Ep. 08 - Creating Responsible Supply Chains At Scale

Justin Dillon: Welcome to the responsible supply chain show where we explore the world of responsible sourcing and resilient supply chains. I'm your host, Justin Dillon. In each episode, we dive into real stories from some of the world's best business government and thought leaders protecting people, planet, and profits. Let's get in. Okay.

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So in today's episode, we speak with Rincha. Tou has held leadership roles at places like places you never heard of, like Disney, Marriott, HP, Starbucks, where she helped develop human rights strategies. She also worked at the State Department, and that is where we first met. We're gonna be speaking about how some of the biggest companies in the world are implementing human rights due diligence systems in their supply chain. She's really good at it.

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Two has she's kinda got the trifecta going. She's worked at, like, the charity, NGO sector. She's obviously worked for government, and she's held positions at influential positions at publicly traded companies. That is a lot of face shifting. That is something that I would call soft power.

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Soft power, in my opinion, is a superpower. Why? Because I don't have it. I I I I don't have soft power skills. Here's the definition.

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The ability soft power is the ability to co opt rather than coerce. It involves shaping the preferences of others through appeal and attraction. Okay. Maybe I have some of that. But I what I don't have is the ability to do that inside of bureaucracies or systems.

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That is very difficult for me to do. And I actually have an immense amount of respect for people who can do that because I would lose my patience very quickly. But soft power really is a superpower. It's the ability to turn bureaucratic BS into something beautiful. So let's get into our interview with Starbucks and Disney alum Tou Rincha.

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Tou, good to see you. Where am I finding you today?

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Tu Rinsche: Hi, Justin. I am based in the DC area.

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Justin Dillon: Have how long have have you always been there?

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Tu Rinsche: I've been here forever. Yeah. So I went to GW for undergrad and kind of just stayed on the East Coast, but originally from California, like you.

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Justin Dillon: And, I'm so happy to talk to you because I just, you know, it's a crazy week and I have lots of questions and I'm just expecting you to answer all of those. So thank you for being here. My first question is, what are companies thinking right now in regards to supply chain responsibility given all the trade and tariff saber rattling that are happening? Any like quick wisdom you can offer our listeners?

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Tu Rinsche: I think there's just a lot going on. I think what companies are thinking about is probably meeting compliance.

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Justin Dillon: Yeah.

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Tu Rinsche: Kind of just the bare minimum, right, and and waiting to see kind of what happens with what's happening with the geopolitical issues. Mhmm. So I think it's probably smart to wait, but definitely meeting minimum compliance. There's a lot of various regulations regarding supply chain responsibility, as you know, Justin. And I think that some of them are active and some of them are yet to, you know, be enforced.

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So I think it's kind of a focus on those that apply now and then obviously put in place what is needed in the longer term.

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Justin Dillon: How many companies do you think know what the minimum is? Because I completely understand you don't wanna do more than you need to. Do do you have any sense that companies actually know what the minimum is for the for them?

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Tu Rinsche: I would hope that companies are smart about it and they are engaging their legal counsel as well as their supply chain teams, procurement teams to better understand, one, are they in scope for various laws? Obviously, here in The US for American companies, as you know, the 1930 Tariff Act applies to all companies

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Justin Dillon: Yeah.

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Tu Rinsche: With regards to prohibiting forced labor. Yeah. Some of these other laws that are outside of The US, that's just that's probably a bigger question. But, certainly, there are organizations out there, particularly nonprofit organizations, that are very critical of companies and, you know, with good reasons. So they do have tools in place now to identify companies that should be in scope.

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Right? And and one group that's doing that is SOMO, which is a European nonprofit. They actually just released, I think, recently a what's called a CS triple d data hub. Yeah. Where they've identified thousands Yeah.

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Thousands. Of companies that would be in scope.

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Justin Dillon: So if you work at a company and you're like, I wonder if the CS triple d applies to me. Just Google that in SOMO and Yeah.

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Tu Rinsche: I would go into that tool. It's pretty easy. Yeah. That's right.

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Justin Dillon: Yeah. Well, I mean, it it it it's interesting because I think when you have so much noise, it can become a bit of a paralysis paralysis of analysis. And, also, this is boring stuff. I don't think it's any I just learned this this week. I don't think it's any and by boring, I mean, strategically.

