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Understandably, the UK electorate’s decision to leave the European Union has left businesses cautious, and now the world of procurement must take a step back and prioritise different areas within the function’s remit. While it is hoped the role of corporate social responsibility (CSR) can withstand the brunt of Brexit, predictions have been cast that this area – and more specifically sustainability – will be one of the aspects of procurement hardest hit over the coming period.
Implementing successful CSR policies is no easy task at the best of times, even less so when combined with an abundance of uncertainty with regards to the forthcoming policy landscape of the EU.
Brexit will put businesses that rely heavily on EU trade in a difficult position and, since all anyone can do is second-guess how the UK government will negotiate its withdrawal, even fundamental aspects of procurement are likely to become a challenge. Hiring employees from within the bloc and sourcing goods from EU-based suppliers will pose problems – particularly to UK businesses – so the procurement function needs to take a detailed look at its suppliers and their roles within the supply chain.
The EU is widely known for its wide-ranging regulations, which ensure common practice is met across all member nations. The UK leaving the EU may mean the government favours new, independent rules; a major obstacle for CSR.
All of a sudden, having easy access to suppliers you can be confident have adhered to the same policies and procedures governing your own business and being confident in the knowledge that goods have been ethically sourced, becomes something of a grey area.
Environmental policies the UK adopted as part of the EU are at risk of being compromised, and many environmentalists have voiced concerns over the negative outcome Brexit will have on the progress of sustainability in the supply chain.
"Many of the laws that make our drinking and bathing water safe, our air cleaner, our fishing industry more sustainable and our climate safer now hang by a thread,” said Greenpeace UK executive director John Sauven in a recent statement.
If businesses don’t know how and where their products are sourced, how can they guarantee consumers they are sustainable? Will there be an effort to source sustainable alternatives?
Losing this access to the single market undoubtedly opens up a host of difficulties in guaranteeing sustainable supply chains.
Regulations aside, political and economic risk often leads to businesses tightening the purse-strings.
Sustainable practices are rarely prioritised when cost-savings need to be made, and so Brexit also threatens to tip the balance in favour of cutting back on CSR activities to save money. It is not that businesses don’t care about sustainability, but that it is simply too expensive in an already volatile market. If not implemented in the right way, CSR policies can prove to be expensive. During such an unpredictable period, unfortunately, it’s more than likely that cost will overrule ethics on this front.
Although cost will always be a crucial element to procurement, the importance of addressing the long-term ramifications of Brexit must not be ignored. Change won’t happen overnight, so no drastic changes will occur overnight.
Yes, businesses should be acting fast rather than adopting the “wait and see” stance, but they shouldn’t throw CSR completely out of the equation as this leaves them open to a number of potential risks. Taking a long-term view to the value of CSR and sustainability is essential.
“Brexit will lead to short-term budget reductions for many companies - these budget cuts will mean that companies might be tempted to cut their CSR budgets,” Pierre-Francois Thaler, Eco Vadis’ co-CEO told Procurement Leaders in a recent interview.
“However, I’m confident that people will see the value of CSR.”
Although sustainability may be at the bottom of many a procurement agenda, it is crucial that it doesn’t become the sacrificial lamb of the function in uncertain times. Building a sustainable, ethical business takes time, but one drastic, ill-advised decision can see it ruined in seconds.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.