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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Corporate Social Responsibility in Procurement — Everything a Procurement Professional Should Know
Key takeaways
- Align CSR with procurement for brand enhancement, customer attraction, and financial rewards through ethical practices.
- Prioritize sustainability to meet customer expectations, stand out in the market, and ensure long-term success with transparent supply chains.
- Despite benefits, one-third of leaders face hurdles in integrating CSR due to complexities, perceived costs, and resistance.
Corporate social responsibility (CSR) is adopted by many businesses. However, what is its impact on procurement?
In this article, we will discuss what corporate social responsibility and sustainable procurement are. We will tell you the importance of corporate social responsibility within sustainable procurement. Additionally, we will tell you the pitfall of corporate social responsibility in procurement.
After you finish reading this article, you will gain knowledge about the impact of CSR within procurement. Thus, it will allow you to know how you can align your CSR and procurement with each other to develop your business further.
Corporate Social Responsibility– What is it?
Corporate social responsibility (CSR) is the commitment of businesses to behave ethically and contribute to the development of the economy all while improving the quality of life of their workforce and their surrounding community.
It is a type of self-regulation used by companies aiming for social accountability through sustainable initiatives to care for the environment and society.
Proper execution of the CSR concept may bring a lot of benefits to companies. It includes easy access to capital and markets, increased profits, improved brand image, gaining more customers, and better decision-making and risk management processes.
What is Sustainabilityin Procurement?
Sustainable procurement, also known as green procurement, refers to the adoption of processes that are concerned with environmental, social, and governmental factors while considering the price and quality of goods that will be acquired by a company.
To simplify, sustainable procurement refers to how businesses can identify and reduce the environmental and social impacts in their supply chain. Typically, corporate social responsibility is usually brought up when companies talk about sustainable procurement.
Sustainable procurement is a strategic decision that goes beyond the requirements of economics. It considers the assumption of stakeholders if their performance is equal and acceptable.
The Significance of Corporate Social Responsibilityin Sustainable Procurement
Companies are beginning to focus on corporate social responsibility in sustainable procurement as customer experience drives brand loyalty. The company’s ethics are becoming a critical factor to differentiate them from its competitors in the global market.
Additionally, companies are finding various ways to turn profits using environmentally and socially responsible methods. When you promise that your business processes are ethical, then you should walk the talk as customers are now wary of how their purchases can affect the environment and society.
For example, if the company’s mission aims to lower its carbon footprint, then the procurement manager or department should focus on sourcing sustainable and non-toxic materials from suppliers who share similar values.
You need to have a clear view of how your policies match your company’s mission to integrate corporate social responsibility within your procurement processes. Companies that integrate CSR in their procurement processes outperform their competitors with higher financial rewards, more transparent supply chains, and deeper brand connections.
An Impactful Pairingof CSR and Procurement
Nowadays, customers are paying a lot of attention to company values when making purchasing decisions and employees are looking for companies that care about social issues. Because of this, it is getting difficult for companies to know where to start and allocate their resources for sustainable initiatives. By working with procurement teams, companies can source external resources that may help achieve CSR initiatives.
When the company is looking for external resources, sustainable procurement can help document the needs of the organization to ensure that the solution aligns with your initiatives.
When running a procurement event for CSR services, procurement teams can award businesses to companies with insights into those identified organizational priorities.
CSR is a culture of a company. Thus, procurement can help drive that culture and promote participation by sourcing for the right partner. This is due to the fact that the right partner is the key to creating impactful contributions to the environment, society, and economy. Also, working with experienced procurement professionals can help to ensure a successful CSR implementation.
Perceived Pitfallsof CSR in Sustainable Procurement
Despite the many benefits of CSR, one-third of industry leaders prioritize the management of CSR in procurement over the years to come according to a survey by Deloitte. The widespread neglect is linked to the practical challenges of purchasing goods and contracting services that align with CSR goals.
This is due to the fact that procurement is already a complicated process as it entails vendor vetting, talent acquisition, contract negotiation, and material selection. Additionally, Many companies are not yet ready to run a sustainable business as many leaders believe that it increases costs, complicates processes, and intensifies stress.
The job is heavy and it requires unique solutions for creating buy-in, changing buying behaviors, enforcing standards, and tracking progress on sustainable procurement initiatives.
The journey of companies toward CSR in sustainable procurement practices is overwhelming if you take all of it at the same time. Therefore, you can start with small changes that fit within your company culture.
Conclusion
In conclusion, Corporate Social Responsibility (CSR) is a vital commitment for businesses, influencing procurement practices and sustainability. CSR, encompassing ethical behavior and contribution to economic development, offers substantial benefits, such as enhanced brand image and better risk management. Sustainable procurement aligns economic, social, and environmental factors, crucial for companies aiming for CSR.
Frequentlyasked questions
What is corporate social responsibility?
It is the commitment of companies to operate ethically to protect the environment and improve the lives of the people in society.
What is sustainable procurement?
It refers to the adoption of processes that are concerned with environmental, social, and governmental factors.
Why is CSR important?
It is important as consumers and investors are becoming more conscious of whom they are going to do business with.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
