Business Essentials: 'How can we make sure that everything we do is green?'

Sisco Merchandising was set up in South Africa in 1989, and in England six years ago. Sisco UK now has offices in Bristol and Weybridge in Surrey, where it takes orders from many large companies for various products - notably tin boxes and outdoor parasols. The vast majority of these are made in China.

Managing director Alex van Oortmerssen explains why this poses a problem: "The buck is king in China and they are years behind us in terms of how they treat the environment. As a result, you get some very sneaky people."

His latest headache is that some dealers in China are stamping wood from Indonesia to say that it has come from a sustainable source, when it hasn't. "It's a nightmare trying to ensure that the wood we get for our parasols doesn't come from such sources."

He believes that as far as a lot of his overseas suppliers are concerned, the tree is there to be cut down to make them money. "But they know what we want to hear in terms of being environmentally friendly. So you can go to the sawmill, where they reassure you that the wood comes from managed forests and they show you all the stamps - but I'm not always convinced."

The potential repercussion of Sisco selling on such wood is that it could go out of business, says Mr van Oortmerssen.

"Imagine a large international corporation getting into the newspapers as a result of using parasols with wooden frames that come from endangered forests. It would be PR suicide for them and for us."

In the past, he says, the big companies that Sisco sells to were more concerned about value for money than ethics. "But now, everything they do has to be good practice. It means they could refuse stuff from me if it turned out that anything was wrong. And because we have to pay upfront for everything in China, with no recourse, that would be terrible for us."

One area of business where Mr van Oortmerssen has been able to ensure high standards is the Chinese factories that supply Sisco.

"There are huge concerns among our customers that these factories are sweatshops - that they are working people overtime, that they are underpaying them, that they have under-age workers, and that health and safety is not up to scratch," explains Mr van Oortmerssen.

However, he works with a quality-control company in Hong Kong that carries out spot checks and even puts ghost workers in the plants. "We know everything is OK. But actually to persuade companies over here - even with the use of videos and photos of the factories - is very difficult."

He recently took the purchasing director and procurement manager of a new customer on a visit to China so they could inspect the factory and question staff. But, of course, that's not always possible. "Are there any official channels by which I can convince companies?"

WHAT THE EXPERTS SAY

Stephen Pegge, head of communications, Lloyds TSB Business

"Because the ability to prove that its wood products are ethically sourced is vital for Sisco's reputation, I would urge Mr van Oortmerssen to contact the Forest Stewardship Council UK. The FSC operates a recognised system of certification and product labelling that allows companies to identify wood products sourced from well-managed forests.

"Ultimately, if a certified or verified supply is not available and Sisco does not want to risk its reputation, it may need to source the product from other countries where the right ethical guarantees are available.

"Sisco should also look into joining the Ethical Trading Initiative, which is recognised by larger companies and lends credibility to its members.

"To underline its commitment further, Sisco could introduce its own formal ethical trading policy, which sets out its core values as a company. This policy should be made available to all suppliers and customers."

Teresa Fabian, senior manager, sustainable business solutions, PricewaterhouseCoopers

"Sisco is right to be concerned about its obligations and about practices in the Far East.

"I would recommend engaging with those key customers that have set standards in this area to understand more clearly what kind of evidence they expect and how their demands can be implemented in practice.

"It is unlikely that video footage alone will give much comfort to an informed buyer, as many issues of non-compliance are not visible. As such, supplier evaluation using a variety of techniques, including employee interviews and document testing, would be needed.

"Using local expertise is the right way to go, though I would seek reassurance that your local partners are credible across social and environmental issues and have the necessary skills. Product quality alone is no longer sufficient.

"Sisco should be able to demonstrate that it has clear, responsible sourcing standards. These should be incorporated into pre-selection criteria, contracts and continuing evaluation mechanisms."

Simon Webley, research director, Institute of Business Ethics

"Sisco has a dilemma. Even if it puts pressure on its dealers to prove that the wood comes only from sustainable forests, it may not be heard above the demands of the less scrupulous buyers. A possible solution lies in a collaborative approach - things would change if the requirements were coming from a group of customers. Ultimately, unless the dealers listened, they could end up with little business.

"To persuade its own customers that standards in the areas from where the wood is sourced are high, Sisco could consider a shared approach to auditing. A good example is the International Council of Toy Industries, which launched a programme using a common monitoring protocol to check the factories making toys against a code of business practice.

"The aim is to certify that practices at the sourcing factories are approved by a recognised body."