Procurement with Purpose Newsletter no. 69 – June 4th 2024

Can’t believe it is June and I have not broken out either the golf clubs or the bicycle yet. Haven’t played golf for years really, and didn’t cycle much last year, now somewhat afraid of waiting 6 hours for an ambulance if I did have an accident… I need to get back on that saddle really!  Mind you, have spent quite a few hours this week delivering election leaflets so not a lot of spare time. My constituency, Surrey Heath, will select its Conservative candidate tonight I believe following Michael Gove’s retreat so we will know who we are up against…

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UK election – Labour’s energy policies

Labour’s plans for de-carbonising the power system have come under a little more scrutiny, and it seems very unlikely from everything I have read that the target of 100% green power generation by 2030 can be hit. Put it this way, if anyone want so have a bet, I’ve got £500 ready to go…  It requires a huge increase in new solar, on and offshore wind generation and also the upgrading of the UK’s electricity grid network, which has major planning, skills and industry capacity issues to overcome. 

Great British Energy, a “publicly owned clean power company”, does worry me too. It now seems to be purely an investment vehicle rather than an energy provider, but the concern then is whether it will end up investing in schemes that waste taxpayers’ money.  Let’s face it, if you have a brilliant energy project in mind, I would be pretty sure there are plenty of banks, funds, private equity houses and so on who will support it. If you can’t raise money commercially, then maybe that is a sign that it’s not the best idea for the taxpayer to put money into it.

We’ve seen plenty of dodgy characters and schemes trying to make money in the sector – for instance the story of Britishvolt hardly fills you with confidence. So I just have a fear that this might end up wasting or losing a lot of money and providing a big stick that can be used to hit Labour as we get into the new government.  

Great British Energy also wants to give funding to local authorities to invest in renewable energy projects. Unfortunately, the track record of councils spending money wisely (Nottingham, Croydon, Woking, Teesside, Thurrock, Liverpool…) is not reassuring as we have seen corruption, fraud, and sheer incompetence far too often. So, 10/10 in terms of aspiration for Labour, but only 4/10 for the actual feasibility and coherence of this policy.

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India – Crazy Hot, but not quite THAT hot!

High temperatures continued to make global headlines last week. There was some doubt as to whether New Delhi in India really saw a new record of 52.9C, and it looks like that was down to a faulty instrument. But there is no doubt that the temperature has been around 50C for some days in large parts of India and Pakistan, and 49.1C in New Delhi was still a record for that city. At that temperature, particularly if humidity is also high, the human body basically cannot function properly. We are going to see a lot more heat related deaths, as well as crop failures, economic issues and more if this becomes a regular occurrence.  

However, in terms of good news, data for March indicates that China, the worlds largest emitter of carbon dioxide, might have hit a significant landmark seven years earlier than expected. CO2 emissions fell in March, so may have peaked as expanding solar and wind power generation covered 90% of the growth in electricity demand. Fossil fuels still account for 63.6% of generation, so there is still a long way to go, but at least the direction is positive. However, I can’t see that emissions are going to reduce fast enough to do much to address the heat issues for a few decades at least.

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Stupid, stupid, stupid

Baillie Gifford’s sponsorship of the Hay Literary Festival, and the firm’s 20-year partnership with Edinburgh International Book Festival have ended after pressure from climate change and Gaza  protesters.

As the BBC reported, “Pressure has mounted on the organisers in recent weeks after the protest group Fossil Free Books turned its attention to the long-running Hay festival. The group attacked the festival for its links with the investment firm, which it says has links to fossil fuel firms and Israel”.

But Baillie Gifford manages money, and doesn’t generally make investment decisions itself. Two per cent of clients’ money is invested in fossil fuel companies, which is dwarfed by the 25 per cent that is invested in a way that explicitly supports the net zero transition, according to City AM.  “As for Israel, the letter complains of the complicity of companies like Amazon, Nvidia and Alphabet. If they’re responsible for the war in the Middle East then so is every consumer in the developed world”.

Now its fine if some authors want to make a personal stand and refuse to appear at these festivals,  but I worry that more and more firms will just think it is not worth the hassle and reputational issues around sponsoring arts events, venues or programmes. Maybe they will go and sponsor a sector that might be more welcoming to their money – Formula One maybe!  Or pay some vacuous influencers to promote their products on TikTok.

And this will achieve nothing frankly, the firm isn’t going to change its whole business model because of a minor sponsorship issue. I suspect most people will just think this is all very stupid. All that happens is that Hay might have to reduce its “year-round programme of free outreach and education”, and stop doing some of the worthwhile initiatives that actually help disadvantaged people.

Now maybe other firms will step into the breech – but what is acceptable? Not food or drink firms of course, or anyone who doesn’t pay the living wage, or has a bad record on pollution, or operates in dodgy countries around the world… Not many firms are totally unblemished in the eyes of every campaigner on every topic, so far easier to just stop sponsoring, I fear.

Well done Charlotte Church and Nish Kumar and others – maybe this makes you feel good about your own virtue, but you are facilitating a decline in funding for your own profession and your less successful colleagues in the Arts.  

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Why you should promote supplier diversity

Having written a few times about the pressure on DEI programmes, including supplier diversity, I thought I’d give you a short quote from my Procurement with Purpose book just to remind us of why we do these programmes. Hint… it’s not to make the CEO feel good!

“… organisations should seek to develop a diverse supply chain, including suppliers that support wider social purpose, or represent a different sort of business to the “usual suspects”. Whereas some topics such as deforestation are only really relevant to certain organisations, this principle of diversity in the supply chain is relevant to every organisation.

Over the years, various strategies have led to a situation where too many organisations see a relatively small number of very large firms dominating their supply chain. The procurement profession has driven this itself to a large extent. Strategies around aggregation, leverage, and supplier reduction have led to organisations boasting that “we have reduced our supplier numbers from 10,000 to 1,000”.

But is that really a good thing? Whilst there are some advantages in those approaches, it has often made it harder for small, minority-owned or new firms, or unconventional businesses such as social enterprises, to become suppliers to large organisations. And that can have disadvantages for the buyer, too.

Having too few suppliers can be just as problematic as too many, as seen in terms of PPE (personal protective equipment) supply to the UK National Health Service and other health organisations globally during the pandemic….

Greater diversity of suppliers could bring benefits for many organisations. In general, smaller firms can be more flexible than giant businesses. Start-ups bring innovation. Social enterprises can provide different approaches or ways of looking at the world that can benefit their customers. This also creates more competitive markets; where a few giant firms dominate a market, that can lead to unhealthy behaviour or poor performance from a buyer’s perspective.

So whatever PwP causes you and your organisation choose to support, bear in mind that being open to new and diverse suppliers and encouraging a dynamic supply chain is not purely about wider purpose. It can also have very direct benefits for organisations looking to improve performance through having a broad range of effective suppliers in place”.

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Dehd!

It’s always great to find a band you haven’t hear before that you instantly love. So thanks to my old friend and ex Spend Matters colleague, Sheena Smith, a pretty serious muso herself, for pointing me towards US indie threesome Dehd and their new album Poetry.  Tuneful, energetic and interesting indie basically. Here you go…try Dog Days