Too often, executives have seen Corporate Social Responsibility (CSR) as a passing fad, with Social Value having a slot on the agenda for a number of years, providing varying degrees of organisational success. So, we ask: What does Social Value mean for a progressive CPO and their strategic procurement plan? And will 2020 be a step-change year?
CSR is now rising up the business agenda. Forces like globalisation, social media, regulation, and changing customer habits are elevating its importance. As customers and society more broadly place increasing importance on CSR and ‘purpose’, some leaders have started to look at it as a creative opportunity to fundamentally strengthen their businesses while contributing to society at the same time.
This changing landscape is now creating a clearer financial motive. And new research shows how the most ethical and enlightened companies that are embracing this movement are consistently outperforming their industry competitors. The research highlights that these organisations enjoy an increased share price of between 4% and 6% and they pay 8x fewer consumer-related fines.
The rise of the ethical consumer is changing the way in which organisations operate and implement strategic procurement plans, and it’s creating new value opportunities and heightening the risks of doing the wrong thing. So, what should a forward-thinking CPO be excited and worried about in this new social and environmental age?
New value opportunities……
Patagonia is putting CSR at the heart of its business model with environmental values strongly embedded in it’s brand’s DNA. Typically, cotton uses large amounts of insecticides and pesticides in its production, and in response, Patagonia has used supplier collaboration to develop innovative solutions, including creating an organic cotton supply chain. Patagonia is creating sustainable shared value through investment in its supply chain, and delivering social value to wider communities.
Another example is Adidas and their collaboration with Parley for the Oceans. Together, they are preventing plastic from entering our oceans by transforming it into high-performance sportswear. Their first ocean plastic trainer sold out instantly and they have now gone on to generate more than a billion dollars in revenue through sustainable products, whilst helping to solve the biggest threat to the health of the world’s oceans.
For others though, risk is the issue. Ethical and environmental issues have the potential to gain popular traction much more quickly than before. In 2019 alone, we’ve shone the spotlight on coffee cups, palm oil, and plastics to name a few. Looking forward to 2020, I believe we will continue to see even more focus on climate change, alternative energy, and plastics.
Where does the CPO fit in……
In an increasingly global marketplace with increasingly complex supply chains, ensuring a mechanism is in place to drive the CSR policies of organisations across the supply base is crucial to business success. The days of transactional procurement relationships are gone. Strategic procurement requires the ability to collaborate with suppliers to generate increased value and a sophisticated approach to managing risks from a global supply chain.
Looking ahead, I think we need to shift thinking towards:
Collaboration = more value
Supply chain networks often hold the keys to innovation, and whether it’s supplier relationship management, accelerators, or idea challenges, Procurement needs to help their organisations identify and develop novel ideas.
Shared values = trust
Policing the supply chain is one strategy and the use of audits or 3rd party monitoring programmes play their part. Alternatively, aligning your supply base so that it re-enforces and supports your values is a powerful driver of success.
Technology = more visibility
Technology can enable business to adopt a more responsive, coherent, and insightful reporting framework. Data-enabled dynamic, accessible, and real-time CSR reporting will become the norm and is already being demanded by tech-savvy stakeholders.