Salterbaxter - Directions Supplement - Avoid The Low Hanging Fruit

DIRECTIONS MONTHLY SUPPLEMENT JULY 07

TRENDS AND ISSUES IN THE WORLD OF CORPORATE REPORTING

AVOIDING LOW HANGING FRUIT WHY TOUGH CHOICES ARE NEEDED IF COMPANIES WANT THEIR SUPPLY CHAIN STRATEGIES TO BE GENUINELY FRUITFUL

Directions Monthly July 2007

Issue 14

Welcome to the July edition of Directions Monthly. The 2012 Olympics brings with it an opportunity to present the benefits sustainable procurement can bring – so we thought it was only right to give the supply chain management issue some much needed attention. We have invited Shaun McCarthy, Director of Action Sustainability and Chair of the Commission for a Sustainable London 2012, to give us an insight into why businesses need to resist ‘low hanging fruit’ and avoid the quick win approach. He suggests the procurement profession needs to shape up and create a more ‘fruitful’ strategy to tackle supply chain issues.

Lucie Harrild

Pavan Athwal

Businesses need to reconsider the way in which they manage their supply chain and ensure they are communicating with all who may hold them accountable. So why is the procurement profession not realising this opportunity to raise its own profile?

Shaun McCarthy Director of Action Sustainability and Chair of Commission for a Sustainable London 2012

Over the past 50 years, one third of the earth’s species have become extinct, a further third are set to follow if mankind does nothing to halt the environmental degradation we see today. Some professions, such as procurement, also face extinction if they do not evolve. Sir Neville Simms, the Chairman of the Sustainable Procurement Task Force, defines sustainable procurement as ‘using procurement to support wider social, economic and environmental objectives, in ways that offer real long-term benefits’. So how high is a sustainable supply chain on your business agenda? Is your supply chain in fact a liability rather than an asset? Now, more than ever, is the time for businesses to prioritise their impacts and actions, re-think their supply chains and begin work on a ‘fruitful’ strategy! I was a member of the Sustainable Procurement Task Force and a firm supporter of Sir Neville’s recommendations. In the Flexible Framework, we have a clear picture of what good sustainable procurement practice looks like. This was driven by good practice in business, including BAA who attained second place in the Business in the Community Index in 2006. At the time, good practice in business was based on a clear process to manage risk and for reputation risk driven by stakeholders to set the priorities. The Task Force published its findings a year ago and the substantial part of the work was finished 18 months ago. Leading businesses have already moved the agenda further. Marks & Spencer’s Plan A, for example, is primarily driven by opportunity, not risk. I had the privilege to share a conference platform with a senior M&S manager recently. He was challenged by a member of the audience to say if this was a marketing led

strategy or an altruistic initiative. The answer of course is both. This is not an ‘or’ thing, it is an ‘and’ thing. They see their core customer base becoming more concerned about sustainability and see an opportunity to take the right moral course and to satisfy their customers at the same time. Rather than sit and wait for the next Greenpeace campaign, leading businesses are grasping the opportunity rather than mitigating a risk. Further evidence of the commercial opportunities presented by sustainability is demonstrated by the recent announcement of EDF as a ‘Sustainability Sponsor’ of the London Olympics.

Directions Monthly July 2007

Issue 14

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The economic muscle of the consumer purse is able to fuel change. Firms must ask how fit is our supply chain and how are we communicating this externally and internally. But this is all obvious isn’t it? So why are businesses so slow to take it on board?

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I chair the Commission for a Sustainable London 2012. The Olympics represent a major opportunity to break new ground and set new standards. The Commission will publish its first report in the autumn but it is interesting to note the Green Party Chair of the Greater London Assembly, Darren Johnson, congratulating the Olympic Delivery Authority for their progress on sustainability, six months after calling their efforts ‘Pathetic’. High praise indeed from a traditionally critical area. When we talk about sustainable procurement, we are talking about the environment, wages, working hours and the health and safety conditions of businesses. The economic muscle of the consumer purse is able to fuel change. Firms must ask how fit is our supply

chain and how are we communicating this externally and internally. But this is all obvious isn’t it? So why are businesses so slow to take it on board? Unfortunately the answer to the problem is quite complex, and requires organisations to assess their individual impact before they are able to tackle it and it takes time and effort to change. Do you remember the old ‘three envelopes’ story? It is about a manager handing over his role to a successor. He tells him he has left three numbered envelopes to open in sequence if things get tough. Sure enough, things get tough. The first envelope contains the message ‘blame me’ and the new manager pulls through. The next says ‘blame the staff I recruited’ and this does the trick. The third says ‘prepare three envelopes’. The point of telling this story is to emphasise that change on this scale requires vision, intellect and, above all, courage.

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The culture of ‘low hanging fruit’ and ‘quick wins’ is too commonplace.

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Where does this leave the Public Sector? With £150bn to spend each year through the supply chain, this should be a major force for good. There are some great examples; the Environment Agency is best practice, albeit a bit bureaucratic; DEFRA are running hard to catch up; the Prison Service is showing vision with a call for a ‘Zero Waste Mattress’, a product that does not exist today but with huge potential (hospitals, hotels, homes?). Sadly this is the exception rather than the rule. I was recently bemoaning a large section of government to a trusted public sector colleague by saying “they haven’t done anything, they have just written a position paper”. I was reminded by my colleague that, in the public sector, they consider they have done something if they have written a position paper. The complexity between policy and managing a massive supply chain sometimes stifles creativity and action. The central government response to the Task Force was progress of a sort but weak in many areas. The draft Local Government and Health responses are much better. But why does it take a year?

We all know the managers who go for the easy things to achieve, make a name for themselves, get promoted and leave the hard things to their successor. But it is never us is it? It is always somebody else. Look in the mirror, what do you see…? If procurement fails to address the issue, the profession will miss an opportunity to raise its own profile. It seems everybody is looking for low hanging fruit, however the sweetest fruit is often at the top of the tree. Believe me, it’s worth the climb. Business needs to think about a more fruitful strategy. The ice caps are melting now – we can’t wait for successive generations of envelope preparers!

ABOUT US SALTERBAXTER ADVISE COMPANIES ON STRATEGY, BRANDING, CORPORATE COMMUNICATIONS AND DESIGN. Our clients are extremely varied and include FTSE 100 companies; some of the world’s most exclusive brands; independent, entrepreneurial businesses; world leading educational establishments; law firms; private equity firms and media companies. We name companies, re-invent companies, and re-position companies. We help companies communicate with shareholders and advise them on how to address corporate responsibility. We launch, brand and re-brand. A key area of our expertise is corporate reporting and we advise leading UK and European organisations on strategy and design for their financial and CR communications programmes. We currently work with 12 of the UK FTSE 100. Our offer to clients is a balance of genuine expertise in reporting and CR issues with a commitment to producing outstanding creative design. This has been recognised with our work receiving numerous awards including the ACCA award for innovation in sustainability reporting for our work with O2. Contact: Lucie Harrild [email protected] Tel: +44 (0)20 7229 5720

Pavan Athwal [email protected] Tel: +44 (0)20 7229 5720

Directions Monthly supplements our main Directions report. This report is published each year and is now regarded as the UK’s most comprehensive analysis of the trends and issues in CR communications. If you want a copy of the full Directions Annual Survey and Report, call us on the number below or email [email protected]

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