For decades, companies have talked about corporate social responsibility and sustainability. Now a new term has entered the lexicon: social sustainability. There are many definitions of social sustainability. And they all, in one way or another, describe it as equitable distribution of opportunities in economic development and personal growth; meeting basic human needs regardless of status or disability; tolerance and inclusion in building a diverse culture; and empowering people to make their own choices on agreeable terms, be heard and participate in decision-making.
So what does all of this mean for procurement? In the past, buyers seldom had the authority or tools to prioritize supply sources based on sustainability factors. The standard by which they were measured was – and to a large extent still is - based on cost savings, quality and assurance of materials.
But times are changing. Companies are beginning to balance their costs with conscience. They want to know that they are working with diverse suppliers. That no slave labor is being used to manufacture their products. That they are free of conflict minerals. And procurement can help. Technology now makes it possible - and even easy - for buyers to apply the social sustainability lens in making key procurement and supplier relationship decisions.
Buyers can, for instance, leverage business networks and fast-emerging technologies such as artificial intelligence and machine learning to evaluate and segment the supply chain to get a clear view into areas where risk might exist. To assess the inherent risk associated with procuring or outsourcing goods and services to third parties, monitor suppliers for potential risks by triangulating a myriad of inputs across a broad range of risk categories including financial; legal; operational; environmental; social and regulatory threats; and even highlight areas within the supply chain that could be incorporating forced labor. And they can do it all with a few simple clicks.
In rewarding suppliers for social best practices– and sharing these best practices across the networks they are part of, buyers can move the needle from ‘the art of the possible’ to ‘the possible’ and help their companies – and plenty of others – do good, in addition to doing well.
The Consumer Goods Forum best practices features many companies who have inspiring code of conduct statements and approaches to addressing labor policies and principles. Many, for example, audit and check for workers’ rights to have access to their identity documents at all times. They also review worker recruitment policies – to ensure no placement or transport fees are paid to intermediaries. These steps go a long way in ensuring worker safety and human rights.
But what about broadening the scope beyond key trading partners? Supplier Diversity & Inclusion is a fabulous opportunity to address a broader base of suppliers.
Supplier Diversity programs help increase commitment to spend with minority businesses which is a concept that can be applied to a wide geographic area. Mitchell Ross, CEO of Muru Office Supplies, was the beneficiary of one such program when he was invited to participate in an online tender by one of Australia’s largest companies that was looking to end disadvantage among Aboriginal people.
“Muru means pathway and as an Aboriginal man, I want to create a pathway for the next generation of Aboriginal people,” Ross says. “Through the supplier diversity programs, I was able to connect with a like-minded buyer who wants to do the same and win 100 percent of their office supply business.”
And Ross is paying it forward, using his new-found success to launch an incubator he’s co-founded to help young Aboriginal people who want to start businesses learn how to do it. That’s making the art of possible possible.
Minimizing risk while promoting business excellence with diversity suppliers involves a dedicated focus on supplier co-development, hand holding for business development and training, and even referral programs amongst peer groups both within and outside the company. Best practices in supplier diversity and inclusion go beyond the International Labor Organization imperatives and include assessing suppliers on the following:
- Diversity of employees and governance bodies
- Minimum wage compliance by gender, ethnicity across all levels
- Discrimination policies, training and history of violations
- Policies related to harassment, intimidation
- Rights of migrant, indigenous and ethnic minority work groups (as applicable)
- Participation and investment in building of local community and economic growth
And it’s time to put them into practice. As procurement professionals, we protect our business, we deliver best contracts at the right price and quality. We make a positive impact on the bottom line. But in applying sustainability levers to our processes and diversifying our supply chain, we can ensure social equality and justice in our supply chains and make an impact on the world. And the time to act is now.