Selecting the right CR Management System Verification for Supplier in the Outsourcing Services Industry

CR management system verification through CR Rating and CR Certification mitigates buyer risks and is a proactive approach to responsible sourcing

Buyers are proactively mitigating supply chain sustainability risks by using a suite of tools such as supplier certification and monitoring to ensure operational performance through developing responsible sourcing programs. By recognizing the buyer demand for suppliers to operate more responsibly, proactive outsourcing services providers are beginning to voluntarily validate their performance in managing a range of social responsibility issues through certification.

To validate adherence to social and environmental standards, proactive outsourcing service providers can obtain a CR Rating or a CR Certification of their management systems through third-party assessment firms. Both CR Ratings and CR Certifications come with their unique trade-offs so it is important for suppliers, and buyers alike, to understand how to apply these most effectively to optimize supply chain risk mitigation and continuous improvement benefits.

Option 1: CR ratings are assigned to companies generally after completion of a self-reported common template based on a set of disclosures. For buyers requiring CR ratings of their suppliers, the self-reported performance can also typically include a form of limited verification where document due diligence takes place but there is no engagement with local sites. Such ratings apply a scoring methodology that gives a CR rating to a supplier, such as Bronze, Silver, or Gold rankings. CR ratings have grown in prominence over the last 5 years due to their ability to quickly assess a suppliers’ performance on social responsibility issues, but for suppliers where additional validation of performance is necessary, certification offers a more robust approach with site-based due diligence for verification – giving certified suppliers more proof of performance and buyers more confirmation of risk mitigation.

Option 2: CR certifications are based on intensive due diligence with on-site or off-site assessments of an organization’s management systems. It is well known that most manufacturing or food-service suppliers require an extensive on-site verification where company policies and practices are validated thru an audit at each company location included in the assessment scope for certification. Service-based companies, on the other hand, do not typically require an on-site audit due to the nature of the business having less health and safety, social, or environmental risks. Therefore, many of the highly-recognized certifications developed over the past 25 years may not accommodate the operating realities and cost effectiveness priorities of service-based businesses. For service-based suppliers, a cost-effective valuable option is to utilize an off-site certification approach which leverages corporate policy reviews with detailed proof of performance and management system compliance at every assessed site via site management interviews and employee surveys.

Figure 1:  Responsible Sourcing Solutions by Risk Mitigation and Data Validation Needs

The above framework can help guide companies in deciding which CR verification to pursue. It factors in the extent of data validation of a company’s CR policies and practices versus its corresponding relationship to risk mitigation. As data validation increases from acquiring CR ratings and/or CR certification, it is assumed that there is also an increase in mitigating associated risks due to more robust verification.

CR Certification is a comprehensive option to effectively address buyer demands for CR management system verification

Understanding the limits of CR Ratings for risk mitigation, buyers are beginning to look more and more towards CR standards and third-party certification systems to validate their suppliers to industry-accepted best practice. Using a CR standard as a business-to-business certification proactively addresses buyer expectations and assures companies’ key stakeholders, especially customers and investors, that their operations are managed consistently and responsibly.

For proactive Outsourcing Service Providers looking to meet their buyer’s emerging Responsible Sourcing demands, there are several predominate CR Certification Standards to choose from but each varies in the type of assessment, methodology, and topics covered. B Corp, ISO 14001, OHSAS 18001, SA8000, and Verego SRS have become the predominate standards and certifications available for an outsourcing organization. On-site verification is required for a certification with the ISO 14001, OHSAS 18001, and SA8000 standards. Off-site verification is conducted for the certification with B Corp. The Verego SRS certification conducts off-site verification but with site level validation of implementation through interviews and employee surveys.

Predominate CR Certification Standards address core subjects of the ISO 26000 Guidance on Social Responsibility: A Comparison of Standards

To evaluate the strengths of each CR Certification Standard, the ISO 26000* Guidelines have been used to compare how each of the certification options addresses the core topics of corporate responsibility as outlined in the ISO 26000 Guidelines. Most notably, certifications like ISO 14001 and OHSAS 18001 only cover one subject of corporate responsibility, the environment and labour practices respectively. Additionally, certifications like SA8000 only cover two of core subjects: human rights and labour practices. By only covering one or two core subjects, pursuing certification with any of these three standards necessitate pursuing multiple certifications to achieve a holistic responsible sourcing strategy.  Furthermore, B Corp certification addresses 6 out of 7 core subjects with organizational governance as a noted strength, but with very limited depth for the other topic areas. However, in addition to the assessment, the final step for CR certification with B Corp involves a legal requirement of integrating stakeholder interests into the company’s governing documents and legal structure of the company, thus limiting B Corp’s viability as a certification for larger companies. Lastly, the Verego SRS certifications cover all the 7 core subjects of ISO 26000 with a relatively strong focus on organizational governance, human rights, the environment, fair operating practices, consumer issues, and community development, thereby covering the full-spectrum of CR as the most comprehensive approach to CR certification.

Table 1:  Comparison of Certification Schemes according to the ISO 26000 Guidelines.
ISO 26000 is not a management system standard and is not intended or appropriate for certification purposes.

Verego SRS Certification addresses the broadest  spectrum of CR topics with its holistic approach to certification and creates multiple benefits for certified organizations

The Verego SRS Standard is a holistic approach to 56 CSR topics categorized by Verego into five primary areas: leadership, ethics, people, community, and the environment. The three-month long certification assessment process utilizes an audit triangulation approach to validate CR management systems. This methodology ensures the verification of implemented CR policies and practices as well as the identification of gaps and non-compliance. By providing best practice recommendations, continuous improvement roadmaps, and monitoring compliance action plans, Verego validates and promotes suppliers establishing approaches for continuous improvement.

With the Verego SRS Certification, an outsourcing company can gain overlapping benefits such as influencing new contracts and reducing manpower hours in RFP preparation thus creating value, saving costs by avoiding duplicate CR certifications, and acquiring intangible benefits by creating competitive advantage, client satisfaction, customer loyalty and trust. By conducting a number of case studies with outsourcing firms who have previously been awarded Verego Certification, it was quantified that a company with Full Enterprise-Wide Certification can:

1. Avoid roughly 70% on certification costs compared to acquiring multiple CR certifications to satisfy buyer sourcing requirements
2. Reduce preparation time and documentation on RFP inquiries on sustainability sections
3. Avoid costs of client secondary audits
4. Confirm social responsibility improvements impacting its brand positively, and
5. Position the company for winning new contracts and retaining existing clients through validated social responsibility performance that ultimately strengthens competitive advantage.

Figure 2:  Benefits of Verego SRS Certification for an Outsourcing Organization

To learn more about the Verego SRS Certification and the process of CR management system verification for your organization, connect with Verego by contacting info@verego.com.