Procurement with purpose

There isn’t any aspect of business today that shouldn’t be guided by a commitment to sustainable business practice, but it’s no longer enough to be exemplary in your own conduct – these principles now extend to your supplier and partner organisations. And while it’s certainly not news that responsible management of supply chains, including through social auditing, is business critical, legislation in the UK is taking this one step further and setting a standard in both the public and private sector.

The ‘Social Value Act’ has changed the way that UK public sector procurement operates. Today every public body in England and Wales, such as the NHS or the Ministry of Defence, must ensure that the goods and services they commission or procure add ‘value’ to the local area. This could be a social, economic or environmental, but the long and the short is that when any of these public bodies spend, the company they are buying from has an obligation to give back. Its purpose is twofold in that it ensures that taxpayers’ money generates additional return on investment, while also having a direct effect on the locale. For example, a local authority might engage the services of a private sector company to undertake maintenance on housing, and that company, as part of the agreement, commits to taking on a number of apprentices in the local area. And while the Social Value Act is only law for the public sector, their contracts total in the tens of billions and are seen as very much worth fighting for by the private sector.

What this means, at least in the UK, is that this legislation is having a ripple effect and there is a growing understanding of the business case for building social value into tenders. This is something that Bob Pickles, Head of Corporate and Government Affairs at Canon UK has witnessed first-hand. “Three to four years ago, it wasn’t part of the measurement criteria [for a public sector tender bid], but now it probably accounts for ten to fifteen percent. This can tip the balance ­­– you can win on price and still lose the tender bid because you didn’t do a good enough job on social value or sustainability.”

Bob believes we have reached a ‘perfect storm’ scenario, where the climate emergency, alongside other high profile social and economic circumstances, has created a state of heightened awareness. This has shifted consumer priorities and put pressure on business to ‘do the right thing’ – and be seen doing it. “That’s competitive pressure, as opposed to just legislative pressure,” he clarifies. “There’s a window of opportunity [for business] to step up to the plate and act as a leader in delivering change and transforming their operations to deliver sustainable outcomes and social impact. And competitive advantage lies with those who achieve this well.” In the not too distant future, Bob believes that procurers in all sectors will begin to make decisions in favour of organisations that have made these changes and this development will leave those that haven’t behind.

A recent reception, hosted by Canon UK, at the Houses of Parliament certainly bore this theory out. Businesses from the private sector were keen to join the discussion on sustainable procurement and expressed a desire to build this into the fabric of their organisations. Embracing these public procurement standards as best practice in the private sector creates wider value for everyone. “There is a common purpose here and that is the sustainable development approach that we’re taking,” explains Robert Spencer, the Director of Sustainable Development at global engineering company, AECOM. “We want to see net zero solutions that make it possible for our customers, our users, our clients to meet the climate emergency head on, confidently.”

However, it raises the question of ‘how’? It’s a combination of knowledge, investment and building the correct teams. From a procurement point of view, it’s essential to understand early on what you expect from a potential partner or contractor and where these requirements can support your organisational values. On the part of those wishing to sell their goods and services, it is to be expected that they have verifiable compliance with legislation and relevant certification with, for example ISO standards. But over and above this, what are they doing to deliver tangible, long term social and environmental benefits through their products, services and people? Positive answers to this question can add a very real competitive edge, particularly in a global marketplace. In the case of a large bid team, working to win substantial contracts, having a permanent place at the table for sustainability expertise also becomes essential and there is also plenty of scope to work with charities, social enterprises and other outcome-driven organisations in planning the delivery of complex or challenging social value projects

Some of this comes with an up-front cost, but, as Bob points out, “it will drive gains in credibility and reputational strength. And trust, both in brands and their products. It’s the reassurance that buyers need to know that organisations they’re working with are doing the right thing and behaving on behalf of society.”

Canon’s corporate philosophy is Kyosei – ‘living and working together for the common good’. In EMEA, we pursue sustainable business growth, delivering social and environmental benefits for our customers both now and in the future. Canon EMEA has been awarded the EcoVadis gold rating for five consecutive years, putting us within the top 5% for sustainability performance.