The rules for doing business have changed

Posted: 21 June 2022 | | No comments yet

To succeed in today’s environment, you need to get a clear view from the top of the mountain. Rick Sanderson FIFST, Founder of The STAR Index ESG Platform, explains.

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Only those most adaptable to change will survive. Charles Darwin’s famous quote has never been so true as it is in today’s business world. Transparency in all walks of life is changing the way we make our buying decisions, none more so than in business. Investors, stakeholders, shareholders, management, employees and customers are demanding more insight and more honesty in terms of how goods and services are delivered.

This is a positive thing, right? Nobody would argue about that. However, the foundations of modern capitalism have been built on the premise of growth, margin, return on investment and maximum yield at minimum cost. On the back of this, the ‘value proposition’ for large brands and others has been built around claims and credentials, which until now, the consumer has simply trusted to be authentic.

However, several seismic jolts over the past 20 years have shaken consumer confidence in how we produce goods and services. Because of events such as the BSE outbreak in cattle in the mid-90s, the financial crash of 2007/08, the 2013 Rana Plaza garment factory collapse in Dhaka, Bangladesh, and Volkswagen’s emissions scandal in 2015, consumers and investors alike are now seeking more transparency and integrity from businesses and brands.

The importance of ESG

Business ethics and trust are fast becoming the gateway to consumer spending, as we look for organisations that have a more balanced approach to how they address economic, social and environmental issues in a way that benefits people, communities and society.

Issues that companies had not previously planned for are now main priorities, while we have yet to face tomorrow’s emerging issues

Environmental, Social, Governance (ESG) as we now know it, has become increasingly more prominent, moving from spurious ‘greenwash’ statements of the past, to board-level positions and policies in the present. But what about the future? Businesses need help and guidance to raise the bar and prove they are delivering social, environmental (or ecological) and financial or ‘triple bottom line’ benefits.

There is room for optimism with tools and frameworks now available for food and drink companies to adopt ‘net-good’ practices throughout their organisations, as well as frameworks for independent reporting. We now have a north star in carbon impact reporting in SBTi and CDP, and B-Corp, also known as Benefit Corporation, for wider ESG business metrics and behaviour.

Questions to ask yourself

While these can help companies to become more purpose driven, where do you start from and how do you chart your progress?

The landscape for modern businesses is incredibly complex, with internal matrix management and differing motivations. Then there are external shareholders and investors that want short-term gains as well as long-term returns. In this environment, ensuring your business has a collective purpose and direction can be very challenging. If your business is not clear and confident about its mission statement and how to achieve it, then you cannot expect your suppliers, customers and investors to follow you on that journey.

Our firm belief is that without visibility there is no accountability, and only those most responsive to change will survive. So the questions you may need to be asking yourself – and have the answers for – are:

  • How many suppliers and products at tier one and beyond are in our supply chain at any given time?
  • Are we communicating our values and codes of practice to them? And are they being adhered to?
  • Are there sustainability risks within these supply chains that could undermine our ability to continue trading successfully?
  • How do the UN’s Sustainable Development Goals (SDGs) impact our business?
  • Does our supply chain utilise natural assets/resources that are finite? And would our business be able to trade successfully without easy and cost-effective availability of these assets?
  • Would a failure in our responsible sourcing policies – such as a modern slavery scandal – damage the value of our brand?

Where is my business starting from?

When a climber attempts to scale a mountain, the first thing they must do is ensure that the right team has been put together. Sufficient funding is crucial, as is meticulous preparation. It is also crucial to have a clear plan and an understanding of how it will be delivered. Contingency plans must also be developed in the event of something going wrong.

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Are you asking yourself the right questions, and do you have the answers?

It is also important to communicate to those crucial to the mission where they are going and the reason why. And, to continue the mountaineering metaphor, before a single crampon starts the snowy climb, you must first get to base camp. This is known territory from where the journey starts. It must be a clearly visible location that other team members can find if they need to return to it. They will also need to have a map to hand – the plan – that clearly sets out how they will reach the summit.

So as you start your ‘ascent’ into the new territory of responsible sourcing and transparency, have you followed all the preparatory steps that our climber will have done?
Do you fully understand the landscape in terms of your capability to succeed and where you are starting from? Let’s start with the four Ps: people, politics, platforms and partners.

  • People: Do you have the right team around you, with the right skills, in order to deliver in this new world? Do they have the understanding, capacity and ability to adapt? Can they absorb new thinking and challenges, engage with third parties and non-governmental organisations? Have they had previous experience and can they bring external insights? And can they engage right across your business and influence those at the top of it?
  • Politics: Are all departments and influencers within your organisation aligned and buying into the need to embrace change? Do they have objections that need addressing, practical issues in their own roles, irrational fears about whether all of this ‘stuff’ really matters?
  • Platforms: Do you have the raw materials, technology and solutions in place in order to map, manage and monitor your mission and chart progress as you move forward? Do you have a clear platform from which to communicate with customers, suppliers and investors?
  • Partners: Crucially, are your supply partners with you on this journey? Do they understand it? And where are they starting from? Are you aligned with the right strategic suppliers that understand why this is important – ones that are not hiding at the back, but leading from the front? Are you in a position to support and coach them; to clearly communicate your aims and objectives; and reach a comprehensive understanding of their commitment across all areas of responsible sourcing?

If you can’t map it, you can’t manage it

Issues that companies had not previously planned for are now main priorities, while we have yet to face tomorrow’s emerging issues.

Companies looking to start their journey towards more responsible sourcing or chart the progress already made, need a common language or framework through which to articulate the outputs. Moreover, they also need a structured approach to capturing and standardising data. This is not easy with many companies still depending on ‘old world’ technologies to solve ‘new world’ problems, which multiply down the supply chain.

There are digital platforms and frameworks to help you track these crucial elements of doing ‘better business’ and equally help your suppliers build knowledge and capacity. This new environment is no longer about compliance, it is about shared learning, collaboration and continuous improvement, the kind of teamwork needed to scale the mountain and get the view from the summit. After all, without visibility there is no accountability.

About the author

Rick Sanderson is passionate about sustainable and transparent supply chains, and his career and motivation is driven by building a fair and compassionate commercial environment for producers, people, animals and the environment. Rick has been operating across the food chain for the last 27 years, having been a Procurement Director, Technical Director and Sales Director for FTSE 100 companies and blue‑chip FMCG manufacturers. Rick has developed and sold two award-winning food companies of his own, and is the Co-founder of STAR Index. He is also the former UK Young Agri-Consultant of the Year, Shell UK Entrepreneur of the Year Runner-Up, a Fellow of the Institute of Food Science & Technology, and former Dragons Den contestant among many awards and accolades.

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