Patagonia’s commitment to social responsibility doesn’t end at company headquarters. It extends to management of the company’s entire supply chain, including the selection of suppliers committed to international labor and human rights standards.
The larger the organization, the greater its influence on the creation of more sustainable products. Organizations spend exponentially more on suppliers than on philanthropic efforts, yet both can drive positive social and environmental impact. According to Schonfeld & Associates, companies can spend an average of 25% of revenue on operations, versus just 0.13% on donations to charity through philanthropic endeavors.
Historically, an organization’s social impact was simply a measure of its philanthropic giving. However, in today’s business climate, the selection of responsible and ethical vendors can have a significantly greater social and environmental impact on society. For example, donating to a local environmental group focused on conservation and cleanup is important, but arguably more so is selecting suppliers that aren’t actively contributing to environmental degradation in the first place.
In 2020, thriving and sustainable businesses are no longer focused solely on maximizing shareholder profits at the expense of all other stakeholders. Shareholder expectations are shifting, and consumers, regulatory agencies, employees, and communities are experiencing firsthand the positive value that companies can bring to their communities, beyond just jobs. Stakeholder groups have greater visibility to the positive and negative effects of a business’s operating model, and they expect companies to operate ethically and responsibly, in ways that don’t drive value for a select few at the expense of many.
As part of the ever-increasing evolution of corporate social responsibility and triple-bottom-line business strategy, companies are exploring both traditional and non-traditional aspects of the organization to uncover areas of risk and social and environmental impact.
Responsible or sustainable sourcing, is defined as “the integration of social, ethical, and environmental performance factors into the process of selecting suppliers.” Implementing a responsible sourcing program is largely focused around two key objectives: modifying business processes (mostly in supplier management), and the change management associated with those process modifications. Here’s how to implement responsible sourcing into your operations.
Exponentially greater positive societal impact is within reach, and doesn’t require additional funding. Responsible sourcing programs can drive intentional spending practices that require a certain level of social and environmental commitment from suppliers that present less risk and greater partnership value. Triple-bottom-line business strategies can drive substantial value for all types of businesses, as well as greater sustainability and resiliency into the supply chain. Leverage your buying power to incentivize and encourage responsible business practices throughout your supply base, and further your organization’s long-term viability and sustainability.
Jake Gentry is a consultant with Point B, a management consulting, venture investment and real estate development firm.
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