Procurement with purpose must encompass social justice

Spend Matters welcomes this guest post from Paul Polizzotto, the Founder & CEO of Givewith, providing insights into social justice and procurement. 

Chief Procurement Officers (CPOs) have always faced a multitude of complex challenges. In 2019, procurement teams became increasingly focused on how to safeguard against geopolitical risks linked to Brexit or trade wars between the U.S. and China. In fact, according to the Deloitte Global CPO Survey 2019, 46% of CPOs identified an economic downturn as the number one risk impacting procurement.

Fast forward to today: Not only do we find ourselves in the middle of a global pandemic — which has rattled supply chains and exposed cracks in a system that has been optimized for decades — but major cities across the globe, from Minneapolis and Atlanta, to London and Berlin have witnessed mass protests following the death of George Floyd, Breonna Taylor, Rayshard Brooks and the countless cases of systematic racism, inequality and injustice.

These tragic events have brought companies to a somber moment of reckoning, which has led organizations across all industries to have very real conversations with employees, business partners and external stakeholders about what they can do to address systematic racism and social inequality.

As executives identify ways to drive social progress, it’s important not to overlook procurement. While procurement has traditionally been a critical agent for change when it comes to environmental issues — such as curbing greenhouse gas emissions, cutting waste and sourcing recycled content — procurement can also play a critical role not only in protecting human rights but actually helping to advance them.

The vast majority of procurement teams are already adopting practices to eliminate workforce exploitation in their supply chains, such as egregious slavery-like conditions, forced or compulsory labor, child labor and labor trafficking. In addition to abolishing these practices, many leading sourcing teams have already done the work to identify, select and invest in diverse suppliers, helping them grow and stay afloat through preferred payment terms or helping them improve and evolve their products. While prioritizing diverse suppliers is critical, procurement teams should also make it a top priority to ensure their team is diverse too.

While expanding and building upon these well-known efforts, it’s also critical for companies to identify ways to help generate funding to support nonprofits, social enterprises and NGOs, considering 60% of people believe brands must invest in addressing the causes of racial inequality, according to a recent Edelman Trust Barometer. Furthermore, nearly two-thirds of Americans believe it is a company’s responsibility to give back.

To help address this, procurement teams can leverage their immense purchasing power to help generate new sources of funding for organizations on the frontline addressing racial inequality and social injustice. Specifically, procurement teams can collaborate with suppliers to direct a small percentage of their total transaction to underwrite social impacts that fight systemic racism and social inequality through direct service, education and advocacy work. This social impact sourcing practice can generate entirely new sources of funding for organizations such as Black Girls CODE, RFK Human Rights, NPower or other organizations that are addressing racial inequality in areas beyond corporate capabilities.

What’s unique about this application of social impact in procurement is that both the buyer and supplier involved in the deal can derive significant cross-company value, benefiting human resources, investor relations, marketing and communications, and corporate social responsibility (CSR) by reporting the impact to key internal and external stakeholders. Driving awareness around these issues should be ongoing, and procurement can make these contributions sustainable by ensuring these activities generate measurable business value. This can be seen in the form of increased ESG ratings, improved employee retention rates, higher Net Promoter Scores and so on.

Today, corporations need to identify tangible and immediate ways to address society’s most pressing systemic challenges like racial injustice. However, these efforts shouldn’t subside once the news cycle starts anew. Sourcing and procurement teams have already identified ways to drive significant change as it relates to their company’s environmental impact. Now more than ever, procurement has the potential to be a key driver to advance other pressing social issues, not only because it’s the right thing to do, but because it benefits their business too.

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First Voice

  1. Jason Busch:

    I am in complete agreement with what you say in the body text, but not the headline. Social justice is a divisive term even if you are strongly in favor of supplier diversity and inclusion programs, which I am. For example, as a parent, I can say that what is being taught in my children’s schools under the guise of “social justice” is incongruous with liberal values, including free speech, individual rights and racial + gender equality.

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