Procurement and Corporate Social Responsibility: A Perfect Couple

As procurement evolves to address new supply chain risks, an opportunity exists to boost corporate social responsibility

Gert Sylvest
Gert Sylvest

Companies that make real commitments to corporate social responsibility (CSR) with programs that are focused, meaningful, consistent over time and branded enjoy the financial rewards that come with the hard work. Today, it’s common to accept full responsibility for the products you sell—both in terms of production, sourcing, distribution, maintenance and return flows, and in how they affect people and the planet. This reality is penetrating boardroom agendas everywhere, implicitly or explicitly, under the umbrella of CSR.

In sourcing and procurement alone, there’s a real opportunity to make an impact. According to a Zurich Insurance study, major corporations have an 85 percent chance of at least one supply disruption in the next 12 months—and the top five risks are CSR-related. CSR and procurement goals are intertwined like a double helix, and the natural way of doing business today. There are many ways to connect procurement to CSR, but a prerequisite is to align the leadership of both.

Launching or accelerating a sustainable and/or social procurement initiative with a large company’s procurement team is a challenge. You want to be sure that there’s consensus that produces a win-win for both CSR and procurement. The reality is procurement will need to evolve with the radical changes in demand, supply, and production patterns that are driven by changing regulation, policymaking, consumer preferences and rising commodity prices. These factors, in turn, are increasingly influenced by social and environmental concerns. This fact can serve as the cornerstone to build buy-in for your initiatives.

Below are several ways to wed your CSR and procurement goals.

Share Your CSR Goals in Your Supply Chain

You need to understand the standards you want to set and these may be expressed in many forms. A supplier code of conduct may help to express the standards to be met throughout your supply chain. You can use it to share the standards for suppliers on the ethical, social, environmental, health, safety and labor standards you expect.

For example, there is a widely used code of conduct for the electronics industry, the Electronic Industry Code of Conduct (EICC) and the Global e-Sustainability Initiative GeSI-ETASC for telecommunications. These typically include health and safety, environmental, and labor and human rights standards. By ensuring your suppliers meet your responsibility criteria, you can mitigate the risks that can affect both the performance of your supply chain and CSR efforts.

But change doesn’t happen overnight. Sharing the goals widely within your supply is an important first step to create visibility around the expected standards, and the foundation to track progress and onboard new suppliers.

Integrate CSR into Corporate Buying

Businesses spend an estimated $6.7 trillion on global trade annually. By tapping into this stream and redirecting a percentage of it to a social cause, businesses can easily embed CSR into their everyday procurement efforts.

Recognizing the opportunity to kick-start this form of impact buying via e-procurement technology, Tradeshift recently partnered with the (RED) brand to help raise awareness and funds to eliminate HIV/AIDS in Africa. Integrating social procurement onto the e-procurement platform encourages and delivers a steady stream of money to the fight against AIDS while giving our customers a seamless way to reach their CSR objectives through impact buying.

Share Your Goals inside Your Organization

Share the same sustainability and social goals internally within the organization where the buying decisions are being made. Different departments and teams may have different ways of supporting the overall company goals and this may eventually involve changing spending behavior. By making it visible to employees how their spending behavior contributes to the overall company goals, when the buying decision is being made, you can show everyone how their decisions are connected to the overall company goal. You can also see this as an opportunity for procurement to harvest information that can help you drive better and more efficient contractual decisions.

Finally, organizations implementing these programs will have the need for and will foster greater supply chain transparency. Open networks that promote collaboration not just within the supply chain, but also between companies, people and services will go a long way to making sure the metrics, analytics and visibility are in place for procurement to track and report progress toward CSR goals.

Gert Sylvest is chief technology officer and co-founder of Tradeshift, drawing upon years of technical experience to ensure the platform is at the cutting edge of what’s possible in the areas that will be most important to users in the near and long term. Having spent time in consulting roles at Accenture and Avanade, Sylvest met his co-founders while leading the technical implementation of the EasyTrade project for the Danish National IT and Telecom Agency. His technical philosophy revolves around the democratic principles that drive the internet itself—free, easy, open.

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