Procurement actions speak louder than words

September 20, 2022

As people in the Western world start to face up to the record of exploitation and injustice in their recent economic history, a push for a sustainable approach to diversity, equity and inclusion was inevitable. Engaging and enabling indigenous communities, minorities and people in the Global South can be a first step towards remedying these injustices.

While it is easy to see the benefits and ways of including these communities’ knowledge and lived experiences in decision-making concerning sustainable development, governments and companies often overlook the myriad of opportunities available to engage economically, in a way that enables their development and mutual gain. For example, the Māori economy was estimated to be $42 billion, reflecting an astonishing 60% growth from 2013-2018. Opportunity for investment in and collaboration with Indigenous businesses in this instance alone is enormous, creating mutually beneficial relationships and more equal access to growth and trade.

Many global companies are unwilling to wait for governments to act; driven by stakeholder and investor interest, they have found proactive ways to promote inclusion and engage with diverse communities and suppliers, by leveraging their extensive economic relationships. Examples include Unilever, and within the B4SI network PwC and AusPost, who have made social procurement a strong element of their social impact strategy.

Social procurement is gaining traction globally. Simply put, this route to impact allows businesses to intentionally divert some of their annual procurement spend towards suppliers who create clearly defined and demonstrable social impact, while empowering communities and groups that have historically been left behind. But companies also recognise the benefits to the business: building resilience in supply chains through diversification of suppliers; improving employee engagement and talent acquisition; and the establishment of a competitive advantage through improved brand image to key stakeholders. Social Procurement enables companies to reach ambitious ESG targets in their value chain, such as the gender balance and implementation of a living wage.

As is to be expected with anything “new”, companies face challenges when adopting social procurement. For example, the cost of implementation can be higher; there may be a lack of awareness of the business benefits among decision-makers; and it’s not always clear “what counts and what doesn’t count”. This can seem intimidating at first, but identifying strategic areas where a company can make the most impact, starting small and focusing on lower-risk areas and building over time, is proving a successful approach.

Key to managing the process and articulation internally and externally, the B4SI Framework and the dedicated resources on social procurement ground activities, are used by companies to set the direction of their social impact journey, while also meeting commercial objectives. The Framework highlights the opportunities in engaging with businesses owned or operated by marginalised communities and groups. Allowing a business’s procurement practices to bring its mission, vision and values to life through its purchasing activities.

Author: Kevin Fay