,000 different component parts being required for the construction and use phase of buildings [55]. Companies primarily manage labour issues as part of their product supply networks but the high numbers of products and components, often originating from unknown global sources, makes it difficult to ensure transparency in employment practices. Even in relatively short supply networks, such as within the UK, mapping labour practices can become complex. Complexity can make the different forms of modern slavery, which are frequently informal and transient in nature, hard to detect and therefore persistent [56–58].

Carillion first used assessment tools in 1999 to review the environmental performance of suppliers. From this work, they identified that only 50% of suppliers broadly met requirements. As a result, Carillion began to address the social aspects of its suppliers' services and products by engaging with suppliers to promote sustainable sourcing of products and materials, "with high risk suppliers being encouraged to change practices rather than being delisted" [49]. The company made it clear that ensuring human rights was a key company principle and that they had "an ongoing commitment to improve the living and working conditions ... not just for direct employees but also for our subcontractor teams" [49]. The Modern Slavery Act 2015 went further, demanding greater transparency across the supply network, with clear evidence of company engagement. Along with many of its peers, Carillion included questions on their supplier registration system relating to human rights, asking for confirmation that companies had employment practices in line with the ILO or UN Global Compact on human rights, i.e., that they ensured fair wages and freedom of association, with no forced labour. They also asked companies if they engaged in responsible sourcing within their own supply networks.

A senior-level working group within Carillion reviewed existing company approaches and risks and, as a result, accepted that for many smaller suppliers, the Act and the concept of modern slavery represented a little-known issue. This was reiterated by the supply chain team with one member stating, of suppliers, "There is limited knowledge out there and even less on how it will be implemented" (medium-level decision maker). A large part of the company's efforts was therefore directed at engagemen<sup>t</sup> and awareness raising. At a company level this was achieved by direct communication with Tier 1 suppliers, changes to the supplier registration process, information and awareness raising via Carillion's own website and Carillion's own externally facing supply chain teams and operational staff. Questions on the internal supplier registration system were expanded to include the term "modern slavery" and, to support smaller companies, and in 2016 Carillion's Labour Standards Charter was developed [59] which suppliers could sign and adopt if they did not have their own processes in place. However, Carillion also identified that slavery was an industry-wide

concern which, whilst highlighted by legislation, strongly resonated with the values of their peers and would benefit from collaborative efforts. In 2012, to meet gaps in sub-sector specific sustainability skills, Carillion, along with industry peers, helped create and co-fund an on-line skills platform, the Supply Chain Sustainability School (SCSS). By 2015, the free-to-use "school" had thousands of industry members. To overcome the knowledge gap on Modern Slavery, a group from the SCSS encouraged and facilitated main contractors, clients and major manufacturers to work collaboratively to create new slavery guidance directed specifically at the construction industry. Skills modules on Modern Slavery and the Act, along with video materials and written information, were developed and promoted by main contractors and clients to organisations in their supply networks [60]. However, progress of awareness across the network remains slow, with 21% of Carillion supply chain team identifying, in 2017, that most or many of the Tier 1 suppliers they worked with did not know about the Modern Slavery Act [52].

For companies operating in the UK, the Modern Slavery Act aligns with general societal norms and values and builds on existing legal requirements; and ye<sup>t</sup> slavery can still occur. Detection becomes even more difficult when company operations or supply networks span countries or regions where different operating principles are accepted and where governmen<sup>t</sup> engagemen<sup>t</sup> may be less developed. As a specific example, Carillion identified its highest risk area as its Middle East and North Africa (MENA) businesses, particularly in relation to worker welfare standards. Carillion had operated for more than 40 years in the Middle East, a region that has been experiencing an immense building boom. Organisations such as the Business and Human Rights Resource Centre have identified major human rights abuses in the region, such as migrant workers being subjected to high recruitment fees, non-paymen<sup>t</sup> of wages and restricted mobility. A separate Carillion-MENA Welfare Steering Group was therefore established.