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Like, I it seems like Ferris Bueller's Day Off is a timeless movie, so I'm not worried aging myself. I can do that any other time. But, I mean, it it is interesting that the director of that movie chose to this to use this nineteen thirties tariff act as the material that the teacher is teaching in class that's putting everyone to sleep. And where we get the famous

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Tu Rinsche: I did not know that. That's actually know the whole like

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Justin Dillon: a, it's a meme now or an audio meme like Bueller, Bueller. It's relevant today because of some of what's going on using tariffs during the depression to be able to protect American interests. Actually, I think the over under on that is it didn't quite work. That's not an indication of anything that's happening right now, but this has been tried before. But one of the provisions, this is this is wild, but one of the provisions in that act was it allowed for the importation of goods made with slavery if you couldn't produce it here in The United States, which is just if you think of the mindset a hundred years ago, it's just crazy that was in there.

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The Obama I I I remember working with State Department back in the day, that's when you and I met, I think you're still at State. And I remember working with, I remember getting a call from the White House saying, hey, we're excited about the work everyone's doing here. We're gonna do something really exciting. We're gonna close a loophole in this nineteen thirty's tariff act. And I'm like, what a nothing burger.

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That sounds like, that sounds like nothing's gonna happen. And from that, what do I know? I'm not a lawyer. I mean, you know, loopholes are in Tariffax seem like a big deal, and that has created the legal framework for UFLPA and WROs and affecting companies all over the place. So when you think of US Importers, and this show, you know, reaches, you know, people all over the world, but US Importers right now are just drinking from a straw.

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They don't know what to follow. Any any guidance for them other than just stay tuned? Because that seems to be the message we're getting.

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Tu Rinsche: Yeah. No, you bring up a really good point. I mean, the consumptive demand provision was removed, that made a huge difference, Now, all of a sudden, it was open ended. Any company importing products made with potential forced labor or child labor that was prohibited. And I think what was really powerful was the enforcement side of things.

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To your comment earlier where nothing really happened, probably true. Progress was really slow. But when enforcement started to happen under CBP and they were given the authority to enforce the 1930 Tariff Act and in particular forced labor, that made a huge difference. When cases started coming in, when they started communicating on their websites which companies were on XYZ list, that made a difference. So I think we are starting to see things changing.

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We are starting to see things moving in a direction that let's say before it was like nice to have human rights programs, right? It was nice to have a responsible sourcing program and maybe a team Nowadays it's mandated. So the fact that it's mandated, there are regulations specific to ESG, to human rights due diligence, and in particular, even to forced labor or child labor specific issues, right? Companies must take action.

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Justin Dillon: Yeah.

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Tu Rinsche: And I think that there's a lot of things that they can do. Obviously it varies quite a bit depending on your maturity level, kind of where you're at, what are material issues to you, what your supply chain is like, right? As long as you're a company that's importing product outside The US, these are issues that you should care about, absolutely.

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Justin Dillon: They're a cost to your business, not just a cost to your reputation.

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Tu Rinsche: Absolutely.

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Justin Dillon: You have the absolute authority and ethos to be able to speak into this. You have worked in government, in nonprofits, and in some of the biggest companies in the world on every sides around supply chain responsibility, whether it be climate or primarily, you've worked quite a bit on forced labor. So you've got this very unique view of you've been quote unquote in the room of a lot of different types of rooms. That gives you that has to give you some level of of superpowers to be able to have, like, superpower, you know, diplomacy. I mean, to be at the State Department, to be at Disney, to be at Marriott, be at no.

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You weren't Amazon. Marriott, Starbucks. Sorry. That's what I was thinking. Right?

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I mean, you've been you've been in a lot of different places and then also going to work and being on boards in the NGO side. Tell me a little bit about how that's changed your perspective because most people that's worked, they've just worked at a company, they don't know what goes on, how the sausage is made at the state department or inside of a nonprofit. How does that give you a unique view into these problems?

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Tu Rinsche: Yeah, no, that's a great question. I've actually thought about that quite a bit. I think having worked inside and outside of companies has provided me with certainly a well rounded perspective on human rights and also reinforced to me that every stakeholder has a critical and important role to play to advance progress. It's not just one stakeholder. It's not just the company.

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It's not just the MDJO. It's a lot of different stakeholders that need to be part of the solution. And each is unique in their capabilities if we want to achieve real and lasting positive impact. So, for example, like a nonprofit or a civil society organization, they can't fully implement their programs without the support of the government institutions and the governance around that. Equally important is civil society and business should see each other as companions versus adversaries on human rights.

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I would say ten years ago, it was sensitive to have companies and these activists or advocates be in the same room. It was tense. A lot of folks didn't want to talk about these issues. They are ugly issues. But nowadays, we are seeing a change in attitude.

