Procurement and Corporate Social Responsibility

Use Your Purchasing Power to Build a More Ethical (and Profitable!) Company

PurchTips Edition #445

Procurement isn’t just about delivering materials on-time, with less risk and at less cost. Social responsibility is now an integral part of the procurement landscape.

procurement-social-responsibility

A bad social reputation can hurt you deeply with your potential customers. The 2016 US National Survey on Corporate Social Responsibility found that 39 percent of the respondents would avoid buying from a company that wasn’t responsible, and 25 percent would tell their family and friends to do the same. A full 84 percent said that they look for socially responsible companies when making their purchasing decisions.

What do we mean by “socially responsible?” Attributes include:

  • Paying and treating workers fairly
  • Paying (rather than avoiding) taxes
  • Being environmentally conscious
  • Having a positive impact in the community (including charitable giving and volunteerism)
  • Producing and marketing products ethically

Many companies now include Corporate Social Responsibility (CSR) sections in their annual reports, and investors and other decisions makers read those sections carefully to decide whether those companies are a safe or risky investment!

Procurement has a vital role to play in CSR because so many of the areas mentioned above touch the supply chain. What happens if a news story shows that one of your overseas suppliers is using child workers, or polluting the environment? In this era of instant communication and social media outrage, you can’t afford to have an irresponsible link in your supply chain. Now is the time to think about doing the right thing, rather than reacting after the fact of being caught doing the wrong thing. As a procurement professional, you can personally make an enormous difference right now in the ethical and financial future of your company.

In a sense, every procurement decision is also an ethical choice, weighing responsibility against cost, speed, and risk. Your spending on the materials you procure is an investment, and you can choose to invest in ways that benefit your world as well as your company. All investments balance risks and rewards; consumers might choose to spend more with you if you took the risk of paying a little more to workers on the front end. And the more transparent you are about your CSR choices – in your marketing and your annual reports – the more you stand to gain in reputation and profits down the road. It’s the ultimate win-win!

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Copyright 2019. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By David Millington, SPSM, SPSM2, SPSM3 - Director of Education (Next Level Purchasing Association)

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