The Pervasive Belief in Contractual Imposition. When considering the most effective strategy for enhancing engagement with Environmental, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) initiatives among suppliers, the dichotomy between relationship-building and imposition comes into sharp focus. Given that a significant portion of a company’s revenue—approximately 80%—is often generated by external suppliers, a common scenario, the choice between these approaches is critical.

Opting for imposition not only misses the mark but also overlooks the essence of fostering sustainable growth and innovation within the supply chain.

Despite the intuitive understanding that cultivating robust relationships underpins superior service and collaboration, prevailing trends indicate a surprising inclination towards imposition as the default strategy. This approach, however, has consistently shown to be largely ineffective, whereas relationship-oriented strategies yield far more positive outcomes. This discrepancy raises the question: why does this gap in strategy versus outcome exist?

The answer lies in several factors. Firstly, sustainability is frequently relegated to a box-ticking exercise in compliance or marketing, rather than being recognised as a strategic avenue for enhancing the supply chain’s overall performance and innovation. Moreover, the logistical and resource-intensive challenges of transitioning to collaborative practices across potentially vast and varied networks of suppliers can seem overwhelming, particularly for large organisations.

There’s also a pervasive belief that contractual imposition offers a more straightforward, cost-effective, and manageable method of mitigating risks. Coupled with entrenched conventional operational methods and a cultural resistance to change, many companies continue to rely on the imposition of contracts to swiftly respond to market demands, albeit at the expense of longer-term sustainability and supplier engagement.

However, it’s imperative to acknowledge the broader context within which these supply chains operate. Over 95% of global companies are Small and Medium Enterprises (SMEs), which become increasingly smaller further up the supply chain. The simplistic notion that 20% of suppliers constitute 80% of the value—while perhaps accurate in terms of expenditure—ignores the complexities of engaging with sub-tier suppliers, many of which are SMEs themselves. Further reading on SMEs, The Secret Sauce To Sustainability.

These smaller entities often grapple with the existential question of “what’s in it for me?” Lacking the requisite standards or processes and primarily focused on immediate financial survival, many are unaware of their role within the larger supply chain ecosystem. Describing themselves as “just the filler in the sandwich,” these businesses highlight the critical need for a shift in approach.

To truly advance CSR initiatives within your supply chain, the solution is not to impose, but to connect and build meaningful relationships. Our expertise lies in facilitating this transition, demonstrating how a relational approach can transform your supply chain’s commitment to sustainability and social responsibility. Read further insights from Mercy Productions and the Case For Corporate Sustainability.

If you’re ready to chat and find out more about how Suppeco can help you to make this pivotal shift, contact us now to arrange a personalised demo.