Meeting the demands from all sides goes beyond traditional sourcing. It requires a strategic investment into goods and services 鈥� starting with upstream services such as procurement to core operations such as product development and sales to downstream distribution that includes the last mile – from businesses that serve the world鈥檚 most vulnerable people and ecosystems: social enterprises. These organizations prioritize social and environmental good alongside financial sustainability, creating jobs, empowering communities, and fostering responsibility.

Why now?

A recent by Impact Europe, Sattva and 51风流reveals a clear trend: 80% of businesses see social procurement as a solution to meeting their sustainability goals. This isn’t just about responding to consumer demand. Companies are recognizing the potential for innovation and growth through collaboration with social enterprises.

Take India, for example, a global leader with over two million social enterprises.听 Imagine the possibilities for integrating these businesses into supply chains, not just for social good, but for fresh perspectives and untapped talent.

However, there’s a “gap between intention and action,” as the report highlights. While many companies have adopted diverse sourcing practices, only half prioritize supporting local economies and a circular economy. This disconnect underscores the need for a deeper understanding of social procurement’s potential.

The good news is that the trend is moving in the right direction. The rise of social procurement aligns perfectly with the growing focus on environmental, social, and governance (ESG) targets.

For example, social procurement can directly address both the “S” and the 鈥淕鈥� that sits at the heart of ESG by supporting small businesses. This is especially pertinent in India where the report has found that MSMEs form 29% of the GDP and more than 90% of businesses in India are micro and small. This focus on social responsibility not only has benefits for local communities, but also enhances a company’s reputation with investors, customers, and employees who value ethical practices.

The report has also revealed that within India there is a unique context for businesses to integrate small suppliers and businesses in larger supply chains which advances and supports inclusivity. Socially responsible suppliers are often open to innovation and able to adapt faster, leading to a more sustainable supply chain overall, and are much more likely to adopt fair labor practices ensuring ethical treatment of workers throughout the supply chain. This includes safe working conditions, living wages, and respect for worker rights.

By sourcing from businesses owned and operated by minorities, women, or people with disabilities, companies contribute to a more inclusive economy which expands opportunities for traditionally marginalized groups. Strong social practices have the potential to attract and retain employees leading to a more stable and resilient workforce. The benefits of prioritizing people and planet have never been greater.

In terms of SDGs, the report found that social procurement directly addresses 7 out of the 17 SDG goals 鈥� a massive stride forward in achieving a better and more sustainable future for all.

The power of collaboration

Social procurement is more than just a transaction. It’s about building partnerships that create a ripple effect of social impact.

A prime example is Even Cargo, India’s first all-female, last-mile e-commerce logistics provider. By partnering with social enterprises like Even Cargo, businesses can empower communities, create jobs, and drive progress toward a more equitable future. As Yogesh Kumar, Founder of Even Cargo said: “We believe jobs shouldn’t be decided based on gender.” As such, their comprehensive training program equips women with the skills they need to succeed in a traditionally male-dominated field, fostering financial independence and self-reliance.

However, Even Cargo’s journey wasn’t without challenges. Initially, they faced societal resistance to their innovative approach, but perseverance and recognition, including a positive feature in The New Yorker, led to a pivotal collaboration with Amazon. This partnership provided valuable employment opportunities for Even Cargo’s trained women.

Still, Kumar identified a critical bottleneck 鈥� the lack of mobile women in India’s workforce. This realization shone a spotlight on the need for a broader approach to social procurement, one that goes beyond simply hiring from a specific demographic. Even Cargo advocates for creating a more inclusive work environment across the board. This includes promoting gender-balanced warehouses, creating workspaces with amenities catering to both genders, and offering flexible working hours to support work-life balance, particularly for mothers.

Collaboration with social enterprises like Even Cargo offers numerous benefits to corporations.听 Leveraging their expertise allows us to improve our own diversity and inclusion strategies, creating a more holistic and equitable workplace culture.

