My old colleagues at Spend Matters have come up with a very good idea – a timeline for “Procurement /Supply Chain ESG Regulations Through The Years”.
It lays out some of the major milestones that focus on ESG (environmental, social, governance) in terms of government regulations, major reports and actions in those areas. It starts with the Foreign Corrupt Practices Act (FCPA), put in place in 1977 in the US “to prohibit bribery payments to foreign officials that could influence obtaining or retaining businesses”.
It is reasonably international – I didn’t know about the 2013 National Action Plan for the Netherlands, for instance. It “outlined the steps businesses should take to promote human rights. It was based on the internationally accepted principles on business and human rights. Businesses are expected to show how they respect human rights, whether by consulting stakeholders or publishing formal public reports”. And I was surprised to learn that India’s Companies Act makes it mandatory for companies of a certain profitability to spend 2% of their average net profit on CSR activities.
It does miss some significant points of interest though – the UK’s Social Value Act of 2012 deserves to be in there, I’d suggest, but it is interesting and worth a look.
Spend Matters has also been increasing its focus on software related to procurement with purpose. sustainable procurement / ESG. That’s not surprising, as the wider focus on these topics has of course led to technology firms spotting an opportunity to move into the space, and that applies to both existing firms and start-ups.
Sadly, but not surprisingly, much of the deepest Spend Matters analysis is behind a paywall – you need a “PRO” subscription to access it. But one article here looks at supplier management tech firms who now incorporate aspects of ESG capability into their products, covering Kodiak Rating, State of Flux, Tealbook, Avetta, EcoVadis and SupplHi. (Mark Perera, co-founder of this website, also runs Vizibl, which could well be added to that list, by the way).
Prior to that, Spend Matters looked at how the “big boys” amongst the S2P suite providers - Coupa, GEP, Ivalua, Jaggaer and SAP Ariba – are incorporating ESG related features. But that article does point out that suites will rarely meet all the ESG management and reporting needs for major firms.
“First, S2P suites are rarely the collector of primary data on ESG areas. Instead, they integrate with third-parties that reactively monitor relevant risks. The challenge is that the suites themselves do not control the data. Second, the scope of S2P suites encompasses internal stakeholders and tier 1 suppliers … Because understanding a full ESG performance picture requires a deep visibility of the supply chain, the suite gap in this area makes organizations reliant on other specialists to solve this challenge”.
As I said earlier, you can’t access the full articles without paying, but Spend Matters are giving other free advice which might come in useful if you are looking to buy technology to help you in this field. Their “How to Buy Procurement Technology” guide is a step-by-step description of doing just that, providing links to relevant articles and templates for different stage so the process.
It is free as long as you set up an account, and it really does look very useful. It is well worth accessing this if you are looking to buy ESG related software, or indeed any other tech that might help you in the wonderful world of procurement and supply chain management.