Negometrix-Proud-to-be-Procurement-Darin-Matthews-Measuring-Supplier-Performance-in-CSR

Corporate Social Responsibility CSR: Measuring Supplier Performance Proud to be Procurement October, 2020... Session ObjectivesüGain an appreciation of corporate social responsibility CS

Corporate Social

Responsibility (CSR): Measuring Supplier Performance

Proud to be Procurement

October, 2020

• What is CSR?

• Traditional definition

• More than “doing the right thing”?

• Supplier Performance Measurement

• Areas if performance

• Measurement tool

• Leading Organizations

• Portland State University (USA)

• Greater London Authority (UK)

• University of California (USA)

• Wrap Up

• Trends moving forward

• Questions, comments

Session Objectives

üGain an appreciation of corporate social responsibility (CSR)üContrast organizational approaches to CSR

üRecognize best practices in CSR

üGain familiarity with supplier score carding in CSR

About Me

• Spent over 25 years as public sector CPO

• Longtime faculty member and author

• Past president of NIGP: The Institute for Public Procurement

• Have 4 remarkable and successful children

• By practicing corporate social responsibility, also called corporate citizenship,

companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental

• To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment, instead of contributing

• As important as CSR is for the community, it is equally valuable for a

company CSR activities can help forge a stronger bond between employees and corporations, boost morale and help both employees and employers feel more connected with the world around them.

• Corporate social responsibility is important to both consumers and

companies.

• Corporate responsibility programs are a great way to raise morale in the

workplace.

ISO 26000

• In 2010, the International Organization for Standardization

(ISO) released a set of voluntary standards meant to help companies implement corporate social responsibility

• Unlike other ISO standards, ISO 26000 provides guidance rather than requirements because the nature of CSR is more qualitative than

quantitative, and its standards cannot be certified

• Instead, ISO 26000 clarifies what social responsibility is and helps

organizations translate CSR principles into practical actions The

standard is aimed at all types of organizations, regardless of their

activity, size, or location

ISO 26000 Principles

1 Accountability

2 Transparency

3 Ethical behavior

4 Respect for stakeholder interests

5 Respect for the rule of law

6 Respect for international norms of behavior

7 Respect for human rights

By the Numbers

Companies that include

sustainability criteria into

purchasing decisions

Consumers more likely to buy from a company with a reputation for sustainability

QUESTIONS?

Supplier Performance Measurement

Why Measure Performance?

• Provides a “level playing field” for all suppliers

• Conveys the priorities of your organization

• Holds suppliers accountable

• Influences positive behavior in suppliers

• Identifies areas for improvement

• Keeps all contract parties on the “same page”

• Creates an environment of collaboration

üDiverse supplier spend

üEnergy savings

üWaste reduction

üUse of alternative fuelsüReduced emissions

EcoVadis

EcoVadis

Scoring Methodology

Understanding Performance

Tracking Supplier Improvement

Leading Organizations

• Portland State is largest public university

in Oregon (30,000 students)

• Portland is Oregon’s largest city

• Partnered to develop leading policies on

CSR, including anti-sweatshop legislation

• Developed by city procurement staff and

PSU supply chain students

Portland State University – City of Portland

Policy Elements

• Labor standards based upon International Labor Organization (ILO) and United Nations (UN) standards and conventions

• Association and collective bargaining

• Freely chosen employment

• Child labor avoidance

• Humane treatment

• Non-discrimination

• Regular work hours

• Overtime

• Wages and benefits

• Just cause termination

21

Procurement Practices - PSU

• Include sustainability and diversity in all formal RFPs (over $100,000 USD)

• Require subcontracting plan for constructions bids

• Use of aspirational (soft) goals on formal procurement (15%

minimum)

• Promote the use of diverse contractors for informal procurements (under $100,000 USD)

• Provide notice to diverse business associations of bids and RFPs

• African American Chamber of Commerce

• Hispanic Chamber

• National Association of Minority Contractors (NAMC-Oregon)

Procurement Practices – City of Portland

• Require compliance with anti-sweat shop policy with all bid and proposal responses

• Verification of compliance required with all contract renewals and extensions

• Compliance checks for awarded contractors

• Include termination provisions for non-compliance

• Others

• Minority evaluator program for RFPs

• Good faith effort requirements (outreach on construction bids)

• Robust annual reporting on diversity spend

QUESTIONS?

