Let’s face it, there weren’t many positive aspects to 2020. But I did get the chance to meet and interview some really interesting, passionate, and smart people who care about various elements of the Procurement with Purpose agenda. Unfortunately, since February that has been online rather than over a beer or coffee, but you can’t have everything.
Before Christmas, I spoke to Jacqui Archer. She started her career in Glasgow, from humble beginnings, as she put it. She won a place as a school leaver onto the graduate management trainee programme with the National Health Service. The NHS suited her own intrinsic sense of purpose, and she also began to understand how “positive intent drives the actions that deliver outcomes”, a philosophy that has stayed with her to this day.
She moved into the private sector with Rolls Royce, where she developed a focus on collaboration, working with customers and suppliers to develop mutually beneficial relationships. But she felt something was still missing, and as her career progressed, she started thinking about the impact of commercial relationships on wider issues.
“I was interested in the whole sales and procurement lifecycle and how commercial decisions impact wider sustainability issues. But there was a problem in terms of how to measure sustainable value”. The international reporting standards didn’t seem adequate, to her they seemed fragmented and disconnected from the decision making causing the impact and, and she says, “simply getting an ESG report does not drive value or fundamental change”.
About 5 years ago she set about researching and designing her own “integrated holistic framework” and that’s now resulted in the Positive Impact Commerce Foundation, a community-interest company. The tools and processes she is developing and promoting are designed to be a system to deliver sustainable value from the perspective of the business, focusing on making better decisions that drive the right outcomes.
The model has five pillars, which combine to give an organisation a “Positive Impact Commerce” rating. Archer wants the PIC rating to become a standard measure that organisations can use to measure themselves and track progress.
The five pillars are;
· Integrated Governance – business wide and focused on impactful decision making
· People – the internal social value gained from engaging the workforce and clients
· Planet – natural value such as mitigating climate risk and improving biodiversity
· Society – providing real social value and economic opportunities
· Profit – how balanced is the balance sheet, for example does it pay its “fair share” in taxes?
Under each of the five pillars, there are eight materiality indicators, with the most important weighted accordingly in the final scoring process. If you score above a threshold, you get a PIC rating, a single number calculated from the rolled-up scores.
But I asked how she felt capable to assess, for instance, whether an organisation behaves “properly” in terms of tax? These are tricky issues.
“Clearly, it’s not for me to weigh in on individual company tax policy, but fair tax is a big consumer expectation. We encourage transparency and can provide useful data such as the proportion of spend and effort on various high impact activities. If a participating company pays less tax, it just gets a lower social value score. The algorithm measures the gap between the evidence and the outcome and provides comparable indicators to show where the balance of effort is. Companies can use this insight to calibrate their own decision making”.
The process starts with a self-assessment questionnaire. Organisations gather financial and non-financial information and assess themselves against statements, many of which are based on the “perceived wisdom” as suggested by various international standard-setting organisations. Archer simplified it and refocused the intent from just reporting what was being done to the distance to the goal and put it onto an AI enabled digital platform to enable the PIC assessor to highlight gaps and suggest more impactful activities for the organisation undergoing the rating.
The PIC system is now at an early deployment stage and Archer has one notable success. The UK’s Ministry of Justice (MoJ), one of the largest and most sensitive government departments, is running a pathfinder project, with a handful of their most significant suppliers. In the first quarter of 2021, some data should start emerging, which will be interesting. Archer intends to make key learnings publicly available and if it’s a success, the MoJ intends to use PIC to inform the social value score in major procurements.
Archer is also gaining valuable insight into deploying the rating system through this pilot work – “it’s a great start, but we need to road test it with lots of suppliers to make sure we’ve got the optimum balance in the value pillars”. She is also keen to stress the holistic and pragmatic approach she feels is appropriate.
“This is about getting to the right outcomes faster – that means organisations can’t just cherry pick glossy projects and ignore big resilience gaps in the supply chain - but they can’t do everything at once either. They must be able to prioritise effort and choose activities that are appropriate to the scope and scale of their business and that takes time. The framework gives everyone the same platform and the opportunity to get the balance right for them”.
The need for careful planning and prioritisation are certainly sentiments we’ve been supporting here, and something we’ve heard from other leaders in the procurement with purpose field. If the PIC ratings can help organisations understand where they are and where they want to go on sustainable and purposeful procurement journey, then they could be a useful tool. We look forward to seeing how the MoJ pilot goes and reporting back on that later this year.