What will be the most important drivers of change in the global sourcing arena over the next decade, and why?
Around the world, companies of all types and sizes are facing a groundswell of pressure to create more sustainable sourcing within their supply chains. Conversations regarding how to address this burgeoning emphasis on corporate responsibility are frequently finding their way into company boardrooms as consumers, investors, and politicians become increasingly interested in, and vocal about, environmental- and social-responsibility issues in business. As these external groups see more and more companies proactively and successfully implementing sustainability initiatives in their supply chains, organisations who have not yet taken steps to dispel concerns regarding the behaviours of their suppliers and their suppliers’ suppliers will feel pressured to fall in line.
Sustainable sourcing, along with corporate sustainability in general, has changed dramatically since the last century when efforts to make companies more environmentally friendly were typically seen as the pet projects of the rare "tree-hugger" in the office who had to beg senior management in order to get approval of an environmentally-friendly, but often financially-unappealing, project. Today, efforts to sustainably source commodities, parts, and materials have not only made a turn toward more widespread acceptance, but they have also become more financially viable and will soon become the expected practices for companies and industries worldwide. Those organisations that begin making changes now can be a part of forming new sourcing norms and best practices in ways that more closely align with their own business needs and that will drive sourcing behaviours within their industry for years to come.
Because of this global attitude shift toward sustainable business practices, external pressure to create sustainable supply chains will be one of the most important drivers of change in the global sourcing arena over at least the next decade. Companies that proactively analyse their supply chain and take steps to influence their suppliers to shift toward more environmentally- and socially-responsible business practices will realise benefits in the near and long terms. Companies that are slow to embrace sustainable sourcing practices will experience increasing social, political, and internal business drivers pressuring them toward change in our increasingly environmentally and socially conscious world of business.
For the purposes of this article, a Social Driver is defined as an action by an outside party that has positive or negative implications on a business’ reputation. A Political Driver is a local or national law or regulation or international treaty or accord that causes a business to act or cease from acting in a specified manner. A Business Driver is a decision, internal to a company, made for the purpose of furthering that business’ financial interests.
Trying to determine which of these three drivers of sustainable sourcing behaviours will be primarily responsible for the changes we will see during the next decade creates a chicken-and-egg paradox, and begs the question “which comes first?” The correct answer to this question is that all drivers concurrently influence each other while increasingly driving businesses toward sustainable sourcing and, in return, are influenced by the sustainable sourcing measures businesses implement.
Understanding which of these three drivers will be primarily responsible for changes in sustainable sourcing in the future is less fruitful of an endeavour to those studying the topic than understanding how these drivers influence each other and, ultimately, how they influence business leaders to change corporate sourcing and sustainability behaviours. Although an analysis of each driver is important to fully understand how companies are and will be influenced to adopt sustainable practices and how each Driver influences each other, this article will specifically address the impact of Social Drivers on sustainable business behaviours.
Social Drivers on Sustainable Business Behaviours
This influence of Social Drivers on sustainable business behaviours will become an increasingly important area of study as tech-savvy and sustainability-minded millennials begin voting and enter the workforce in the coming decade. According to a Nielsen study, 72% of 15-20-year-old respondents from around the world said that they would be “willing to pay more for products and services that come from companies who are committed to positive social and environmental impact…”, up 12% from the year before. (Nielsen, 2015). However, this growing interest in socially and environmentally friendly business practices is not limited to the young. Nielsen also found that 51% of Baby Boomers (50-64-year-olds) also were willing to pay more for products from these same companies, up 7% from just one year earlier. (Nielsen, 2015).
It is likely that these trends will continue to climb as the spread of internet availability around the world makes it easier to share and obtain information regarding environmental and social causes. Simultaneously, consumers will also have increased access to information that will help them assess how the businesses they frequent and the politicians who represent them mirror their own attitudes regarding these causes.
