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Knowledge
CSR, Environmental Stewardship, and Sustainability: The CPO’s Outside-In Agenda (Part 2)

In our last post, we noted that a number of overarching issues are shaping procurement from the outside-in and that a CPO can no longer be focussed on cost-cutting and supply assurance alone. Economic instability, globalization, digital business strategy, and today's topic of corporate social responsibility (CSR), environmental stewardship and sustainability must also be addressed in balance with traditional procurement objectives, include category management, supply base alignment and demand shaping.

Even though most consumers won't pay more for products that are sustainably and ethically produced, these same consumers are the first to boycott your brand when the media reports on child labour in your supply chain, unsafe working conditions or employee deaths by factory fire or suicide. These same consumers are also the first to throw up their arms in protest if any organization associated with your supply chain uses animals for testing, burns dirty coal or employs slave child labor.

Thus, at the very least, it's critical that procurement ensure that the organization, and all of its suppliers, are environmentally responsible and focused meaningfully on sustainability. While it's nearly impossible to monitor working conditions on a daily basis in a supplier's plant, it is possible to monitor its impact on the environment and its commitment to sustainability initiatives.

Moreover, it is possible to lessen your impact on the environment. Shift your energy usage mix from non-renewable to renewables while eradicating unneeded and costly over-consumption. While you might still need oil-based fuel for aircraft and hybrid 18 wheelers, you don't need it for your battery-powered warehouse lifts, and there are increasingly attractive plant and facilities options for improved energy management.

There are other things you can do:

  • Reduce unnecessary waste of food products due to poor transportation, storage and processing practices (see our food waste series for more on this)
  • Change your processes to minimize waste, and change your operating practices to minimize carbon production. It could be a global supply network redesign to reduce unneeded transportation. Or it could be as local as the plant floor and warehouse — or those of your suppliers. “Lean and clean” programs are becoming increasingly popular to eliminate all forms of waste.
  • Reduction of toxic chemicals (e.g., using “green” chemicals in many of your MRO/facilities spend categories) which also improves worker health and when combined with other programs can lower your insurance costs.

You get the point. The technology is available and we have reached a point where it is now usually as affordable as the dirty alternative if you take a long-term view. And if you do it right, you can also find many other benefits in the form of consumption reduction, complexity reduction, tax expense reduction, reduced fines and penalties, improved customer and shareholder brand perception, reduced insurance costs, discovery of alternate suppliers and so on.

So just do it.

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