Should there be a sustainability shake-up?
In this article Gerard Chick discusses why procurement is ready for a shift in approach to sustainability. He examines why social intelligence is a key business asset and plays a vital role in risk reduction.
Are you thinking about the next generation of sustainability focused procurement professionals? Is your aim to alter the way business is done in every function and unit of the contemporary business?
Today’s successful sustainability focused procurement executives are pushing the boundaries of their job description, budget constraints and the limits of “moral influence”. Their goal is simple: to alter the way business is done in every function and unit of the company. Their motivation: “the implementation of shared organizational and social values”.
From the organizations we spoke to, it was apparent that procurement executives are frequently leading via provocative measures, which help functional managers to identify their own opportunities in order to improve corporate, social and environmental performance with their range of influence. This drives sustainability consciousness down to lower organizational levels, embedding it in the company culture and organizational processes. Through a form of ‘acculturation’, sustainability moves from “personality-focused” to process driven — and the creation of organizational routines that stick.
When procurement lead on this issue they typically work at identifying like-minded allies in key functional positions, and persuading them that it is in their own interest to take action by demonstrating the value in sustainability. They help managers find value by “commercializing social value” into their individual business decisions. Social value is an important corporate asset gained through relating with key stakeholder constituencies.
Social Intelligence as a Business Asset
Traditionally, sustainability initiatives have been externally focused, with the bulk of managers' time spent communicating initiatives and reducing the company’s carbon footprint. Social intelligence is a valuable corporate asset. Knowledge of the Millennial Generation’s greater expectations about social responsibility, for instance, can be key in attracting, motivating and retaining the next generation of employees.
Understanding activist and shareholder demands for transparency in political contributions can avoid damaging revelations about your company’s lobbying policies. Insights into indigenous rights issues, when making raw material sourcing decisions, can help avoid potential conflicts, supply disruptions or reputational risks.
Social intelligence is gained through relating with influential stakeholders and, more importantly, it is recognizing that social intelligence is most valuable when it enhances day-to-day business decision making, and this is key. Inaction on sustainability initiatives often stems, not from a lack of interest among functional managers, but a failure to demonstrate the business value of applying social intelligence to decision processes. Implementation often follows quickly after the value is understood.
Fortunately, it’s not a difficult challenge; we all read the papers or talk with our neighbours, co-workers and share our experiences, concerns and hopes for the future. Through this habit we obtain and share social intelligence, which we use to make decisions, like choosing what car to drive, what school to attend or who to vote for.
Unfortunately, while business managers are encouraged to use “commercial intelligence” in business decision making, most leave their “social intelligence” behind when they arrive at work.
Maximizing the benefits of social intelligence requires that your actions are not haphazard, but guided by an overarching sustainability vision and strategy. To achieve this, and lead sustainability via procurement, you need to rethink the role of procurement.
This recent trend towards sustainability is by no means purely a theoretical phenomenon. National governments and international bodies, such as the EU and WTO, are debating the sustainability challenge facing the global economy and putting into place ambitious targets and action plans. Companies across all industry sectors must adapt to a rapidly changing world in which the need for sustainable economic, environmental and social development is at the core. Many companies have made significant changes to the way they operate, fully embracing the sustainability challenge, but others still view sustainability as something that does not really concern them and might ‘go away’ in the next few years.
The future of sustainable purchasing and supply management simply cannot be viewed as a fad, a transient phenomenon, because the world is running out of natural resources whilst the world population keeps growing rapidly. So, there is no choice but for the whole world to become much more sustainable.
It is by no means a certainty that procurement will play a central role in creating sustainable business models. However, as we have pointed out throughout the book, The Procurement Value Proposition, businesses are increasingly reliant on their supply chains for production of the products and services they market to their customers; procurement managers are in an important position to make these changes happen.
Sustainability must avoid becoming the responsibility of a few more or less isolated individuals within companies; instead it is important that it become integrated into companies’ fabric: all their processes, including purchasing and supply chain management, should take into account the need for sustainability.
If procurement leaders and managers are to embrace this challenge they have to change the ways they operate. This requires new ways of thinking about supply structures and processes, and new skills and competencies. It follows from above that sustainability is not the responsibility of a few sustainability experts but a challenge that must be embraced business-wide.