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I'm really happy to see that, the naming and shaming, while I think calling out and keeping companies accountable is critically important, the attitude is changing towards let's work together to find solutions. I think that is the right approach. And so working within a company is, for me, is really exciting being in an house, at least I think so. Because you can get very hands on with internal policies and politics and navigating bureaucracy and influencing decision makers. Then of course the fun part, which maybe some people think is boring, but integrating human rights principles into business practices.

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Justin Dillon: Oh, tell us more.

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Tu Rinsche: It sounds easy, but it's not.

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Justin Dillon: Does that mean? What does that look like in a company, integrating that? Tell us more.

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Tu Rinsche: For me, it's really about how do you influence with very little authority or power? Oftentimes the human rights person like myself, probably the least powerful person inside the company. But it's about engaging with the right folks to be able to get what needs to be done on human rights. I'm still learning every day, even though I've been around for some time working on these issues. I think one of my most valuable lessons is really identifying champions and internal partners who can help you engage with leadership, in particular with the C suite.

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Then so many of my roles, I would say that serving as the company's human rights officer or expert, again, I have very limited authority and power. And I wouldn't be able to do my job well without the partnership of the C suite, so executive leadership, as well as senior executives who engage with their peers to be able to bring them on board and get buy in. So for example, across the various companies I've worked in, I've partnered with a chief human resources officer, chief communications officer, chief policy officers, and those are the folks who are gonna actually be able to help do the embedding.

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Justin Dillon: Yeah. I I appreciate that that you say you don't have a lot of power. You've got a lot done for someone who didn't have a lot power. I'm just gonna let's just

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Tu Rinsche: Thank you.

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Justin Dillon: Be very clear. I can see your resume. I'm looking at it. It's like, okay. That's even more impressive.

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You didn't have power. So clearly, your superpower is diplomacy. We've heard companies say, hey, thank you, Freedom, for the data you provided in our supply chain. We can see things we've never seen before. We're seeing some challenges.

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The problem is I can't change it. I can't cancel the contract. I can't prioritize this. This is a strategic supplier, so now we've got another problem. What advice would you give for people in that case, and I think I know where you're heading, but what advice would you give for someone whose job it is to go find problems but doesn't have the power to fix them?

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Tu Rinsche: Yeah. So I face that all the time.

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Justin Dillon: Okay. That's the right person.

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Tu Rinsche: So we're in good company. You know, I would say getting executive and corporate buy in is really challenging, right? Because when you're kind of working on human rights, you're generally, again, like I said, have the least influence. You probably have the smallest team. You certainly don't have the budget to do any of this work, so it's really hard.

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But along the way, I've learned, some basics include you need to speak the language of business, right? In terms of return on investment, risk and reputation. Like it's so critically important to develop a strong business case. For example, highlighting how human rights risks expose a company to legal, financial, and operational risks. I think the work that you do with Freedom does that really well.

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The other is scare them a little bit. There are lawsuits. Companies are getting sued as a result of human rights not complying with human rights. And then there's also real concrete impact, supply chain disruptions. Imagine that your product can't get into where it needs to be because of these issues.

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Then you're not going to have product, right? And then of course, the big one is regulatory penalties. We're seeing that there are big financial fines for non compliance. I think number two is also emphasizing how consumers, so if you're a consumer facing company, investors, if you're a public company, obviously your business partners. Then of course your employees, they expect ethical, responsible business practices, including responsible sourcing.

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And so failure to act can potentially damage brand trust and reputation. So reputation is so critically important for, again, a global brand.

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Justin Dillon: And

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Tu Rinsche: I would say number three is show how leading companies, so those who may be a bit more sophisticated around human rights, are using responsible sourcing as a differentiator, right, to drive customer loyalty or even long term profitability. And what we're seeing now, and there's plenty of studies on this, is that younger generations today are asking tough questions. They want to know that the products they are buying and consuming are ethically made. I know my kids are asking me that, and they're part of the alpha generation. So these are young kids, and they know what's happening.

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I think this is pretty basic stuff, so they know what's right and wrong pretty easily. The other area where I have found to be really useful as someone who's practitioner is leverage external pressures, such as investor and regulatory. And then I think industry benchmarks are super useful. So I often share kind of what I know about upcoming laws that could impose penalties. So a big one is CS triple D.

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Justin Dillon: Yep.

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Tu Rinsche: Right? And we know that the penalties are pretty-

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Justin Dillon: They're real.

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Tu Rinsche: Significant and they're real. And right now, I think it states in the regulation that it should be no less than 5% of the company's

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Justin Dillon: global turnover. That could be your entire profit margin.

