Corporate Social Responsibility (CSR) is increasingly affecting customer-supplier relationships. Here are five different approaches and the effects that have been observed, on the ground, across 370 case studies including tenders, referrals and audits.
Depending on how far it is embedded in best practice at the procuring organization, CSR can play a primordial role, or one that aligns closely with the development of the business and its ecosystem… or it can just be an add-on:
1. CSR as an add-on.
In the buyer organization, CSR is not well understood or integrated into the organization. When invitations to tender are sent out, the procurement team questions suppliers about CSR, but does not really seem to take the results into account and does not give them any feedback about it. As for the user departments within the business, they seem to be ill informed or apathetic about it…
2. Using CSR to reduce the risks taken by the buyer organization.
In the buyer organization, the risks covered by CSR complement those that the enterprise has to control. When invitations to tender are sent out, suppliers who do not respond perfectly or do not respond at all to CSR questionnaires can be eliminated. This can apply, for example, to risks associated with labour laws, anti-pollution measures or respecting ethical criteria.
3. Using CSR to decide between suppliers.
In the buyer organization, CSR is an additional way to differentiate between various suppliers. When invitations to tender are sent out, suppliers’ answers to CSR-related questions have a significant impact on their image and overall attractiveness, and even on how much confidence the buyer has in them. CSR helps to the buyer to decide between suppliers and helps to encourage good ethical practices.
4. Using CSR to maximize value creation.
In the buyer organization, CSR plays an integral role internally in driving overall performance. When invitations to tender are sent out, CSR questionnaires are concrete and precise, soliciting both qualitative and quantitative information. Suppliers’ offerings are clearly assessed against CSR criteria, as well as in terms of the economic, environmental and social added value they can deliver. CSR criteria can often account for a 10% weighting in the tender evaluation process, and sometimes up to 20% in Northern European countries.
At this level of integration, CSR promotes an emphasis on ‘best bidder’ approaches and discourages short-termism with low added value.
5. Using CSR to boost innovation and collective, sustainable progress.
In the buyer organization, CSR is seen as an essential response to societal and economic issues and the questions of sustainability that characterize our age. When invitations to tender are sent out, the buyer organization identifies avenues for improvement both for suppliers and for the organization itself. Over and above a traditional customer-supplier relationship, a genuine partnership is established which can even lead to the shared development of action plans.
So CSR helps to reinvent business practices, build new alliances, promote the emergence of new relationships based on solidarity, and strengthen the whole ecosystem.
“Show me how you treat your suppliers, and I’ll tell you just how mature your approach CSR is!”
To sum up, the quality of dialogue with suppliers and how far CSR is an integral part of invitations to tender very often clearly equates to the level of maturity that CSR has reached in the buyer organizations themselves and their ability (or lack of it) to take full advantage of it. In concrete terms, the more dynamic the approach to CSR, the more it translates into good customer-supplier relationships: speeding up the exchange of best practice and boosting the creation of associated added value for everyone involved.
In October 2013, Bull was ranked number one in the GAIA Index for its approach to Corporate Social Responsibility (CSR) and assessed to have reached ‘Gold’ level by EcoVadis, a company that regularly evaluates the CSR performance of almost 20,000 companies.