I was looking back at my Procurement with Purpose book, and what I wrote over two years ago about how Covid might affect the whole sustainability movement. Here is what I said then – you can judge whether it has stood the test of time.
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Hypothesis 1 – Procurement with Purpose will be sidelined because…
· Businesses will simply be struggling to survive as the world crashes into a major recession or potentially even depression. That will put the focus on cutting costs – and that will mean a brutal procurement environment with tough negotiations, delayed payments and the usual actions we see when times are tough.
· Internal resources will be cut in organisations as they address their internal cost base, too. That will include procurement, so as teams shrink, there will be less time for the “nice-to-haves”, which will include procurement with purpose programmes.
· Younger people, who have been leading the drive in areas such as climate change, will be worst affected by the economic effects of the pandemic. They will have to put their energies into simply getting and keeping a job, rather than campaigning for good causes.
· Ironically, the economic downturn will make it more likely that climate change targets will be hit, so that might reduce the imperative to take more proactive steps to drive down emissions!
Hypothesis 2 – Procurement with Purpose will thrive because…
· Everyone has realised how much we all depend on each other. That many people doing minimum wage jobs are arguably more important to society than bankers or soccer players. Being kind and considerate, including to future generations, will be seen as a higher priority for society, supporting many of the procurement with purpose ideas and initiatives.
· There will be a backlash against firms that are seen to have behaved badly during the crisis, or afterwards (in terms of increasing payment terms for suppliers, for instance) and they will be punished by customers. The concept of “predatory capitalism” will be much discussed, and that scrutiny will grow, with firms being reputationally damaged if they don’t behave in a sustainable and purposeful manner.
· Young people will only accept their inevitable economic difficulties if they can see that society is moving in the right direction more generally, so pressure in areas such as climate change and plastic use will increase rather than diminish.
· “Socialist” solutions to the crisis such as huge government investment (cf. the USA) or renationalisation (rail in the UK) will mean the state taking a wider role, and less of the economy will be in the hands of profit-maximising bodies. The public sector is more likely to want to address “social value” and procurement with purpose issues.
On balance, I believe that the positive view will prevail, and it has been encouraging to see leaders in sustainable business reinforcing their commitment through 2020/21. But COVID has driven change, often rapid, and has already pushed many organisations into reviewing or even radically changing their supply chains. PPE (personal protective equipment) was suddenly a highly “strategic” spend category, and a matter of life and death, not a simple category where volume leverage was the usual procurement strategy.
It seems likely therefore that governments and businesses will to some extent move away from globalisation towards supply chain approaches that place more emphasis on local or national supply. Every government in Europe will want to know that critical items such as vaccines or PPE (and many others) don’t depend on China in the future – or indeed on the USA.
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And I finished that chapter like this.
“So, procurement with purpose should come out of this crisis stronger than ever, with a renewed sense of the value that it can create for everyone: individuals, businesses and governments”.
Was I right?