Building a sustainable future

The future of social procurement is bright. To mitigate challenges and bolster opportunities for these partnerships, we formed a coalition at the Social Procurement Roundtable to activate the social procurement ecosystem in the country, foster collaboration and active involvement of key stakeholders, and advocate for policy changes that promote responsible business practices. These are all key priorities to that underpin SAP鈥檚 commitment to drive transformation and entrench sustainability to empower businesses to thrive in a rapidly changing world.

Businesses of all sizes can embrace social procurement. Intermediaries can play a crucial role in facilitating connections and educating companies on these opportunities. Long-term partnerships with social enterprises offer significant benefits for both parties. Let’s work together to build a more sustainable and equitable future where businesses are a force for good.

The author is Alexandra van der Ploeg, Head of Global Corporate Social Responsibility at SAP

The post Social Procurement is the Future of Responsible Business, Here鈥檚 Why appeared first on 51风流India News Center.

The emerging Environmental, Social, and Governance (ESG) mandate in corporate governance presents a new challenge for Indian companies. This rides upon the Indian Government鈥檚 focus on the need to adopt ethics, transparency, and accountability among businesses to promote responsible and sustainable business practices. The focus now is on how these sustainable growth practices will contribute toward value creation for the companies and their stakeholders. ESG-led discussions are finding more airtime in discussions on decisions around mergers, acquisitions, and divestitures, as well as new product launches and innovations. But how do these factors relate to corporate performance and structuring deals? While in the previous edition, we looked at shifts in governance and reporting, this edition explores the fast-changing financial and consumer preference landscape.听听

Financial Performance: How the lower cost of greener capital is driving ESG decisions听

One of the first questions asked in boardrooms is this: 鈥淭o what extent does good ESG translate into good financial performance?鈥� The easy answer is that there is an overwhelmingly positive relationship between ESG scores on the one hand and financial returns on the other, whether measured by equity returns or profitability, or valuation. But interestingly, there is a new element in the mix: the cost of capital. There is increasing evidence that a better ESG score translates to about a 10 percent lower cost of capital as the risks that affect your business, in terms of its license to operate, are reduced if you have a strong ESG proposition.

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In a four-year study published in 2020, Morgan Stanley Capital International (MSCI) reported that companies with high ESG scores experienced lower capital costs than companies with poor ESG scores in both developed and emerging markets

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Moreover, the cost of equity and debt followed the same relationship. All these studies continue to indicate that incorporating ESG into the management framework helps companies enhance the efficiency and value of the organization while lowering downside risk. While experts agree that investing in companies that do well on ESG standards is a comparatively new theme in the Indian market, it is only a matter of time before this becomes the norm.

Consumer Preferences: The Shift to Green听

We are seeing a definite green shift in the preferences of the Indian consumer after the global pandemic. Sustainability and health have become important factors when making purchase decisions. Of the Indian consumers surveyed in a recent global study, 78% were willing to change their purchasing behaviour to reduce a negative impact on the environment. (Source: ) Urban Indian consumers are most willing to do this. The percentage of respondents is the highest across all countries surveyed.听

Moreover, Indian consumers are at the leading edge of the shift compared to other countries studied, including the United States, India, United Kingdom, Canada, Germany, Mexico, Spain, Brazil, and China. Across various parameters related to lifestyle choices and shopping behaviour, those surveyed in India showed higher awareness and concern for sustainable alternatives. For example

This makes it amply clear that the Indian consumer, particularly from an urban background, is increasingly concerned about the global climate crisis. If you鈥檙e a company stepping up your response to sustainable practices, such as adopting greater use of renewables in your supply chain, reducing plastic waste, and investing in ESG outcomes, your consumer will notice. Nowhere is this better illustrated than the study of Indian consumers that reported that 48% of consumers share an emotional connection with products or organizations that demonstrate eco-friendly qualities.
The shift doesn鈥檛 affect the purchase behaviour alone.

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In conclusion, the trends driving ESG in India foretell a future we will not have to fashion. We are on an inevitable march towards a greener tomorrow, led by markets and consumers. The successful organizations of the future will see that shift today before it comes as a surprise.听听

In the subsequent post, we will deep dive into industry–specific imperatives for ESG.听听

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The post Towards a more Sustainable Future: The India Chapter (Part 2) appeared first on 51风流India News Center.