Maximising brand development with CSR
By Ella Copeland
In traditional business models, Corporate Social Responsibility (CSR) departments and procurement teams are two very separate entities, with individual, often contrasting goals and objectives.
While the traditional role of CSR is to donate money or goods to worthy causes in order to develop the brand image and fulfil social responsibility, the role of the procurement team is often to cut cost as much as possible from the supply chain operations; an approach which at times has led to using irresponsible suppliers and contributing to a negative brand image.
Following increased consumer awareness of the poor working conditions and negative environmental impact associated with some overseas suppliers, the roles of the CSR and procurement departments are growing closer together.
As procurement teams find themselves evaluating ethical practices, and CSR teams consider the impact of suppliers on brand image, it is key for businesses to ensure the two teams work together to achieve their targets, according to Alis Sindbjerg Hemmingsen, founder and CEO of the Danish consultancy Responsible Procurement.
“I think a lot of companies are realising that from a brand stand, if you’re sending money to Africa but haven’t addressed your operations, that’s green washing and consumers aren’t stupid,” she said. “That’s what responsible procurement is all about, integrating the consumer into procurement and that’s how we can bring much more value into procurement - by doing things that make a difference.”
In order to integrate the two processes, procurement teams need to consider how the supplier base integrates with CSR, integrating the supplier strategy with the brand’s CSR objectives and communicating between departments to develop the brand strategy. According to Hemmingsen, this approach also has the potential to save cost by contributing to risk management policies and minimising the potential cost of a damaged reputation from unethical sourcing.
“Implementing responsible procurement doesn’t always need investment, because if you decide to minimise the focus on risk management, train suppliers and cut waste down, you bring costs down and minimise different types of risk through a completely different approach to procurement,” explained Hemmingsen. “Let’s say you have a category where you work with the packaging to reduce it by a percentage, then you have reduced your spending and done something good for the world. It depends on what suits your company’s business model best.”
This approach means communication between the CSR department and CPO is crucial. The CSR manager has an understanding of the business values they have to bring in, which needs to be explained to the procurement department. The two teams can then consolidate efforts to create events, activities, strategies or platforms to further integrate their shared approach.
“Where I stand, I am taking a procurement approach to CSR, rather than a CSR approach to Procurement. What I try to tell my customers is that they should not focus on everything. From a consumer point of view, always have your focus – just like H & M and Coca-Cola have done, look at what you need, recognise that without this resource your product would be gone,” explained Hemmingsen.
In this way, responsible procurement adds to the competition. By implementing it, companies are able to minimise risk, bring down costs and develop products which are competitive, making them a step ahead of competitors when planning to develop new and more sustainable products.
Having recently attended the World Procurement Conference (WPO), Hemmingsen claimed Procurement Managers were asking ‘How can we create more value than just working on savings?’ with CPOs increasingly acknowledging responsible procurement methods as a way of lifting procurement into a business development role to add to a company’s competitiveness.
“The amount of resources put into risk management at the moment is a little bit of overkill. It’s really nice to see CPOs recognising the importance of CSR in procurement. People are recognising its importance, but they’re still working out how to practice it.
“The World Procurement Conference was attended by High-Level CPOs who have a good view of what is important to them, and it’s great to see that they’re thinking about CSR and risk. So we’re moving forward, bringing new value to procurement,” concluded Hemmingsen.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”