Opportunities Throughout the Procurement Cycle

• Include green product specifications

• Tender/bid documents clearly convey

expectations and priorities

• RFP selection criteria includes sustainable

• Consider sustainability performance in

contract renewals and extensions

Greater London

Authority

• Enhancing social value;

• Encouraging equality and diversity;

• Embedding fair employment practices;

• Enabling skills, training and employment opportunities;

• Promoting ethical sourcing practices; and

• Improving environmental sustainability 26

Policy Elements

• Ensure that environmental issues are proactively

addressed in all aspects of the procurement

process

• Do not support, encourage or facilitate the trade

in drugs, tobacco, slavery or prostitution

GLA Sustainable Procurement Policy

27

University of California

• One of the largest university systems in USA

• Comprised of 10 campuses and Office of the President

• Committed to sustainability, equity and diversity

• Annual procurement spend: $8.5 billion (USD)

Policy and Practices in Sustainability

• Existing procurement policies were revised in 2018

• Increased use of environmentally preferable products (EPP)

in hosted catalogs

• Reduction of foam packaging in shipments

• Inclusion of sustainability as selection criteria in all formal RFPs (over $100,000 USD)

First RFP: How did it go?

• Economic, Workforce, & Social Impacts

• Policies that demonstrate commitment to economic, workforce and social justice

• Practices on measuring compliance and tracking improvement

• Environmental Sustainability

• Sustainable business practices that minimize impact to the environment

• Measurement of performance in area of environmental sustainability

• Sustainability in Operations

• Environmental practices related to the services provided

The Winning Proposal (Pearson VUE)

• Economic, Workforce, & Social Impacts

• Robust benefit package, support employees in gender transition, several women

holding board positions, strong supplier diversity program

• Environmental Sustainability

• Environmental policy since 1992, carbon neutral since 2009, utilize green power,

use FSC certified paper, reduced water consumption by half in 2015, promotes green travel

• Sustainability in Operations

• Remote meetings to reduce travel, digital reporting to reduce paper usage,

support staff that telecommute, use of diverse business as sub-consultant

Supplier Diversity

Diverse Business Programs

• Disadvantaged business enterprise (DBE) – While this term is sometimes used to refer to all businesses, it is actually a

Federal business certification.

• Minority business enterprise (MBE) – This term refers to a business that is owned and operated by an ethnic minority,

and is also a recognized certification in many states.

• Women owned business enterprise (WBE) – Refers to a business owned and operated by a female, and can be viewed

as a competitive advantage in industries typically dominated by men (i.e, construction).

• Small business – This term refers to businesses with all types of ownership, and is normally based upon the annual

sales volume and/or number of employees Certification as a small business can be at the state or national level.

• Veteran owned business – These are businesses owned and operated by military veterans or their family members A

variation of this category is service disabled veteran business, which is owned by an individual that became disabled due to their military service.

• Local vendors or locally owned – Refers to businesses within a certain geographical area (city, county, certain zip code,

etc.) that often receive recognition or preference from government agencies This is referred to as a local preference, which looks to support the local economy by giving a monetary (percentage) preference to businesses that provide local jobs and taxes.

• Lesbian, gay, bi-sexual, transsexual (LGBT) business enterprises – This is a certification offered through the National

Gay and Lesbian Chamber of Commerce, and is recognized by the US Small Business Administration (SBA) as well as some local public agencies This program is new compared to other more established certifications, but is likely to gain acceptance in public procurement in the coming years.

• Small, women and minority (SWAM) – This is a unique term used by the Commonwealth of Virginia, who has one of

the strongest programs in the country for disadvantaged business

Diversity Throughout the Procurement Process

Pre-Solicitation

• Number of diverse suppliers to attend training

• Percentage of diverse suppliers in supplier database

• Number of diverse business events attended by an entity

Solicitation Phase

• Number of diverse suppliers contacted

• Number of diverse suppliers submitting a bid or proposal

• Number of diverse subcontractors contacted

• Number of diverse suppliers at pre-bid conference

Contract Award and Performance

• Contract dollars awarded to diverse suppliers (prime, sub-contract level)

• Number of contracts awarded

• Replacement of MBE or WBE subcontractors

• Awarded contract amount vs amount actually paid to disadvantaged businesses

• Actual amount of business going to disadvantaged businesses in a multiple award scenario

What gets measured?

Wrap Up

qCorporate social responsibility continues to grow in

importance (globally)

qLeading organizations address environmental, social

and economic aspects of CSR (follow their lead?)

qCSR plays a vital role in all stages of the procurement

38

Darin Matthews, NIGP-CPP, CPPO, CPSM, C.P.M.

Darin.Matthews@negometrix.com

References and Resources

• Corporate Social Responsibility, James Chen and Gordon Scott, www.investopedia.com

• ISO 26000, Social Responsibility, www.iso.org

• EcoVadis, Resources, www.ecovadis.org

• Portland State University, Equity in Public Contracting Policy, www.pdx.edu

• City of Portland, Oregon, Sustainable Procurement, www.Portland.gov

• Greater London Authority, Sustainability Policy, www.London.gov.uk

• University of California, Office of the President, Sustainable Procurement www.ucop.edu