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Tu Rinsche: Could be really big, right? Yeah. And if you're a public company, I think another piece of information to make a business case that's really important is around sharing shareholder resolutions and investor inquiries with cross functional teams as well as leadership. Understanding these are the types of questions that investors are asking and they are human rights related as Can

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Justin Dillon: you push into that a little bit? Because again, we're all here to just sit at your feet and pull secrets out of your experience. But, you know, at Freedom, we're getting calls from, like, private equity firms. The investor community is coming to us saying, we wanna start understanding the supply chain of our portfolios or companies we're investing in because it's a material risk. So that's real, that's happening, that you can go, you can just do a Google search and start looking at private equity supply chain risk and you're going start to see stuff.

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Is the C suite aware of this? That's my question. Are they aware that this is, in general, I know you can't say everything, but in general, are they aware that this is starting to dig in? Because that seems like that would get their attention.

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Tu Rinsche: Yeah, I would say from my experience, kind of where I have sat, this information does come to the C suite, absolutely. Again, folly for companies that maybe have the capacity to handle these types of inquiries. It is increasing. I would say you're absolutely spot on, Justin. These firms, investors, private equity, they're getting smarter.

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They're actually even hiring people on their teams who know a thing or two about ESG and human rights, right? They're asking really good questions. I would say to every company I've been at, I've had to engage with investor relations and those teams to help them navigate some of these questions that they're getting from their stakeholders. So, absolutely, I think that that would be an area where, again, leveraging those external pressures would be really helpful to get the attention of C Suite, including the CEO.

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Justin Dillon: Yeah. It it seems like and and this is one of my favorite things about the work you get to do is that you get to I I feel like we get to to, I guess, you know, is it jujitsu where you're using the opponent's force against like, we get to use more market forces to do good things for companies and, like because I I can totally argue that a more responsible, transparent, resilient supply chain is a value add to the company, even without all the great things it does in the world. And I agree, if we don't get better at making those arguments and making those cases, the stick as opposed to the carrot of regulations and fees and all the rest, that certainly helps. But I think that there's a carrot here as well that sometimes just gets missed in all of the challenges. Have you got any tips that you can give when it comes to, hey, while this may not be us that's doing it as a company, our responsibility is that we make sure that the companies we're doing business with are doing, are sharing their responsibility.

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Like how do you communicate that upwards?

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Tu Rinsche: Yeah, I think, you know, the language of human rights, like you said, isn't the most accessible, So like most people have no idea what I mean when I say I work in human rights. They're like, what, what is Like, you mean like you're helping people out of poverty? I'm like, not exactly, but that would be an ideal outcome. Right. So I appreciate this point because it does get to the point of like, what is this, how do you, what is this work and how do you communicate it to people who may not be as versed in this language?

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And so for me, I think another way to look at this work and the work that I certainly do is to frame it as risk mitigation management, because that's really kind of what it is at the end of the day, right? So generally human rights work is viewed as a cost. I don't make any money for the company. I actually spend money. And so, that's not a positive, but I would argue that of course it adds tremendous value, right?

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By one, avoiding legal and compliance costs, as we kind of mentioned earlier. Two, reducing reputational damage on behalf of the company.

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Justin Dillon: Right.

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Tu Rinsche: Three, providing supply chain stability and resilience, And then four, and I've seen this actually in a number of different programs that I've invested in as a donor and funder is lowering turnover and absenteeism. When workers feel that they have worked with dignity and they are respected, guess what? They're going to show up, right? They're gonna be happy about it.

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Justin Dillon: Yep.

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Tu Rinsche: So I think that there's absolutely a competitive advantage for a company to invest in human rights and being able to, again, make that business case, speak the language of the executive of your business, of your company, to then be able to communicate, all this value add. Yeah. Right? And I I love the, the Mastercard priceless campaign, and I think that illustrates really well, like, value of human rights, that it really is priceless.

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Justin Dillon: Yeah. It is. How do you sell people on the idea of, progress, not perfection? Because when it comes to human rights, you want a perfect record, not an okay record. And there are no such things.

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There's no and that's really hard to get people's head around is, yeah, there's no perfect supply chain, there's no slave free supply chain. I'm sorry, no matter how hard you try, it is pervasive. But there is a better there there is a responsible supply chain. Are way there there are there are thresholds that you can meet. Is is there is there more of an audience for that at the c suite level that, hey, we don't have to be perfect, but we can just demonstrate that we're making progress over time?

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Because that didn't exist five, six years ago. It's like, want I want you to be perfect or do nothing. And it seems like we've got a little bit more, aperture for progress, but I'm wondering if that's my theory. I'm wondering if you're seeing that as well.

