Procurement with Purpose Newsletter no. 62 – April 23rd, 2024

It seems clear now that we have come to a critical point for sustainable and purposeful business approaches. When I started this newsletter at the beginning of 2023, virtually all the stories in terms of what organisations were doing were positive, even if the underlying problems were of course worrying.

But over the last few months, the tide seems to have turned. It is increasingly difficult to find those positive stories, and much easier to find reports that suggest the sustainability movement is running into some serious problems. As supporters of this agenda, we need to recognise what is happening and think about how to address that – there is no point just pretending everything is fine!  So perhaps it is time for the Great Sustainability Reset.  More on that in the next couple of weeks when I’ve thought about it a little more deeply, but I like that phrase as a theme.  

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Human rights intel for you

If you missed the recent Sustainable Procurement Pledge session on human rights, there is another chance to catch up with the latest legislation that is going to affect many companies.  On Thursday 25th April at 9am UK time, Bryan Sillaman, Adèle Bourgin and Medhi Si Djelloul from Hughes Hubbard & Reed LLP will give us an overview of recent European ESG legislation with a focus on its impact on procurement functions, in particular the upcoming Corporate Sustainability Due Diligence Directive and its interaction with the CSRD. This is really useful and relevant content from the SPP – and it is all free. Register here.

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Unilever taken off our Christmas Card list

Back to the Great Sustainability Reset and probably the biggest relevant news last week was around Unilever, once the exemplar for the sustainable business movement, dating back to 2010 when Paul Polman, the new CEO, announced a dramatic set of sustainability targets for the consumer product giant.

But last year, the new CEO, Hein Schumacher, said that the firm would be moving away from some of that focus and (to paraphrase) would be looking more to profit rather than planet or people. Then last week, he went even further in an interview with Bloomberg, signalling what observers called a “strategic U-turn” for the company. He confirmed plans to water down the company’s ethical pledges on a range of sustainability issues.

Previously, one pledge was to halve use of virgin plastic by 2025 – now Unilever will aim for a reduction of a third by 2026. The pledge to pay direct suppliers a living wage by 2030 has gone, and now the aim is to ensure fair pay for suppliers accounting for half its annual spend by 2026. (I wonder which half??) The pledge to spend €2 billion annually with diverse suppliers by 2025 is gone, as is the commitment to have 5% of the workforce made up of people with disabilities. (My estimate is that Unilever spends at least €40 billion euros a year with suppliers, so that 2 billion is only around 5% of spend).

He said that the focus on sustainability was cyclical (not cynical, which is how I initially read that). “When you have a huge drought for a number of months but everything else is going fine, the attention is on climate. These days it’s about wars and rightly so, that’s at the forefront”.

So war means we can forget about sustainability? Clearly, this is very disappointing. Unilever got more mentions in my Procurement with Purpose book than any other firm. If I do another edition, that will obviously have to change.  I spoke to people in the procurement team there who were really behind the whole “purpose” agenda and were genuinely passionate about it.  I wonder how they feel now.

However, there is the question of achievability which comes up several times this week. If Unilever realised some targets simply were impossible to achieve, then of course they must be reviewed.  And no-one could argue against focusing on real deliverables. This is how the news was presented on the firm’s website.

“…. we’ve spent many months thinking about how we evolve our approach. And it comes down to three key shifts we intend to take.

• To be more focused in allocating our resources towards our biggest sustainability priorities.

• To be more urgent in driving actions towards our long-term ambitions.

• To be more systemic in our advocacy to address the enablers and blockers of progress outside of our direct control”.

There is also talk of working more in collaboration with others to address systemic issues rather than focusing on those within Unilever’s own control – arguing much of that sort of progress has already been achieved by the firm. ”This means that Unilever will more forcefully use its voice and convening power to address enablers and blockers of our progress”.

All good stuff, but some of it sounds like justification for simply reducing the priority given to this agenda. I don’t really see how that reasoning applies for instance to the reduced commitment to fair wages in their own supply chain. Anyway, the shares have fallen by 8% since Schumacher took over last summer. So given the share price is clearly what matters to Unilever, the solution is obvious. Speaking as a shareholder myself, I suggest the CEO needs to go.   

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Scotland gets cold feet too… (or is it hot feet?)

Last week, the  Scottish government admitted that its climate targets for 2030 were unachievable and adjusted the details. Of course, the politicians said nothing had really changed - but they have. As The Conversation website said:

“The Scottish government has rescinded its 2030 target of a 75% emissions cut to greenhouse gas emissions, relative to 1990. The target was statutory, meaning it had been set in law in the Emissions Reduction Targets Act of 2019”.

