As the call for sustainability intensifies across the stakeholder spectrum, ESG compliance in the procurement function is rapidly becoming the norm, and value creation the new competitive advantage. But how can corporate supply chains to create social and environmental impact? Social procurement is a clear answer.
Social procurement is a slowly gaining global movement where large corporations are integrating social enterprises into their value chains. SAP, for example, has committed to sourcing 5% of its addressable spend from social entrepreneurs, along with an additional 5% from various vendors by 2025 (5×5 by 25). Similarly, French sneaker brand Veja is working with social enterprise Groupe Ares to integrate disability inclusion into its warehouse and logistics services. Cross-industry initiatives are also gaining momentum, where multinationals such as Deloitte, Johnson & Johnson and Siemens are coming together to collectively use their buying power for social impact by joining the UK Buy Social Corporate Challenge.
From a social enterprise perspective, the benefit of social procurement is clear: working with large corporations can help social entrepreneurs scale their business operations and increase their impact. But what is the benefit for businesses? According to the global study conducted by Yunus Social Business (YSB) titled The Social Procurement Manual, social procurement offers companies a handful of strategic advantages, including:
Meet customer demand for socially-originated products and services, which creates brand differentiation for the business
- Achieve the company’s ESG objectives
- Improve employee engagement and talent acquisition
While social procurement offers procurement managers the opportunity to create value in their corporate supply chains, this opportunity does not come without challenges. Moving from traditional to social procurement isn’t necessarily easy, requiring shifts in mindset and operational practices along the way.
Supply chains as a strategic tool for change
As a pioneer in the impact sector, BSJ draws on 10 years of harnessing the power of business to end poverty and the climate crisis, using corporate supply chains like the one of their strategic tools for change. Their Social Procurement Handbook offers a 5-S adaptation for procurement managers interested in bringing social procurement to their organizations:
- Strategy – create a business case for social procurement combining financial and non-financial metrics.
- Stakeholders — Engage stakeholders in social procurement through a combination of a strong business case and inspiring story. Be prepared to challenge the myths of engaging with social enterprises and bring facts to the table.
- Systems – allow your social sourcing initiatives to shine by expanding your sourcing criteria to include impact benefits. By including impact criteria in your sourcing system, social enterprises gain a competitive edge.
- Scale – meeting the large-scale volume requirements of enterprises can be challenging for social enterprises. Address these challenges through capacity building, long-term partnerships and collaboration with relevant intermediaries.
- Narration — social procurement is fundamentally different from ordinary procurement in that it touches people’s hearts. It has the potential to tie daily work to meaningful purpose and commitment. Maximize this potential by publicizing your initiative, your goals and always be transparent about your progress.
“Integrating social procurement into the enterprise supply chain can seem daunting at first, but it’s about starting small, focusing on less risky areas, and finding partners who can help you. It’s as much about bringing innovation and diversity to your supply chain as it is about having a social impact. Companies that engage in social procurement today will continue to succeed and lead in the future,” says Oliver Hurrey, President of Sustainable Procurement Pledge, a growing global nonprofit community of thousands of procurement managers wishing to integrate sustainability more easily into procurement.
For greater transparency and better decision-making, procurement managers can consider investing in digital tools that help them better understand supplier data across the entire value chain. Spend Matters TechMatch is a great tool for identifying and evaluating available digital solutions.
To identify opportunities for impact within the enterprise supply chain and find social enterprises that are enterprise-ready, BSJ offers the Unusual Partner Program which ensures that procurement managers starting out in procurement can leverage the business benefits and positive impact that working with social enterprises can bring.