With your vision, drive and persistence with your corporate finance team, you will be able to define a quantifiable dollar value on your sustainability initiative…
Getting your organisation up to speed with sustainability is no easy task. It’s an area of responsibility for procurement and supply chain that covers a multitude of minefields – environment, social and economic etc. But also, fortunately, some daisy fields – stronger brands, employee value proposition and a major positive contribution to a better society.
I’m lucky to have been educated on most of the sustainability areas throughout my career and via my global network. But if you’re early on in your career, or new to the area of sustainability, it’s a lot of ground to cover! My best advice (and this won’t be a surprise!) is to use your extensive network to get educated and learn best practice.
When I speak with people around the world, the biggest problem they have is getting off first base. The need to get budget approval from their CFO for their sustainability project.
Many companies around the world have signed up to The United Nations 17 Sustainable Development Goals (SDGS), to all of which procurement and supply chain can make a positive contribution. How your sustainability project is going to help your company achieve its SDGs is the first and most obvious link you need to make with your C-level and your project.
The case for purpose is just like any other corporate initiative, it has to be rooted in a strong financial return – a business case. However, many of the important benefits that come from managing sustainability are seen to be unmeasurable. Organisations have been struggling to put a value on the impact of catastrophic supply chain events that permanently scare their corporate reputation. The value of having positive relationships with employees and the community can also be difficult to quantify. But investors and the community are putting increasing demand on companies to validate their sustainability efforts. Reporting on sustainable communities and regional spend, by way of example.
With the vision, drive and persistence within your corporate finance team, you will be able to define a quantifiable dollar value on your sustainability initiative. Here’s four ideas for KPIs to get the thought processes flowing:-
1. Reduce total lifecycle cost
The early part of my career was spent extinguishing media fires set by consumers concerned about the environmental impacts of disposable nappies or aluminium cans. I quickly learnt that there are indeed three sides to every story. Industries do so much to consider their impact on the environment and often go above and beyond what’s required, but rarely get appreciated in the mainstream media. In our “sound bite” media society, consumers rarely get to understand the concept of “total lifecycle cost”. It’s important we all build total lifecycle cost models, so we quantify and measure the total impact of the products and services we produce. This will allow us to measure whether we are increasing or reducing our total impact, that can be shared with others.
2. Increase employee engagement
Sustainability projects of every kind are a fantastic way to build your employees’ engagement with the purpose of your organisation. In my personal life I got involved in the Great Barrier Reef Research Foundation and learnt about the impact of climate change and declining water quality on the health of our reef. Until that point, I had no idea what the impact of commercial farming, water and ocean freight passage lines had on our marine ecology. As a member of their Board of Governors, I was invited to swim the reef and was briefed first hand by the world’s leading marine scientists. Employees were also invited to take sabbaticals to the remote labs. Nothing could better build employee engagement and understanding of climate change than these experiences. It had a huge impact on employees’ concerns and actions, but also lead to an increased respect for their company’s commitment to protecting the Reef.
I’ve also supported microfinance initiatives through an organization called Opportunity International, with a focus on small women-owned businesses in India. This gave me real insight into the plight of so many women in the world and the impact that breaking out of the poverty cycle can have on future generations. This made the plight of small female-owned business in emerging economies very real to me, which has always helped crystallise situations such as Rana Plaza for me and the obligation we have to suppliers several layers down in the supply chain.
3. Construct a Net Promoter Score for your community
Does anyone measure this? In my mining days, this was referred to as a “license to operate.” That is, that the community trusted you to operate your business responsibly and ethically. Mining companies, probably more than any other industry, understand how important it is to ensure sustainability is at the front and centre for all their decisions. One program I worked on was a local sourcing program. We qualified and engaged suppliers from the local area to help underpin the social strength of the community in which their employees worked – a very different form of sustainability!
4. Commit a single digit percentage of your corporate spend to social enterprises
About ten years ago I began working with Social Traders, a company who was building capacity amongst social enterprises to enable them to win corporate contracts. Once again, I was reminded of the multiplier effects when marginalised members of our communities are engaged and employed. For me it’s a no-brainer. There are definite areas of corporate spend that lend themselves well to social enterprises – (hint: look first at any category that includes labour spend). As one CEO said “we’re going to spend the money anyway, we may as well make sure it counts.” It was difficult to get traction a decade ago, but I’m delighted to see now how much energy there is within the corporate sector to engage social enterprises. What’s great in these commercial relationship is that everyone wins – the suppliers, the companies, the shareholders and the employees. It’s very powerful.
I’m bringing my years of experience and passion for procurement-with-purpose and sustainability to life by providing a global platform, Procurious, for people to share their learnings and experiences with each other.
For us it’s about demonstrating to our global network of procurement pros that purpose pays and that anyone can make a difference in their organisation, no matter how small.
Get up the learning curve as fast as you can by learning from your peer network. Join Procurious and start sharing your knowledge, start asking questions and start shifting the dial on these sustainability outcomes.