The pressure for companies to solve society’s most pressing problems is growing exponentially, fueled by the gravity of looming issues such as climate change or social inequality. While the majority of companies have already defined their corporate commitment and social impact objectives, many leaders are struggling to implement strategies that actually achieve their aspirations. Considering that 78% of executives believe their companies are failing to deliver on their social impact pledges, there’s a dire need for companies to drive social innovation across each department and generate positive social change through their day-to-day operations.
Amid the changing business landscape, companies are required to achieve two core objectives: generate profits and elevate corporate social responsibility. Due to procurement’s immense purchasing power, more executives are turning to their CPOs to drive innovation and sustainability – all while generating tangible impacts that benefit the communities they operate in. Here’s how procurement leaders can achieve these objectives and simultaneously generate new business value by adding social impact into their sourcing and procurement process.
Procurement with Purpose: The Next Frontier
Today, procurement is no longer just about delivering sourcing-centric cost savings. More and more, leaders in the space are focused on increasing transparency and mitigating supply chain risk to eliminate unethical suppliers that spur slavery, poverty or inequality. In addition to managing risk, procurement leaders are also leveraging “their third-party spend to support causes that go beyond the immediate needs and operations of the firm – whether that might be carbon reduction, supporting diversity, encouraging local enterprise or reducing plastic waste.” Whether it’s prioritizing vendors that uphold the same corporate values or vetting vendors to ensure ethical labor conditions, there are numerous ways procurement professionals can achieve their social goals and benefit their suppliers, too.
The most forward-looking procurement teams are leveraging automation to help manage routine tasks, freeing more time to focus on innovation. Procurement digitization enables leaders in the space to look beyond their traditional tasks and identify more strategic strategies to drive value, like collaborating with their suppliers to co-develop products that are more eco-friendly or cost-effective.
Scaling Social Innovation Through Sourcing
In addition to precautionary strategies adopted by sourcing teams to ensure ethical supply chain management, there’s a huge opportunity for buyers to advance social initiatives through their everyday spend. Procurement can generate unprecedented value from their purchasing power by aligning their sourcing operations with their company’s core sustainability goals. By adopting social impact sourcing – in which the buyer and supplier agree to direct a percentage of the total transaction to a nonprofit, social enterprise, or social impact – procurement leaders can generate tangible change to achieve their company’s purpose-driven aspirations. This elevates the role of procurement to a strategic arm of the organization by generating cross-company value. For instance, social impact progress generated by procurement can help investor relations teams report to Environmental, Social, and Governance (ESG) rating and reporting agencies. Likewise, it can also help HR increase employee retention rates; and marketing, public relations, and communication teams share the story of their impact externally to boost customer sentiment and brand loyalty.
There’s a huge opportunity for procurement teams to advance their company’s corporate commitments through their purchasing power. By focusing on sustainability, social responsibility and innovation, procurement teams can generate unprecedented value for themselves, their companies and their communities more broadly.
Want to learn more about social impact funding opportunities for nonprofits? Listen to Paul Polizzotto's podcast interview on The Sourcing Industry Landscape!
Paul Polizzotto launched Givewith® in 2016, with the vision of rethinking the intrinsic power of commerce as an engine of world-wide social change. Over his 30-year career as a social entrepreneur, Paul has dedicated himself to developing, refining, and realizing the vision at the heart of Givewith: that by prioritizing social impact, businesses can deliver a sustainable source of funding for the critical work of nonprofits and differentiate themselves from the competition, driving sales, increasing profits and raising share prices.
He brings his expertise as the former founder of EcoMedia, which was sold to CBS Corporation in 2010. Under Paul’s leadership, EcoMedia directed more than $100 million in funding and resources to environmental, education and community health and wellness programs across the country, improving the quality of life for more than 60 million people.