Sustainable Procurement, a Myth?

by Bertrand Maltaverne

“[M]ost people agree that from a moral standpoint, [self-driving] cars should save the maximum number of people even if they must kill their passengers to do so.[…] When given the option of hypothetically buying a self-driving car that’s utilitarian (it saves the greatest number of people) or one that’s selfish (programmed to save its passenger at all costs) people are quick to buy the selfish option.” Source: The Self-Driving Dilemma: Should Your Car Kill You To Save Others?

The quote above (which I also used in a previous post) illustrates, in a very direct way, how buying decisions from consumers are from being logic and consistent with moral and the greater good. A tragedy of the commons…

The tragedy of the commons…

“The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting that resource through their collective action.” Source: Wikipedia

The tragedy of the commons is often mentioned in the context of sustainability. It is because the aspect of “common resources” is more direct and intuitive in that context. But, it applies to other areas too, whenever people act in an apparent selfish way against the interest of the community they also belong to.

The example of the self-driving car mentioned earlier, is an illustration of the tragedy of the commons. Consumers:

  • understand what the best choice is for the community = the utilitarian car as it preserves a maximum of lives (the community)
  • act in a way that maximizes their interest (survival) even if it is against the global interest (and, also, potentially their own if they were the pedestrian).

So, the question are: if consumers (all of us) do not act in a value-oriented way, why would companies? Why would the upstream of the chain (B2B) be more moral and consider sustainability aspects as representing value? And, if it so, isn’t it normal that Procurement acts the way it does?

Do people care?

”The apparel industry is responsible for 10% of all carbon emissions globally. This has to change. Putting up solar panels on our homes does little good if we are filling the closets of those homes with fashions made from coal-based power.” There Is A Major Climate Issue Hiding In Your Closet: Fast Fashion, Fast Company, Nov. 2016

To answer the question, I will refer to a more classic area of the tragedy of the commons: CSR and sustainability.

Despite the sustainability imperative being a topic that is extensively covered (in the news, in politics, and in society in general), a majority of consumers are not yet taking it into account in their buying decisions.

“The issue of responsible purchasing is increasingly in vogue and generates interest both from consumers who purchase products and services as well as by companies that buy supplies for their processes and then sell their products to the public.
We have previously addressed this issue from the perspective of the responsible consumer, and we concluded that there is a long way to go before consumers really make a responsible purchase for different reasons.” –Albert Vilariño Alonso, Responsible procurement: issues of interest, risks and benefits,

The root causes are multiple. One is “simple” willful ignorance from consumers. Ignorance that, sometimes, fuels a whole business model:

”There is pressure on the supply chain to manufacture garments quickly and inexpensively, allowing the mainstream consumer to buy current clothing styles at a lower price.
Fast fashion very quickly became disposable fashion, due to the relatively low costs needed to deliver designer products to the mass market. The consequences of the trend became noticeable through increased pollution from manufacturing of the clothes and the decay of synthetic fabric, poor workmanship, and the emphasis on brief trends rather than classic pieces." –Lucy Siegle, Fast fashion, the Supply Chain and the true cost

Do companies care?

Sometimes, it is businesses that do not provide the information that consumers could/would need (assuming they would care…):

But, it is dangerous (and wrong) to generalize. Like for consumers, there are exceptions. Some companies understand the value of CSR (and not just the risk component). Some of them, like patagonia who is in the sector mentioned above, apparel/clothing, even make it a philosophy. CEOs are also more and more vocal about making it happen:

These companies understood their responsibility:

“The obligation, and the self‑interest of every company is to build a robust society.” –Tim O’Reilly

What does that mean for Procurement?

Procurement plays a central role in transferring value from the upstream supply chain to the downstream of the chain.

But, if the key actors in the chain (B2B and B2C) do not consider sustainability (and some other non-price elements) as being important, it is no surprise that Procurement activities reflect that.

Therefore, as highlighted in the tweet by Jordan Early, value-based Procurement is still some sort of a myth.

A myth that endangers Procurement:

& society in general!

A tragedy of the commons!

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