Why CSR Matters in Procurement Today

Having a successful business requires a lot of detail and effort. 

With so many industries and approaches, there's no one-size-fits-all model, that's for sure. 

However, common wisdom says that to really make a strong impression in the market, you've to follow some general rules.

Keeping your brand's reputation on the favorable side, for example, is one of those. 

And the most important thing to achieve that? 

Starts with corporate social responsibility.

But how does CSR relate to procurement? Why should your company care about it?

That and more is coming right away.

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What is Corporate Social Responsibility (CSR)? 

CSR is known for conducting business in a way that embraces practices that benefit society. As a strategy, it goes beyond profits, focusing primarily on ethical sourcing, sustainability, and social well-being.

You can see it as a self-regulatory approach that helps your business to make responsible decisions aligned with social and environmental goals 

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Is CSR a trend?

Maybe in the past, it was seen as an optional initiative, something that could quickly boost your brand in front of your clients. 

Now?

It's what people demand and expect from companies. As we see the impact climate change and geopolitical issues have in our daily lives, it's kind of normal to push for a shift in corporate practices.

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How Procurement is Connected to CSR?

Think about it 

The suppliers you choose, the materials you decide to source, and the policies your company follows. Everything has a direct impact on sustainability and ethical issues. If you prioritize CSR in procurement, you can build a responsible supply chain that not only works in your favor but also helps the world around you. 

For example, you can….

Reduce environmental impact 

• Choose eco-friendly materials so you reduce waste levels and pollution.
• Work with suppliers who are already using renewable energy or organic production methods.
• Follow circular economy principles like recycling and reusing. 

Support fair labor practices 

• Your suppliers should adhere to fair wages and safe working conditions so there's no risk of labor exploitation.
• Conduct audits and require relevant certifications to comply with ethical labor standards.
• Encourage suppliers to adopt diversity and inclusion policies. 

Promote diversity 

• This can be done by sourcing from minority-owned businesses or by working with local companies so you're giving back to the community 
• Measure your success using targets for diverse supplier engagement. 

Drive innovation 

• Collaborate with your suppliers to develop environmentally friendly alternatives to traditional products 
• Invest in research and development for greener technologies.

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Common Challenges to CSR in Procurement 

Cost concerns

We get it 

At first glance, you might believe that sustainable and ethical sourcing is more expensive than conventional procurement practices. Higher costs for responsibly sourced materials, fair wages, and environmentally friendly production methods can create budgetary constraints, making it difficult to justify spending more. However,  you just have to remember that long-term benefits like improved brand reputation and operational efficiency can definitely outweigh the initial investment.

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Limited supplier options

Depending on your industry or market size, finding suppliers that align with CSR values can be challenging. Some suppliers may lack the resources or motivation to meet sustainability standards, making it necessary to either invest in supplier development or source from a limited pool of compliant options.

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Lack of awareness

Can you follow something you don’t know? 

Not really 

This is a problem, as many procurement teams do not fully understand CSR principles or their impact on the supply chain. Without proper training, your team might believe that achieving a competitive pricing is everything, leaving behind the importance of following sustainable standards. Education programs can help bridge this knowledge gap and integrate CSR into everyday procurement decisions.

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Resistance to change

Long-standing procurement habits can be difficult to break. If you and you are team are used to traditional sourcing methods, it could be a bit hard to adopt CSR-driven approaches due to concerns about increased complexity, cost, or disruptions to supplier relationships. Overcoming this resistance requires strong leadership, clear communication of CSR benefits, and gradual implementation strategies.

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Best Practices for Improving CSR through Procurement

If you want to strengthen CSR in procurement, start following these points. 

• Develop a CSR procurement policy: Set clear guidelines on ethical sourcing, sustainability, and supplier expectations.
• Build strong supplier collaborations: Work with people who share your CSR values and encourage them to adopt sustainable practices.
• Use technology: Digital tools can help track supply chain sustainability and compliance with CSR goals.
• Measure impact: Establish key performance indicators (KPIs) to monitor and report on CSR progress.

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How to Develop a Good CSR Procurement Policy?

Start with an outline

Look around your current processes to check what areas could be improved regarding CSR values. Once you’ve done this, you can move forward, creating a roadmap of the necessary next steps. It should outline your commitment to fair labor practices, environmentally friendly materials, and responsible supplier relationships. When your team has clear guidelines, it becomes easier to make decisions that align with CSR goals.

Work closely with suppliers

Your suppliers are fundamental partners in achieving CSR objectives. Choose suppliers who prioritize sustainability and ethical practices. Engage in open conversations about CSR expectations and work together to find solutions that benefit both parties.

Make your life simpler with technology

Advancements in technology make it easier than ever to integrate CSR into procurement. Digital tools like procurement software can help you track supplier sustainability scores, monitor carbon footprints, and check if ethical standards are followed or not.

Key Performance Indicators for CSR in Procurement

Some KPIs you can use include:

• Percentage of sustainable or ethically sourced materials
• Reduction in supply chain carbon emissions
• Number of suppliers adhering to fair labor standards
• Diversity and inclusion metrics in supplier partnerships
• Compliance with global CSR regulations

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