The creation of a Groceries Code Adjudicator has been opposed by nine of the ten UK retailers which it would be overseeing. Ben Cooper suggests their position does not sit well with much-vaunted pronouncements about corporate responsibility and may be strategically misguided.
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Journalists are repeatedly told how wonderfully enlightened Britain’s all-powerful supermarkets are, by the companies themselves that is. Humility is not a virtue they lay claim to. They wield their extraordinary power with discretion, integrity and equity. Accusations from NGOs and supplier organisations about unfair business tactics and abuse of buying power are simplistic and ill-informed.
In the interests of objectivity, one gives it all a fair hearing – fairer perhaps than some of their critics are inclined to give. And then one reflects upon the fact that those same companies oppose the creation of an adjudicator to support the Groceries Supply Code of Practice (GSCOP), introduced last year.
Forget the PR puff, the corporate responsibility reports, the proud championing of Fairtrade bananas and coffee. For many people, the UK’s all-powerful supermarket chains are showing their true colours by opposing this move.
Only one of the ten retailers which would be subject to the adjudicator, Waitrose, has supported the draft bill which has been introduced to Parliament following the recommendations of the 2008 Competition Commission (CC) grocery market inquiry.
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By GlobalDataEven the Cooperative Group, which styles itself as a pioneer in ethical trade, and Marks & Spencer, which claims to be leading the way in corporate sustainability through its Plan A strategy, appear to find independent scrutiny of their buying practices unconscionable.
The nine supermarkets say that the administration of the scheme will add to costs and that the existing Code of Practice (GSCOP) is working well without an adjudicator.
There are a number of circular arguments here. The retailers say the fact that there have been no referrals to arbitration under GSCOP shows how equitable their treatment of suppliers is. Proponents of the adjudicator say it proves how cowed suppliers are by the power of the retailers.
Retailers say the administration of the system will push up costs and will be administratively burdensome. The suggestion that it would fuel food inflation has been rubbished by supplier representatives. They say the costs, which are to be borne by the retailers, are minimal in comparison with the profits of the big supermarkets, and add that if supermarkets are so sure their suppliers are being treated fairly, arbitration will be very rare and therefore result in comparatively little additional work or cost for the retailer.
That argument is self-defeating, say the retailers. If GSCOP is doing its job already and there is going to be no work for the adjudicator, why have it in the first place? Campaigners say it is needed to help suppliers raise grievances without fear of reprisals by the retailers, that it was recommended by the extensive CC inquiry, and that it has deterrent value.
And so we go on. The fact that the Government has chosen to present this measure, which was in all three parties’ election manifestoes last year, as a draft bill ensures a slow passage through Parliament, and the issue will continue to be debated for some time. There may be some changes to the remit of the adjudicator, possibly reflecting retailer concerns or even in response to suggestions from suppliers. What seems fairly certain, and is acknowledged by both sides, is that at some stage the UK grocery sector will see the establishment of an adjudicator.
In light of that, it is puzzling that the retailers have not taken the pragmatic step of lending support to the idea, which could still be qualified with some of its misgivings, for example relating to the possible imposition of fines and the use of information from indirect suppliers and third parties.
As it stands, the major retailers are resolutely opposing a measure which, if their protestations about how fairly they treat their suppliers are accurate, would only legitimate the assertions they make in their corporate responsibility reports. It would, as it were, be a form of independent authentication that these claims are not PR puff but indicative of what the British Retail Consortium (BRC), which represents the UK’s large retailers, describes as “perfectly healthy business relationships” with suppliers.
While BRC members, such as Sainsbury’s and Marks & Spencer, have laid their ethical credentials on with a trowel, not least on these pages, much of what they do stands examination and shows them to be making strides in sustainability and corporate responsibility. However, by joining in the opposition to the adjudicator they risk bringing themselves and their corporate responsibility work into disrepute.
Besides, it is not as if the Government is about to appoint Billy Bragg or Tony Benn as the arbiter who will decide on whether the supermarkets have overstepped the mark. The history of official inquiries, watchdogs and the like suggests government-appointed referees tend to give powerful, established corporations plenty of leeway. And given its record of cosiness with the corporate sector, this government more than any would surely look to appoint an adjudicator who would give the supermarkets the fairest of hearings.
In addition to protesting that ‘doing the right thing’ is important, companies also constantly claim that being a responsible corporate citizen is simply “good business”. By the same token, why is supporting an adjudicator not a good move from a business point of view?
Only Waitrose appears to appreciate this. The retailer said: “Waitrose has always had a long-term commitment to working collaboratively with our suppliers. We believe that industry-wide regulation is the best solution for suppliers and long overdue for our industry, and we look forward to working cooperatively with the Groceries Code Adjudicator. Our suppliers are the life blood of the supermarket industry and it is vital to offer them meaningful long-term support.”
Given that the BRC expects the measure to go through, would it not be more advisable for the retailers to support the idea in principle while pushing for as many concessions as possible? The decision to oppose it outright, particularly through political lobbying, hardly an activity enamoured of the public, not only devalues their ethical credentials but may be a strategic mistake.
