by Victor Tembo
Every organisation has responsibilities to the society in which it operates. Responsibilities to its clients and non-clients. These responsibilities including upholding the rule of law, observing the highest ethical standards and delighting the client. Ethical standards including operating businesses without corruption, undertaking operations in line with the countries regulatory requirements including dealing with ethical suppliers must be the norm. Even as profit making companies like Multinational firms operate to make as much profit as they can, they have a responsibility to ensure that their practices are within the confines of ethical conduct and regulatory framework. That means the sales team, the marketing team, operations, production and procurement must play a leading role in their various domains to ensure ethical conduct at every level. This write up is focused on procurement and its role in social responsibility and the consequences of non-adherence.
As we analyse this issue we may wish to ask ourselves these questions:
- Does good business mean maximum profitability?
- Does responsible buying mean not meeting stakeholder targets?
- Does Responsible buying mean compromising efficiency, transparency and accountability in the public service?
- Who are the main players to push the Green and Responsible Procurement agenda
When we talk about socially responsible procurement, we are talking of a whole range of procurement activities that will ensure that an organisation balances its need for profitability with ethical conduct. In fact, ethical conduct must never be compromised for profitability. Procurement must be done smartly. Smart procurement in the public sector should focus on improving the efficiency of public procurement at the same time using public market power to bring about major environmental benefits locally and globally. This is connected to Socially responsible procurement. Responsible Management teams will often struggle with how to do the right thing for society (corporate responsibility) i.e. protect the environment, conserve resources, treat people fairly – as they strive to do the right thing for the business i.e. improve performance & increase efficiency at lower cost.
What then is Green Procurement? European Commission Definition:
Green Procurement is a procurement process that places emphasis on respect for environmental factors as an ethical requirement. One may ask, how can you operate as a socially responsible firm without making loses. Investors, business partners, employees, governments and most of all customers are demanding both profitable performance and ethical conduct from companies. Balancing these priorities is no longer elective – those key stakeholders are actively rewarding or punishing companies for how successful they are at performing this balancing act.
What does Socially Responsible Procurement (SRP) entail?
*According to Institute for Supply Management, it entails a framework of measurable corporate policies and procedures and resulting behavior designed to benefit the workplace and, by extension, the individual, the org & community
*Ethics and financial stewardship;
*Human rights respect;
*Health and safety
Examples of SRP
– A Chemical manufacturer might focus on environmental practices within its own operations, as well as the procedures of its vendors, and shape the company’s response to those risks.
– A Financial Institution might place an emphasis on ethics and financial stewardship driving its procurement procedures and other internal reporting
Socially Responsible Procurement as an ethical issue is therefore about delivering value for money, whole-life costing and benefits to society and the economy as well as the Environment. Procurement must therefore be Environmentally friendly as procurement has a significant role to play in an organisation’s image. Ethical procurement must focus on “products and services that have a lesser or reduced effect on human health and the environment when compared to other products and services that serve the same purpose.”
(USA Government definition). This includes materials we use for production, our disposal methods of waste products etc.
How then should organisations balance the conflict between profitability and Social Responsibility?
How do you balance potentially Conflicting approaches to
*– Social issues
*– Environmental issues
*- Profitability issues
*– Value for money?
The Government which in most countries is the biggest buyer of goods and services must show leadership by ensuring that its own procurement practices are ethical by dealing with institutions to provide goods and services that are responsive to the environment and society in general. Public Procurement must therefore be conducted with responsibility to the environment and society as a whole. Socially Responsible Public Procurement (SRPP) refers to a wide spectrum of social considerations, which may be integrated at the appropriate stage of the procurement process. According to a study on the incorporation of Social Considerations in Public Procurement in the EU, July 2008, “Socially Responsible Public Procurement (SRPP) refers to procurement operations that take into consideration, inter alia, the promotion of employment opportunities, build-in safeguards with respect to the standards of working conditions, strive to support social inclusion (including persons with disabilities), social economy and SMEs, promote equal opportunities and taking into account Fair and Ethical Trade issues as well as human and labour rights while observing the principles of the EU treaty and the EU Procurement Directives”
Green and socially responsible procurement is therefore the procurement practice that focuses on both non-environmental ethical responsibilities and environmental matters as a primary deliberate action that an organisation practices.
Benefits of Green and Socially Responsible Procurement in practice
Increased Business- sustainable goods & services from responsible suppliers enhance reputation, increase customer loyalty and attract new customers
Reputation management – Association with a supplier or country with a poor environmental, social and ethical record poses significant reputational risk to investment (1996 case of Nike after child labour accusations)
Improved access to capital – investors & lenders look to a country’s social, environmental and governance performance – Millennium Challenge Corporation of the US Government, Multilateral Institutions etc,
In view of the above, are African Governments doing enough to ensure Socially Responsible Procurement is more a practice than a vision? If so, why are some countries still damping grounds for inferior products? Africa has been awash with counterfeits of all types – batteries, shampoo , electrical products, medicines etc.
– Injurious products – fake razor blades often have blunt or jagged edges
– Counterfeits can also be lethal – fake mosquito nets may be a death sentence for a child whose malaria remains untreated
– Africa is deluged by low cost, poor quality goods and counterfeits – Cell phones that explode when charging etc. Cheap Asian products “zhing zhong” or “dollar-for-two” due to their susceptibility to wear and tear after just a few days of use.
The question therefore to ask is : Is Africa living with an epidemic of counterfeits to add to its other problems? The EU and US Markets have strong legal framework to protect themselves from fakes and as such one is always almost assured of high quality goods.
ACTIONS COUNTRIES MUST TAKE
– Regional coordination through seizure of huge quantities of fake medicines in coordinated operations needs strengthening.
– Statistics of fake drugs must be accurate and reliable
– Actions that have been put in place need to be enhanced for Africa to fight back are customs support, anti-counterfeiting technology, better retail systems, pharmacist training, consumer education etc
ADDRESS THE PROBLEM AT PROCUREMENT STAGES
– Include environmental, social and economic criteria in tenders where relevant to the contract;
– Increase institutional capacity to curb non-compliance and violation of acceptable ethical standards
– Develop National Initiatives and Guidelines on sustainable procurement – Best performing EU countries in sustainable procurement have developed such guidelines
– Manage the corruption problems in the public service
– Ensure Long-term political commitment to sustainable public procurement
SOCIALLY RESPONSIBLE PROCUREMENT STARTS NOW!! Don’t wait until society goes frail
There is no perfect man to wait for. There is no perfect time to wait for. The time is now.