Congratulations to the 181 CEOs of the Business Roundtable who announced that their companies need to focus beyond traditional ‘shareholder value.’
And congratulations, too, to the procurement leaders who suddenly have new initiatives.
Officially, these CEO visionaries recognize that it’s time to pay much more attention to delivering value to customers and employees, dealing ethically with suppliers and supporting outside communities.
The real question: Will they turn their words into action?
Real Change Starts with the Supply Chain
Making headline-grabbing public commitments is easy. Driving real change is not – especially with an initiative this bold.
Where should these organizations start?
Most enterprises spend 50-70 percent of revenue in their supply chains, which makes the supply base a natural foundation for any structural change. When left unmanaged, they can also breed serious hidden risks, including slavery, forced labour and dangerous working conditions. Given the public’s intense focus on accountability and doing what’s right, overlooking the supply chain is unacceptable.
Acting on this commitment creates an immense new opportunity for procurement leaders – with a political and professional play that’s too big to ignore. This isn’t just for the leaders at these 181 companies, either; hundreds of others can lead by following fast. Or watch from the sidelines until they’re forced to catch up.
This change, executed well, will create new career pathways for procurement visionaries that aspire for a CEO or boardroom seat. For the CEOs, it creates legend potential. Very few people I talk with truly believe all these companies will put purpose over profit. For the ones that do – and that experience the distinct connection to valuation, brand loyalty, and most importantly, human and societal value – the opportunities are endless.
Developing Your Roadmap
The full roadmap isn’t anywhere near drawn. Fundamentally, it begins with how you lead, and what you’ll do when things don’t work exactly as planned.
Operational conflicts will arise, especially around production, pricing, compliance, suppliers and partners. As these risks are exposed, pressure will mount; if this promise for change is more than words, it opens the door for real dialog around the perceived tradeoffs between short-term financial success and the long-term value creation associated with labor, safety, paying a living wage and the environment. A willingness to measure and speak clearly about what is working and what’s not attracts believers – employees, partners, investors and customers – and increases the likelihood of success.
Operationally, the roadmap starts with your supply base. It’s the single-most crucial lever for creating real, networked impact for initiatives like this. The first step is engaging suppliers to ensure their buy-in and ownership of performance. This requires an investment in assessing sustainability performance, setting supplier expectations, measuring progress and driving real improvements. Engaging your supply base simply is not optional.
Business Roundtable: Corporate Fluff or Systematic Change?
Time will tell whether these CEOs will walk the talk.
Part of me is inspired and motivated by this commitment – it’s what we’ve been saying at EcoVadis for more than 10 years now. And I know that it’s very real for many of these companies. We work with several – including Coca-Cola, Johnson and Johnson and Salesforce, to name a few – and see firsthand their commitment and investment in sustainable procurement, and the resulting business value they experience. We believe it. We see it. We experience it every day across our customer base.
On the other hand, part of me is skeptical. We’ve heard the commitments before, and we’ve seen the broken promises.
It’s time for the few to become the many.
At EcoVadis, we’re hopeful. If you are serious about making change, reach out pierre.thaler@ecovadis.com. We’re ready to help.
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