In 2009, Carillion established a business in Qatar to provide construction, infrastructure and facilities managemen<sup>t</sup> services; it grew to employ approximately 1100 people directly, with a further 6000 employed through subcontractors [6]. Carillion entered into a commitment that employees would be paid in accordance with Qatar Labour law but, in addition, that employees would also receive flights home, holiday pay, health insurance and accommodation and food. They set standards for accommodation that landlords had to meet prior to contracting, and required accommodation to be audited to ensure the standards continued to be met. Carillion put in place processes to ensure that employees have freedom of association, routes to express grievances and work to the same Health and Safety standards as in the UK, replicating the "Don't Walk By" culture used on all UK construction sites. However, in 2014, they were publicly accused of having subcontractor labour on site who had been forced to surrender their passports and were living in poor accommodation and receiving only a small part of the promised wages [61]. In response, Carillion implemented a similar approach for workers employed through sub-contractors. In one of the most contentious areas, that of recruitment, Carillion worked with "preferred suppliers" who had been reviewed for financial, ethical and professional conduct. It also carried out spot checks and terminated contracts with companies that charged excessive fees or had been unethical in their approach. A company like Carillion does not have direct control over its subcontractors; however, they are expected, as a minimum, to comply with Qatari labour laws. Carillion proactively reviewed and monitored the employment practices and accommodation of its suppliers and their subcontractors; only those that met Carillion's standards were included in the preferred supplier list. During 2016, the Carillion Board members visited two accommodation sites in the Middle-East as part of the audit process. When the Business and Human Rights Resource Centre approached the top 100 construction companies working in Qatar and UAE requesting feedback on their approach to worker's rights, Carillion was one of the first companies to respond but only 22 companies in total replied [62]. Qatar has seen an increased drive by global construction contractors to remove modern slavery from their supply networks but media reports, mainly fuelled by the reports of campaigning NGOs, continue to focus on poor worker conditions. In December 2016 Qatar abolished its "kafala" system of worker recruitment and, whilst Amnesty International notes "it leaves the same basic system intact", this does demonstrate that the state is responding to pressure and supporting change [63].

## **3. Observations and Comparisons**

Cross-case comparison provides the opportunity to learn from different cases and to gather critical evidence to modify policy [45]. This type of comparison, considering general and distinctive characteristics between a small number of cases, has already been utilised to support policy recommendations on the role of supply chain collaboration in affordable housing development [64] and to examine sustainable supply chain managemen<sup>t</sup> in the textile sector [65]. Using a case-oriented process, the FSC and Modern Slavery approaches outlined in Sections 2.2 and 2.3, were analysed to look for patterns of similarities and differences. The themes identified have been collated in Table 3, illustrating the main benefits and challenges within each theme. The observations reveal how the SDGs align with the top-down and bottom-up approaches.


**Table 3.** Benefits and challenges associated with top-down and bottom-up approaches.

> Key: B: Benefit to Contractor. C: Challenge to Contractor.

Both FSC and Carillion plc have committed to support the SDGs [51,66]. Indeed, the FSC Chain of Custody approach provides a well-established collaborative supply network of the type identified by the UN as necessary to effect change. However, this work confirmed that those engaged in the FSC timber value chain support the SDG "Sustainable Consumption and Production"—indeed, the Forest Stewardship Council have identified it as one of the goals to which they aspire—but showed that they do not see it as a primary focus. FSC believes that another goal, SDG 15—"Life on Land"—is most relevant to their work, specifically target 15.2 "progress towards sustainable forest management". The Council has furthermore identified that, for those within the supply network, FSC accreditation provides a tool that supports 11 SDG goals and 35 targets (Appendix B, Table A1) [66]. Carillion had also reviewed the SDGs and undertook a major materiality survey, asking staff, clients and other stakeholders to identify the goals they felt Carillion could effectively support. Stakeholders identified five goals, all of which focused on social equality or business innovation, but of these only Goals 5 (Gender Equality) and 8 (Decent Work and Affordable Growth) aligned with FSC's goal selection. In 2017, Carillion published its Annual Sustainability Report noting support for nine SDGs. The additional goals recognized the importance of impacts within its supply network (SDG12) and on environmental issues (especially SDG 15: Life on Land) and also SDG 11 (Sustainable Cities and Communities) [51]. Such variation in goal alignment would sugges<sup>t</sup> that the position and role of an organisation within the supply network influences its view of how it can effect change and thus which SDGs are most relevant. This view is supported by Schmidt et al. [67] who note that, whilst stakeholders advocate "monolithic" outcomes across the supply chain, very different issues are salient for different companies, which therefore set different goals depending on their position within the supply network [68]. This highlights the difficulty of aligning goals and targets between different parts of the value network, even where strong relationships already exist.

