In the context of Procurement with Purpose, the ‘purpose’ word relates to those wider benefits that procurement activities can bring to the planet and its people. For private sector firms, it means going beyond short-term profit motivation and considering the climate and environment, human rights and diversity, supporting disadvantaged people and communities and more. In my book, I argue that firms should not follow these ideas purely out of the goodness of their hearts or indeed to make the Board feel good about themselves. There must be solid business reasons behind these activities.
But recent events suggest we may be moving into an era where organisations have to contribute to a more basic purpose. If you remember the Maslow Herzberg hierarchy of needs from that HR course you did many years ago, you will recall that the most basic needs for humans, right at the bottom of the pyramid, are food and water, core physiological needs. But safety is there too. Before we worry about feeling useful or satisfied with our jobs, before friendship, even sex, or self-actualisation of any sort, those basic needs come first. Indeed, I would argue safety is the most fundamental. I won’t leave my hiding place, even if I am really thirsty, if I can see the tiger waiting for me.
So perhaps in the next few years, our safety is going to move right to the top of the ‘purpose’ list. It was probably why the first communities and governments formed, the protection of group members (who eventually became ‘citizens’) being the most fundamental role of the state or other collaborative institutions.
In terms of our safety, Europe is now realising that it cannot take US protection for granted. Other countries from Japan to Australia and Canada are thinking the same. So we are going to see more talk and action around how we can protect ourselves and our countries. It is all very sad, and like any sane person I would rather in an ideal world we could spend our money on health, education, holidays and fun. But reality is biting now.
So the sustainability and purpose movement cannot ignore this. Decarbonisation should and will continue – but it has to make economic sense. The UK plan for 100% green electricity generation by 2030 was never realistic but was expensive, so it has to be replaced by something more pragmatic. Other countries will look similarly at their plans. I’d suggest Germany needs to move back into nuclear power, but in other countries, more renewables will make very good economic sense and will reduce dependence on imports, risky in a more volatile world.
There will be other benefits of a more considered approach to the ESG agenda. The idea that investment firms would withdraw support from defence companies because of ‘ethical investment’ principles was always deeply stupid. Who did they think would protect their own offices, people and wealth if we found ourselves at war?
Governments will also need to be much more aware of the costs around legislation, not just environmental but in other areas too. We saw the winding back of EU legislation just the other week, making the supply chain due diligence regulations less onerous in terms of firms having to check on human rights and other issues all through their supply chain. We will see more of this.
And we are seeing the death of DEI initiatives in many US firms. That will not necessarily be mimicked around the world, but business and government will be more cautious and look to reduce costs of these programmes too. We may see more about increasing opportunity for disadvantaged groups rather than outright ‘positive discrimination’, I suspect. That is not a bad thing.
The other major driver of change of course is the new US administration, and some of the impact on sustainability here is purely negative, not least the vandalism in terms of removing environmental protections, for instance. So overall, while I don’t think this is the end of the sustainability, business purpose and ESG movement by any means, we are going to see some significant refocusing. That won’t all be bad, but we may have to face up to some disappointments too.