Putting More Muscle, Brains, and Heart into Sustainable Procurement

Authors

• Tara Norton

  Former Managing Director, BSR

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Tara Norton, Director, Advisory Services, BSR

Note: This is part of a series of BSR articles on the tragedy in Bangladesh that will look at root causes, challenges, and how to prevent it from happening again.

It’s difficult to do, but let’s take a step back from the recent industrial disasters in Bangladesh and talk about what businesses can do differently in their own approaches to buying and sourcing. A business can make a tremendous impact through decisions about how it procures goods, where it sources from, and the terms of its relationships with its suppliers.

Despite 20 years of thinking, action, and collaboration, it is clear that sustainability is still not integrated into these decisions. Certainly, Rana Plaza has been a wakeup call for the apparel sector, but this lesson is not limited to that industry.

We could spend more time analyzing what has gone wrong and why, but I suggest that we already understand the issues; it’s time to put our efforts into taking the actions we know will make a difference.

Let’s use our muscles: Get tough on the fundamentals.

We need tough sustainable purchasing policies (not only supplier codes) that will make it nearly impossible for buyers to make unsustainable purchasing decisions. Purchasing sustainably must be the buyer’s job, without exception.

This is happening in certain companies: Marks and Spencer does a good job integrating sustainability requirements into core buying responsibilities through its balanced scorecard (part of its Plan A commitments), and IKEA makes it very difficult for their buyers to source unsustainably, through its Sustainable Product Scorecard, which the company first announced in its 2011 sustainability report.

More companies need to emulate these examples and put uncompromising policies and responsibilities into practice.

Use our brains: Get smart about data.

We know how to source responsibly. There is enough information and knowledge across industries to help buyers everywhere make decisions that will allow their businesses to remain competitive without negatively impacting the environment or people in sourcing countries.

Three particular functions have a role in this:

1. Procurement directors need to define the value that sustainable procurement brings to a business. For 10 years, reports like the 2013 Sustainable Procurement Benchmark have provided a coherent analysis outlining the value companies receive from sustainable procurement, as well as highlighting the best tools and leading practices.
2. Buyers need access to more information about the “true cost” of what they are buying, and they must use this data in their daily jobs. The Kering (formerly PPR) Environmental Profit and Loss Account, which was originally pioneered with Puma, has set a new standard for how companies can measure and assess data about their supply chain, and it has the added benefit of giving buyers numerical information that informs their decisions by analyzing environmental impacts in monetary terms. With funding from Hilton, BSR has been working with companies to develop this knowledge further through our Center for Sustainable Procurement.
3. Investors and indexes need to spread the word about what good procurement looks like, and reward the companies exhibiting the right behavior. Today, by and large, investors aren’t asking the right questions about sustainable procurement. They need to stop asking companies what percentage of their supply chain they are auditing, which provides no indication of sustainable practices. Instead, they need to ask how well companies know their supply chains, and what the company’s relationship is with their suppliers, including in sub-tiers. Investors should be putting pressure on companies to come to terms with their vast supplier networks, and to exercise more care and control over them.

Don’t forget the heart: Live our values.

At a recent BSR workshop on sustainable sourcing, Rufus Bullough, global practice lead at the sustainability executive search firm Wilbury Stratton, talked about the need for more CEOs to lead with their values—and inspire staff to do the same. Ultimately, a lot of issues in sustainable procurement depend on people bringing core values like dignity and respect to the workplace.

At this same BSR workshop, we had an opportunity to look at the tailored buyer-training program at a global health care company, which the business developed to engage its procurement team in a visceral way. Buyers are asked to make some hairy decisions, such as changing an order last minute, and then experience a reenactment of the response of the factory management and impact on the workers as a result of those decisions. We should not be shy about showing this reality.