With sustainability high on the agenda, it’s time to bust a myth: there is no longer a cost of “doing or being good”. While that’s not true and there is still a cost, there’s a bit of a catch: It might also be to the CPO’s advantage….
About 13 years ago I worked in a function that created a post for a sustainability lead. At that time, there were interesting dichotomies with the role. It was either an easy or a difficult role, a role for the lazy or passionate because, despite having a dotted line into the UK CEO, very little changed. I can unequivocally state that our sustainability lead fell into the passionate camp. And presumably also the frustrated camp.
At the time, the prevailing argument was that, yes, we should all “do good” and buy sustainably, but there was an associated cost. Sustainable goods cost more. Further, other than a sense of “doing the right thing” there wasn’t really an upside; customers were not making material choices based on an organization’s sustainability agenda.
So, while nice, it costs more. How times are changing.
Whether it’s building brand loyalty with Millennials and GenZennials or being seen to be more environmentally astute than the competition, there is a revenue opportunity associated with “doing good”. The cynic in me suggests that this might be the reason why so many large corporations are now falling over themselves to tell us how sustainable they are (becoming), although a good outcome is a good outcome.
Further, suppliers of sustainable goods are far more advanced than a decade ago. Not only do they have the luxury of premium positioning, but they are now, in many cases able to compete financially, and demonstrate how your money is used for the greater good. Some of the Social Value UK suppliers are experts at this, making the sustainable choice the easy choice.
There are many articles, particularly in the last 6-9 months, which explore the various ins and outs of why the sustainable choice is the right choice. Looking back 13 years, we have come a long way. Some of the things that we do today, however small the impact, represent a genuine shift in societal DNA. We should all feel good about the progress made and enthused about the progress to come.
However, there is still a cost of doing good. So, let’s not deny it in procurement.
The cost of “doing good” is 1%. 1% of what an organization spends its money on. That 1% may not be paid to the supplier, it’s the cost of;
- Hiring a team of sufficiently skilled and informed internal and external specialists sufficiently skilled and informed to advise the organization of which suppliers and solutions exist.
- Buying and implementing the technology and services to monitor and manage the supply chain and the various risks and decision within.
- Innovating, putting the people, technology, and suppliers together to solve problems and create the next generation of sustainable products and services.
In other words, it’s the cost of good procurement.
Because procurement is the logical home of sustainability. And good procurement has a cost.
Having done the rounds this year I can unequivocally confirm that risk and sustainability are on the board agenda, and not only that, they are on the supervisory board agenda and the NED agenda. Somebody needs to own it, and they are accountable to the leadership of the organization. That person is increasingly the CPO. It’s still a role for the passionate, but no longer a role for the lazy.
There is a cost to doing good, but it might just be an opportunity after all.