Corporate social responsibility and your suppliers
It's not about "checking the box"
Businesses are increasingly interested in incorporating corporate social responsibility (CSR) into bidding, contract and supplier selection, particularly as more midsize companies expand their global supply chain. This practice ensures humane and sustainable supplier choices for companies. According to a Gartner study on this topic, companies may adopt measures related to living wages, anticorruption, anti-slavery and child labor, community relations, disposal and sustainable manufacturing. Key business benefits include improved risk mitigation, better supplier collaboration and cost optimization.
In addition, adding diversity and inclusion into a company’s supplier selection process is another way middle market businesses can further differentiate themselves and mature their CSR strategy. A supplier diversity program promotes the use of minority-, women-, veteran-, LGBT-owned and other historically underutilized businesses. There are a variety of diversity category certifications to consider when identifying appropriate suppliers, including the Small Business Enterprise, Minority-Owned Business Enterprise and Women’s Business Enterprise, to name just a few.
According to the MMBI, among middle market organizations with a special designation or certification, 44 percent responded that their organization required or requested certifications from their own suppliers or partners. Reasons indicated from respondents ranged from "We were required by clients," to "It would increase our reputation and legitimacy."
According to David Hinson, U.S. Chamber of Commerce consultant, president at Brookland Capital Partners and former senior advisor to the federal government on the growth and global competitiveness of the nation’s 8 million minority-owned businesses, intentionality matters when it comes to supplier diversity and inclusion planning.
“Businesses should do their research on appropriate supply partners, perform due diligence to verify claims and establish performance hurdles to evaluate and confirm partnerships are delivering,” Hinson says, adding: “Having a supplier diversity strategy is especially important for middle market businesses competing globally. More and more countries are requiring companies to demonstrate their commitment toward diversity and corporate social responsibility. Businesses are expected to be more purpose-driven and transparent in connection with their supply chain and other operations, and having a formal plan related to this is essential for growing companies.”
IT'S NOT ABOUT "CHECKING THE BOX"
What factor distinguishes a successful CSR strategy from one that just goes through the motions to “check the box?” Jennifer Busse, national leader of RSM's people and organization management consulting practice, says linking the CSR mission directly with the values of the company helps to authenticate the program. Busse works directly with companies to help them develop their social responsibility strategies.
“If your CSR is in place because you are attempting to keep up with competition, yet it’s not linked with your culture, values and vision, your efforts will fall flat,” Busse says. “The plan will seem like another company initiative with no substance, no authenticity, and it will not be accepted by employees and those outside the organization.”
Busse advises keeping things simple in the initial launch of a CSR strategy, too.
“It should feel like a natural extension of the company, embedded and not forced. Employees will get behind something that is clearly communicated and relates to the overall business,” she says. For instance, a middle market food manufacturer may link CSR efforts to addressing hunger issues, while a recycling business may focus its social responsibility on educating the public about ways to help the environment.
“Whether they call it corporate social responsibility, corporate citizenship or shared value, companies understand the importance of solving the needs of their communities and their world. We find that as individual companies formalize their CSR engagements, they experience greater and more effective impact. For middle market businesses, by ensuring that they create strong partnerships and measure and evaluate the outcomes of their work, they can enjoy the positive effects of community engagement.”
- Marc DeCourcey, Senior Vice President, U.S. Chamber of Commerce Foundation
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Report explores corporate social responsibility, diversity and inclusion in the middle market and the value of formalized planning.