David Loseby has been around the procurement world at senior levels for quite some time, and has also become an industry thought leader with strong academic credentials. He has acted as an editor for industry journals, and his doctorate which focused on behavioural science in a business context developed into a book, Soft Skills for Hard Business, published in 2018.
After spending two years in a Group CPO role at Rolls Royce, he has more recently been advising organisations, particularly in areas that are close to our “procurement with purpose” hearts.
We met over coffee in a central London Costa, at 9 am the morning after the CIPS SM Awards dinner, which we had both attended. Despite that, the conversation flowed easily and intelligently – well, it seemed that way to us! We started with me asking him how he sees the sustainable procurement / procurement with purpose landscape generally.
“There are many organisations and people with good intentions, but also examples of people not admitting that they are really unsure as to what to do in terms of implementation. Therefore, I’m trying to help clients sort out what to actually do, to put it simply”.
He believes that governance is often a good starting point. If you don’t know who is responsible and accountable for ESG activities, which these days include some statutory obligations, then you have an issue. Typically, one of the many questions might be “does the firm have a non-executive director with ESG responsibility, for instance”.
Implementing appropriate governance requires a cross-functional approach, and Loseby explains that the discussion must be framed within the culture and working style of the organisation and its people – “the approach must feel unique to the stakeholders if you want them to take ownership”.
Within the ESG definition, the “G” stands for governance of course, and I confess I had not seen that aspect as particularly an issue for procurement to lead. Doesn’t that more often fall under the Company Secretary’s remit, or the CFO or General Counsel perhaps? Loseby makes a strong argument that the CPO and procurement function can and indeed do often position procurement well to provide direction and take overall ownership of the ESG agenda.
“So many ESG related activities fall within the supply chain anyway. And procurement often has the best overview in general of what is going on across the entire organisation. That means we can present options and choices to the Board more easily than most. “Governance” of the supply chain is vital within the E and S of ESG too, so procurement may well be the most natural home for the end-to-end agenda”.
We talked about the use of GRI (Global Reporting Initiative)-type indices, given there are so many and hence it is hard to know which to use! It is often difficult to know exactly what data to collect and how to report on sustainability, Loseby believes. But pressure is mounting on organisations - “I suspect the regulators are going to be looking for candidates to fine soon, to set an example to others!” So it is vital to make sure you are up to date with legislative requirements – some companies may be “sleepwalking” into trouble.
If you are at an early stage in your journey to sustainable and purposeful business, Loseby suggests that understanding and articulating your baseline should be the starting point. From there, plans can be developed in the different purpose-related areas. “The emerging role for procurement is as an ESG adviser – no-one can own the totality of this. But often procurement people don’t have the time to do the initial work to get on top of this, which is where some external support from trusted sources can be useful”.
We moved on to talk about the public sector. Collaborating with councils who are incorporating social value into contracts and evaluation processes for capital projects and programmes will become more common over the next decade This is especially true as “Councils are being given levelling up funds which require contracts to deliver tangible local value.”
But some are struggling – measuring social value can be tricky and often only takes place at the end of the contract when it is too late to address any issues. “Organisations really need to consider which attributes they want to address through the contract, design that into the evaluation and the contract, and measure the benefits through delivery.”
Strategic thinking is vital, Loseby suggests, with an example of a council that wants to help more single parents get back into work. That might require re-purposing of existing council buildings to provide childcare facilities, contracts to support that, then a drive via other contracts to encourage suppliers to recruit more single parents, knowing that childcare is not a barrier. A range of suppliers might contribute in diverse ways to the success of both the centre and the whole initiative. “How many single parents will you employ” might be a suitable question to suppliers in the tender, but it cannot be the only aspect of the programme if successful outcomes are desired.
“You need to be explicit about what you want (right at the start), then take an approach from the start to track and measure what is delivered. Design the measures before the contract starts, and communicate to suppliers and internal stakeholders what will be measured and how”.
That is excellent advice and indeed, much of that also applies to the private sector, which also struggles at times to measure the outcomes and benefits from “purpose-related” activities.
“This is an opportunity for procurement”, Loseby says. “We can be more strategic, and there will be stimulating roles in the profession - but we have to think about this end-to-end approach.”