Scotland is still subject to the wider UK 2030 carbon target of a 68% reduction (and a 77% reduction by 2035), but the basic problem here is that the more ambitious Scottish target was looking unachievable. It was set when governments and political parties were competing to show that they were greener than their rivals, but there was less consideration of whether targets were actually realistic.

Many governments are going to hit this problem in the next few years. The easy part of decarbonisation has been done, just build some solar farms and wind turbines. The tougher elements of decarbonisation are less well developed. National targets are often pretty dodgy anyway as they tend to omit national “Scope 3” emissions – all those embedded in goods bought and shipped from other countries, for instance.  There is also an emerging question around whether enshrining these targets in law is sensible or effective.

I spoke to a Scottish procurement person last week who was highlighting the amount of time and energy that has gone into the “sustainability” agenda from practitioners and suppliers – much of which has now been watered down or even withdrawn (the Scottish Business Pledge for instance.)  He wasn’t a happy man…

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And the whole UK looks a bit shaky too…

The UK’s outgoing head of the Climate Change Committee (CCC), Chris Stark, said prime minister Rishi Sunak was not championing the issue following Sunak’s speech last year in which he made a significant U-turn on the government’s climate commitments. Sunak was also accused of trying to avoid scrutiny of climate policies by failing to appoint a new chair for the CCC. “The overall message that other parts of the world took from it is that the UK is less ambitious on climate than it once was, and that is extremely hard to recover, ” said Stark.

Again, some of this comes back to targets. The UK set ground-breaking targets with ambitious goals for 2035. That date seemed a long time away when the initial announcements were made; now it’s only a decade, and experts have little confidence that the UK will hit the targets. Difficult decisions and even more difficult actions are just not being taken - on insulating homes, switching to EVs and electric heating for homes, reducing air travel and so on. So the target looks unrealistic on current projections unless these issues are seriously addressed. 

Anyway, the message for organisations is that sustainability targets – just like any other targets or objectives – need to be SMART; Specific, Measurable, Achievable, Relevant, and Time-Bound. That applies to carbon reduction, diversity goals, or whatever else we are looking at. So the first big recommendation in terms of the Great Sustainability Reset is this –

Make sure any sustainability-related targets and goals you have set are still appropriate and are realistic. If not, they need to be changed, dropped or supplemented.

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And this week’s extreme weather news come from…

It was hard to tell whether some of the pictures and video coming out of Dubai and the Gulf states last week were real or AI generated for some disaster movie.  The UAE had quite extraordinary rainfall – in some places, two years’ worth of normal rain fell in 24 hours. Not surprisingly, the infrastructure, even in a super-modern city such as Dubai, just wasn’t adequate to deal with this. So the airport, roads and properties were flooded very rapidly. I bet not many firms had “Dubai airport closed due to flooding” on their supply chain risk registers…

Some conspiracy theorists blames experiments in “cloud seeding”, designed to provoke rainfall, for the disaster. That seems most unlikely.  If it worked that well, it would have been used for years already! And forecasters did predict the storm some days ahead.

There have also been deadly floods in Afghanistan and Pakistan after an unusually dry winter. And the record rainfall in the UK over the last months mean that we are likely to see shortages or price increases for certain foodstuffs over the summer, as farmers are unable to plant crops because of flooded fields. It is also unseasonably cold right now in the UK, which again is not good news for the planting season. Ironically, a recent study suggested that higher temperatures alone will push up food prices between 0.9 and 3.2% every year by 2035. So you might want to consider converting your lawn to a vegetable patch…

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Nature on Spotify

A good news story to finish (and thanks to Martin John for highlighting it!)  From the BBC website – “Artists who use natural sounds in their recordings can choose to list "Nature" as a featured artist - and a share of their profits will be distributed to environmental causes.

"It's a way of saying to artists, 'We all use sounds like seagulls and waves and wind. Why don't we pay nature a royalty?'" says Brian Eno, who has remixed his David Bowie collaboration Get Real for the project”.

London Grammar, MØ, Tom Walker and Ellie Goulding are contributing – Goulding has added the calls of speckled chachalacas and Amazonian oropendolas to her track Brightest Blue.  And the very cool Aurora is releasing a new track, A Soul With No King, featuring the sounds of lush, dense forests in her native Norway.   “Nature” also has its own artist page on Spotify. And here is the Bowie track – see if you can spot the sounds of “nature”!