Updated: Dec 19, 2022
Industrialization and then globalization provided unprecedented improvements to our standard of living and shaped the world as we know it today. These societal trends were primarily driven by technology and economics. It has become more apparent that past business models and conventional economic knowledge are pushing up against social and ecological systems’ ability to support continued growth. Social inequality is creating divisions that are challenging social as well as political institutions from functioning as they were intended to or designed to manage. Environmental damage from economic activity is not only threatening food, resources, and energy security but more serious crises from extreme weather events and rising sea levels.
It is important that supply chain management and businesses, in general, respond by expanding the focus of operations from a narrow profit motive. Profit and efficient allocation of capital are still important, but social and environmental needs can no longer be viewed as secondary objectives. ESG (Environmental, social, and corporate governance) is often the term used to describe initiatives expanding corporate responsibility from shareholders to other stakeholders as well.
Procurement is in a good position to address these issues. Retail consumers are increasingly demanding locally sourced, ethically produced, and fair trade products. Procurement in organizations should align themselves with the market. They have the leverage from scale and expertise to make a big impact. RFx criterion and bid evaluations can incorporate ESG requirements and metrics to encourage and increase the market value of ESG. Purchasing strategies that incorporate targets for minority-owned businesses are becoming increasingly common. For example, in Canada, supporting Indigenous businesses is one path to reconciliation while also potentially creating a more competitive and robust supply market.
You might ask if social procurement will end up costing your organization more and by extension reducing your organization’s efficiency and capabilities. I haven’t researched studies showing actual results. But qualitatively, I would look at total cost of ownership, reduced supply chain risk, and local economic development (which indirectly creates a more competitive supply market on the cost side and increase potential demand on the revenue side) as offsetting forces to possible short-term higher prices. Less burdened by profit, the public sector can increase its alignment with various public mandates with social procurement and take a long-term view for social gains. Buy Social Canada and the British Columbia Social Procurement Initiative are two organizations that work to support the social procurement movement. I encourage you to visit their website to learn more about available resources and benefits.