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Tu Rinsche: So it's about making progress over time, especially if you're required to report on it publicly. And I would say that people want to hear the company's story, right? What did you do? How did you improve? Or how did you do it differently?

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They're not going to want to read the same story over and over, year after year. They're going to expect that there will be changes, that there will be some progress being made in little ways.

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Justin Dillon: So

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Tu Rinsche: I would say there's no finish line for this work. It is a constant. And so companies need to get started sooner rather than later Or wait until, you know, there's a compliance deadline. But making progress is key.

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Justin Dillon: It's hard because we're all humans and we put stuff off if we don't feel like we have to. But I agree with you. It does pay dividends to get started earlier. I wanna talk a little bit more about power. And I was talking about it a little bit earlier about using jujitsu to change or power jujitsu.

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You know, you've been doing this for a while and titles, or you've had the terms human rights and titles long before it was where everyone has it. How have you seen your power meter grow over the last ten to fifteen years? I would imagine it was kind of like somewhat low, but like this has become an increasingly important role. Have you seen that, that your power inside and out, you can speak, you don't have to speak specifically, but have you seen the power of roles like yours increase over the last ten years?

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Tu Rinsche: I've definitely seen a trend, and I think that one of it is compliance related, right? There are regulations that do ask, you know, do you have, Who's accountable for human rights? Do you have a dedicated team member or director responsible for human rights? So I think that certainly encourages this trend to establish roles dedicated for human rights. But I would say every company should invest in a human rights team, whatever they may call it, whether it's their responsible sourcing team, whether it's a human rights officer, they need to invest in human rights expertise.

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Another way that I've seen kind of this grow and influence is really around the engagement of consultants around human rights. There's a lot of human rights consultants. So I do see

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Justin Dillon: that

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Tu Rinsche: space has grown a lot. I would say that if, you know, there are pros and cons, right? Shame. So I know Steve Jobs at Apple had really negative perspective about consultants. But I think that there is value there.

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Well, it depends.

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Justin Dillon: Because we're afraid of not having the knowledge internally, right? And so I can see why consultants have had a heyday in this, and all power too, but

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Tu Rinsche: But it should not replace dedicated human rights expertise inside your company.

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Justin Dillon: Yeah. Yeah. For sure. You want that knowledge base internally. So it does seem like the power has has has gone up on these roles, or at least the importance I say power, but but it is.

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You've gotta you've have some power to be able to, to create, any type of change or, change of behavior. Well, to I I I thank you so much. I mean, I've learned so much from you. I think anyone who's you know, this podcast is designed for people that are either in this space or want to come into this space. I'm here for the movement.

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I'm here because I believe that this is as these types of roles inside of companies are crucial. They're good for business, they're gonna make businesses run better, they're gonna make the world run better, and we wanna make sure that everyone that has a role like that or wants to get in this space is resourced well, and you've certainly provided that for anyone in this space, and I just thank you so much for coming on.

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Tu Rinsche: Absolutely. Anytime. I feel like I should write a book about this.

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Justin Dillon: Okay. Preplug. Come back on when you're ready to promote it, and we'll share it with the people that listen to this podcast. Will do. Alright.

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Thanks, Tim.

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Tu Rinsche: Thanks. Bye.

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Justin Dillon: This is the one thing, the part of the show where we drill into one idea from our interview. Tew talked about prioritizing supply chain visibility, resilience, and supplier collaboration, and how her job as a human rights adviser is to essentially help companies from doing or not doing things that would hurt the business. Gartner just did a survey of 579, seems very specific, 579 supply chain practitioners across several different industries and geographies in order to pick what they believed would be the top driving forces on supply chains in the next three to five years. Well, no surprise here. Artificial intelligence came out on top, named by 74 respondents.

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Interestingly, new ESG regulations and trade policies were cited by 67 respondents, followed closely by geopolitical fights and transition for power at a close 65%. Based on these findings, Gartner identified, quote, unquote, competitive characteristics of companies who will succeed in the coming years. These characteristics include from the buzzword bingo game, agility, resilience, and integrated ecosystems. Sounds like consultant speak. These are the same characteristics that two advocates for inside of the companies she advises.

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As a matter of fact, anyone working in responsible supply chains is trying to drive more agility, more resilience, ecosystems, more collaboration into the supply chain. Improving supply chain efficiency is ethics, and visibility is resilience. Don't believe the myth that businesses can't do good and do well. Tired of that. It's just a poverty of innovation and a poverty of imagination.

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Thank you for listening. Your time is so valuable, and please don't forget to subscribe.

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