As information-gatherers seek out knowledge regarding current events, environmental issues, and corporate behaviours, they are doing so more frequently on social media. A 2016 Pew Research Center survey found that 62% of adults in the United States at least occasionally obtain their news from social media versus just 49% who reported doing so in 2012. (Gottfried & Shearer, 2016). Although social media can be a legitimate source of accurate information, social media sites are also phenomenally efficient vehicles through which misinformation, rumours, and extreme opinions can be disseminated instantaneously around the globe.
Interestingly, and frighteningly, social media users are quick to share information without taking the time to verify whether or not it is even true. According to a study by Columbia University and the French National Institute, the content of 59% of links shared on social media was not actually read by the sharer. (Dewy, 2016). According to Arnaud Legout, co-author of the study, “This is typical of modern information consumption. People form an opinion based on a summary, or a summary of summaries, without making the effort to go deeper.” (Dewy, 2016).
Because of this wildfire spreading of information by those who do not take the time to understand what they are sharing, organisations hoping to build or maintain a reputation as being environmentally and socially responsible, or even for those hoping to avoid the public finding out that they are not, cannot ignore the impact of social media. Like a modern day newsie standing on the corner shouting the daily headlines to any and all who pass by, messages proliferated through social media reach beyond just those actively seeking out information. Often this message finds the eyes and ears of those who, although prior to the seeing message may not have cared, now have a piece of data (true or not) that will shape their opinion on that topic.
The challenge regarding this type of information sharing and receiving is that the original source of the information can be literally anyone in the world with access to the internet and an agenda. As the trend to care more about sustainable practices continues to grow, online messages, posts, and videos from those who espouse the cause of sustainability will become increasingly common in newsfeeds all over the world. The way this will impact sustainable sourcing specifically, is that the actions of suppliers, often far removed geographically from the final product or service, will become more easily accessible to consumers who care about how the products they purchase came to be.
It is not far-fetched to think that a disgruntled employee, working in a remote corner of the world, could take and post online a picture of their employer dumping toxic waste into a river, using forced labour, or engaging in some other unacceptable practice, and that picture could spread in a matter of hours throughout the world. Although the company that uses the part or material manufactured by that original source may not know of this behaviour, the internet can quickly and ruthlessly tie those companies together, with the blame usually falling on the final producer with the bigger pocketbook. As this information spreads, so do the calls for the end-user to change its behaviours or for consumers to boycott the product altogether. In order to mitigate the damage that can be caused by such a situation and to avoid similar backlash from occurring again, firms often feel driven to take action to improve the sustainability of their supply chain.
As discussed above, Social Drivers impact Political Drivers and Business Drivers, which, together drive businesses to make changes to their sustainability practices. These practices, in turn, impact the direction and magnitude of the drivers.
Social Drivers, as discussed in this paper, are just one of the areas on which a company should focus when determining how to approach a sustainability project. The powerful effect social media can have on consumers, politicians, and businesses, will only continue to grow as access to the internet expands throughout the world and as producers and consumers of information increasingly turn to social media to share and receive their information. A company that proactively makes changes to its sustainability practices instead of having to do so as a reactive measure, will find that they are in a position to drive their own message through social media and use the often negative powers of this growing information source to their advantage to create and spread a positive message to current and future consumers.
Dewy, C. (2016, June 16). '6 in 10 of you will share this link without reading it, a new, depressing study says'. Retrieved from The Washington Post: https://www.washingtonpost.com/news/the-intersect/wp/2016/06/16/six-in-1...
Gottfried, J., & Shearer, E. (2016, May 26). News Use Across Social Media Platforms 2016. Retrieved from Pew Research Center : http://www.journalism.org/2016/05/26/news-use-across-social-media-platfo...
Nielsen. (2015, 11 5). 'Green Generation Millenials Say Sustainability is a Shopping Priority'. Retrieved from Nielsen: http://www.nielsen.com/us/en/insights/news/2015/green-generation-millenn...