The Modern Slavery approach demonstrates less well-developed collaboration within the supply network: collaboration may reach beyond the first tier of contractors but lacks the clarity and consistency provided by a Chain of Custody process. This study has confirmed how construction companies, such as Carillion, with strong social and ethical stances will implement policies, undertake audits, and work collaboratively with employees and local groups in an attempt to prevent slavery. However, other stakeholders in the supply system have identified that they have a role to play in supporting Decent work and affordable growth (SDG8) but did not link this with SDG12, the performance of the whole supply network. Unlike FSC, there is currently no "bottom-up" approach; it appears that an "imposed" principle, such as the prevention of modern slavery, is extremely difficult to deliver throughout the supply network. This becomes increasingly problematic where peer organisations, and public bodies are not engaged with the issue. A recent report by Segall and Labowitz [69] concluded that breaking the "cycle of abuse" needs stronger legal enforcement; in particular, much greater regulation of the recruitment process and collaboration between all actors in the supply network is needed, to include countries where migrant workers are recruited.

#### **4. Operationalising the SDGs—Value Driven Approaches**

Improvements in the sustainability of supply networks are generally limited to incremental improvements; of doing "less bad". Although the SDGs have been presented as a way to enable more radical reductions in unsustainability, they do not challenge the incremental approach and as ye<sup>t</sup> have not offered targets based on operating boundaries. The targets and indicators that do currently exist offer limited guidance on how commercial actions can be effectively aligned with the SDGs or the Planetary Boundaries [37]. Currently the only explicitly "business focused" indicator for SDG12 is Indicator 12.6.1—"Number of companies publishing sustainability reports" [70]—which is focussed on process rather than outcome. Such weakly articulated aspirations do little to discourage the current business focus on "how a company can contribute" rather than "how it will deliver" [71].

Therefore, there is a role for trade associations and commercial organisations to develop sectoral approaches and guidelines, loosely analogous to the Product Category Rules (PCRs) used in product labelling and based, like PCRs, on shared goals and aspirations. Some large corporations, who are identified as adopting leading sustainable practises, appear to have the necessary "shared, organisation-wide long-term vision" and exhibit "core values and cultures and a sense of purpose beyond the economic bottom line" [72]. In a traditional view of supply networks this is demonstrated by the "corporation" acting as the driving force for implementing CSR through selective commercial pressures on organisations in its upstream supply network. It operates as a hub for stakeholder engagement, on the implicit assumption that the principles of the corporation have precedence over those of other organisations within the network [23]. This is echoed by Jorgensen and Knudsen [73] who note that larger buyers, acting as change agents, exert pressure on their supplier tiers to comply with their environmental and social requirements. It has been argued [23,74,75] that, as the corporation develops these relationships, it moves beyond an adversarial negotiating stance to one of co-operation as it seeks to propagate its own principles through the supply network. This would appear to be the current position with modern slavery: the corporation, driven by legislation and supported by NGOs, tries to require specific social values to be upheld throughout the supply network.

By contrast, the approach followed by FSC has led to development of a different dynamic in the supply network. Through the creation of the FSC "brand" and rigorous certification structure, forest owners have built an equally strong position in the supply network, with network power being found at both raw material and "retail" ends of the network [76]. Both dominant groups value the importance of their reputation and, in the approach presented, both Carillion and FSC shared a similar set of "values". Both organisations had strong self-interest to co-operate but in doing so were also working towards goals with longer-term benefits, beyond those which both parties originally expected. These included generating wealth for local communities, especially local SMEs, and providing buyers with a high level of confidence in the fair treatment of people working in the supply network.
