Negometrix-Proud-to-be-Procurement-Darin-Matthews-Measuring-Supplier-Performance-in-CSR

Corporate Social Responsibility (CSR): Measuring Supplier Performance Proud to be Procurement October, 2020 Overview • What is CSR? • Traditional definition • More than “doing the right thing”? • Supplier Performance Measurement • Areas if performance • Measurement tool • Leading Organizations • Portland State University (USA) • Greater London Authority (UK) • University of California (USA) • Wrap Up • Trends moving forward • Questions, comments Session Objectives üGain an appreciation of corporate social responsibility (CSR) üContrast organizational approaches to CSR üRecognize best practices in CSR üGain familiarity with supplier score carding in CSR About Me • Spent over 25 years as public sector CPO • Longtime faculty member and author • Past president of NIGP: The Institute for Public Procurement • Have remarkable and successful children Corporate Social Responsibility • Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public • By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental • To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment, instead of contributing negatively to them Understanding CSR • Corporate social responsibility is a broad concept that can take many forms depending on the company and industry • Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands • As important as CSR is for the community, it is equally valuable for a company CSR activities can help forge a stronger bond between employees and corporations, boost morale and help both employees and employers feel more connected with the world around them • Corporate social responsibility is important to both consumers and companies • Corporate responsibility programs are a great way to raise morale in the workplace ISO 26000 • In 2010, the International Organization for Standardization (ISO) released a set of voluntary standards meant to help companies implement corporate social responsibility • Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than quantitative, and its standards cannot be certified • Instead, ISO 26000 clarifies what social responsibility is and helps organizations translate CSR principles into practical actions The standard is aimed at all types of organizations, regardless of their activity, size, or location ISO 26000 Principles Accountability Transparency Ethical behavior Respect for stakeholder interests Respect for the rule of law Respect for international norms of behavior Respect for human rights By the Numbers 91 % Companies that include sustainability criteria into purchasing decisions 85 % Consumers more likely to buy from a company with a reputation for sustainability QUESTIONS? Opportunities Throughout the Procurement Cycle • Include green product specifications • Tender/bid documents clearly convey expectations and priorities • RFP selection criteria includes sustainable business practices • Sustainable packaging as part of negotiation • Manage and measure contractor performance • Consider sustainability performance in contract renewals and extensions Greater London Authority • Enhancing social value; • Encouraging equality and diversity; • Embedding fair employment practices; • Enabling skills, training and employment opportunities; • Promoting ethical sourcing practices; and • Improving environmental sustainability 26 Policy Elements • Ensure that environmental issues are proactively addressed in all aspects of the procurement process • Do not support, encourage or facilitate the trade in drugs, tobacco, slavery or prostitution GLA Sustainable Procurement Policy 27 Supplier Impacts/Influences • Opportunity for organizations to dictate market developments • Suppliers respond in order to compete for and earn business • Smaller organizations can follow the lead of large ones (set the standard) • Suppliers using sustainability as competitive advantage University of California • One of the largest university systems in USA • Comprised of 10 campuses and Office of the President • Committed to sustainability, equity and diversity • Annual procurement spend: $8.5 billion (USD) Policy and Practices in Sustainability • Existing procurement policies were revised in 2018 • Increased use of environmentally preferable products (EPP) in hosted catalogs • Reduction of foam packaging in shipments • Inclusion of sustainability as selection criteria in all formal RFPs (over $100,000 USD) University of California • First RFP under new policy (2018) by UC Santa Cruz • Internal resistance was addressed and negotiated • RFP Selection Criteria • • • Technical Solution Cost Sustainability 50% 35% 15% First RFP: How did it go? • Economic, Workforce, & Social Impacts • • • Environmental Sustainability • • • Policies that demonstrate commitment to economic, workforce and social justice Practices on measuring compliance and tracking improvement Sustainable business practices that minimize impact to the environment Measurement of performance in area of environmental sustainability Sustainability in Operations • Environmental practices related to the services provided The Winning Proposal (Pearson VUE) • Economic, Workforce, & Social Impacts • • Environmental Sustainability • • Robust benefit package, support employees in gender transition, several women holding board positions, strong supplier diversity program Environmental policy since 1992, carbon neutral since 2009, utilize green power, use FSC certified paper, reduced water consumption by half in 2015, promotes green travel Sustainability in Operations • Remote meetings to reduce travel, digital reporting to reduce paper usage, support staff that telecommute, use of diverse business as sub-consultant Supplier Diversity Diverse Business Programs • Disadvantaged business enterprise (DBE) – While this term is sometimes used to refer to all businesses, it is actually a Federal business certification • Minority business enterprise (MBE) – This term refers to a business that is owned and operated by an ethnic minority, and is also a recognized certification in many states • Women owned business enterprise (WBE) – Refers to a business owned and operated by a female, and can be viewed as a competitive advantage in industries typically dominated by men (i.e, construction) • Small business – This term refers to businesses with all types of ownership, and is normally based upon the annual sales volume and/or number of employees Certification as a small business can be at the state or national level • Veteran owned business – These are businesses owned and operated by military veterans or their family members A variation of this category is service disabled veteran business, which is owned by an individual that became disabled due to their military service • Local vendors or locally owned – Refers to businesses within a certain geographical area (city, county, certain zip code, etc.) that often receive recognition or preference from government agencies This is referred to as a local preference, which looks to support the local economy by giving a monetary (percentage) preference to businesses that provide local jobs and taxes • Lesbian, gay, bi-sexual, transsexual (LGBT) business enterprises – This is a certification offered through the National Gay and Lesbian Chamber of Commerce, and is recognized by the US Small Business Administration (SBA) as well as some local public agencies This program is new compared to other more established certifications, but is likely to gain acceptance in public procurement in the coming years • Small, women and minority (SWAM) – This is a unique term used by the Commonwealth of Virginia, who has one of the strongest programs in the country for disadvantaged business Diversity Throughout the Procurement Process Pre-Solicitation • Number of diverse suppliers to attend training • Percentage of diverse suppliers in supplier database • Number of diverse business events attended by an entity Solicitation Phase • Number of diverse suppliers contacted • Number of diverse suppliers submitting a bid or proposal • Number of diverse subcontractors contacted • Number of diverse suppliers at pre-bid conference What gets measured? Contract Award and Performance • Contract dollars awarded to diverse suppliers (prime, sub-contract level) • Number of contracts awarded • Replacement of MBE or WBE subcontractors • Awarded contract amount vs amount actually paid to disadvantaged businesses • Actual amount of business going to disadvantaged businesses in a multiple award scenario Wrap Up qCorporate social responsibility continues to grow in importance (globally) qLeading organizations address environmental, social and economic aspects of CSR (follow their lead?) qCSR plays a vital role in all stages of the procurement process qBuying organizations can help influence positive behavior in suppliers qMeasuring supplier performance can help both sides make improvements in CSR 37 Questions? Darin Matthews, NIGP-CPP, CPPO, CPSM, C.P.M Darin.Matthews@negometrix.com 38 References and Resources • Corporate Social Responsibility, James Chen and Gordon Scott, www.investopedia.com • ISO 26000, Social Responsibility, www.iso.org • EcoVadis, Resources, www.ecovadis.org • Portland State University, Equity in Public Contracting Policy, www.pdx.edu • City of Portland, Oregon, Sustainable Procurement, www.Portland.gov • Greater London Authority, Sustainability Policy, www.London.gov.uk • University of California, Office of the President, Sustainable Procurement www.ucop.edu