By Mita Gupta, Board Advisor at Mintec
ESG – environmental, social, and corporate governance – has become an increasingly critical topic and requirement for businesses
But what is ESG? You have likely read more than one of the many articles on the subject, such as this September 2022 TechTarget post which summarizes:"ESG is a framework for conscious consumerism. It helps businesses attract investors, build customer loyalty, improve financial performance and make business operations sustainable."
However, there is a big difference between acknowledging the importance of having an ESG strategy and successful implementation.
In this seventh installment in our 7-Part series, I will present three different but related areas where we must bridge the gap between ESG goals and outcomes.
ESG and Inflation
“Switching to renewables selectively or throughout the supply chain" will "decrease long-term costs, provide price stability, mitigate future regulatory risk, enhance brand value, drive new revenue, and improve employee engagement.” - Mintec Webinar
I part two of this series, we discussed inflation and shrinkflation and the impact of fluctuating gas prices on rising product and service costs. At the time, the focus was mainly on the economic impact of market volatility.. But, how many also saw it has an ESG challenge or how ESG could be a vehicle to corral runaway costs?
The opportunity to change the inflation narrative with oil prices requires procurement leaders to look for other, clean energy sources so that oil and gas prices will have a different economic and strategic impact than today.
There is a caveat, what goes down, must also come up in other areas – such as the batteries used in electric vehicles. The December 2022 Insider article "Batteries got more expensive in 2022 after years of dropping prices – and it could delay access to cheaper electric cars" highlights the fact that there are many areas of overlap between economic considerations and ESG objectives. We will cover those in greater detail in the upcoming The BIG SEVEN in 2023 for Procurement webinar on February 23rd.
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ESG and Talent
When it comes to ESG – and more specifically, diversity, here are a few notable facts:
- There are over 5,370 procurement officers currently employed in the United States.
- 39.7% of all procurement officers are women, while 60.3% are men.
- The average age of an employed procurement officer is 47 years old.
- The most common ethnicity of procurement officers is White (73.2%), followed by Hispanic or Latino (10.5%), Black or African American (7.6%) and Asian (6.6%).
- In 2021, women earned 93% of what men earned.
If you refer back to part four in this series on job security and the talent wars, you will recall how the five years leading up to the pandemic, most CPOs believed that their teams lacked the necessary skills to achieve the strategic objectives. How much of this skills shortfall can be addressed by a more focused and intentional effort to drive increased diversity within procurement teams? After all, if we need a more diversity within the procurement profession, how can we effectively pursue diversity with external stakeholders, e.g. suppliers?
ESG and Supplier Relationships
In part five of this series on supplier relationships, I provided compelling examples of the contrast between moving engagement beyond a transactional mindset and adopting a relational approach to achieve a “mutually beneficial outcome” for all stakeholders.
Think of the Frito-Lay impasse with a large retail grocery chain. Or, how the tables turned for Walmart from a position of strength with Vlasic pickles and their current challenge trying to unload the excess inventory clogging their warehouses and store aisles. It would appear that beneficial outcomes are more the results of a pendular advantage versus a shared stakeholder reality.
“However, I think it is important to emphasize that a supplier diversity initiative goes well-beyond equating success by measuring the throughput of dollars. At its heart, its most significant impact is the recognition that by solving economic injustice, we will also solve racial injustice.” - Jason Trimiew, Director, Global Supplier Diversity, Meta
Here is the question: can ESG objectives—or at least our collaborative and conscientious approach or mindset to "partnering" with diverse suppliers benefit our buyer-supplier relationships with all suppliers? Should we make the same investment in building a strong relationship with every supplier using the same values and models that makes our diversity programs successful such as Meta's early-pay program?
Our panel will discuss these and many other questions – including sustainability, in the upcoming The BIG SEVEN in 2023 for Procurement webinar. If you still need to reserve your seat for this seminal discussion, use the following link, as it will be one of the most important webinars you will attend in 2023.
Upcoming Webinar - The Big Seven in 2023 for Procurement