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Aligning Supply Chain with Corporate Social Responsibility

As the millennial generation has become the largest group of consumers in the United States, their value-based buying decisions have influenced corporate social responsibility commitments from companies across the board. For companies that want to stay relevant to incoming workforce groups, sustainability and social responsibility are imperative—and companies need to do more than just talk the talk to win over conscious consumers. We interviewed Brian Corde, Managing Partner, Atlas Insight LLC, at the 2019 Area Development Consultants Forum in Houston about some of these insights. Below are some excerpts from our interview, which you can also watch here.

Q4 2020
Area Development interviewed Brian Corde, Managing Partner, Atlas Insight LLC, at our Houston Consultants Forum. Our discussion covered how companies are devising and meeting their corporate social responsibility commitments. Interview conducted by Margy Sweeney, Founder and CEO, Akrete, Inc. and Area Development Editorial Board member.
The C-Suite’s Approach to Corporate Social Responsibility
Realistically, I think that C-suite executives are instituting sustainability practices primarily because of the consumer base. There are exceptions to that rule, of course—plenty of executives firmly believe that corporations do have social responsibility to the planet, consumers and the future. But many feel that they have a greater responsibility to their shareholders and their employees.

I see this being driven mostly by generational changes in the workforce, particularly looking at differences in the way that people think. It comes down to consumers making conscious decisions about the products that they want to invest in. Just as a company can choose to pay a little bit more for a renewable source of energy, as opposed to just paying the cheapest rate that they could possibly get, consumers are also making the same decision to buy with their conscience.

Millennials have $1 trillion of collective spending power. That's a really powerful number. They’re a large, economically powerful group of people that are making decisions on buying products based on factors other than cost. I would argue that many baby boomers were making purchasing decisions based solely on costs: “Just give me the cheapest product that I could possibly get as long as it was good. I'm good with that.” Millennials seem to be looking at things from a different perspective and choosing products that they feel align with their own beliefs.

That trend is transitioning over into the working world as well, because what we're seeing is that employee engagement from the millennial group is much, much higher when the individual feels like they are working for a company that has a social responsibility or social purpose. If the company they work for believes in some of the things that they believe in, as an individual, millennials are much more likely to be engaged in their work, to stay with that company longer, and be a more productive member of the team. I think companies and the C-suite are realizing that it's a necessity for them because they have to cater to their employee base and their customer base.

Corporates’ Increased Response to Employees and Consumers
Companies are definitely listening to their employees and their consumers because they simply have to. It's a matter of survival for them. If you think about the dairy industry for example, they're an industry that actually progressed forward faster than maybe some of the other food companies that are associated with animal-based proteins. They've seen sharp declines in consumers making choices to use their products. I think that it has a lot to do with the generational mindset that younger generations have around being a little bit healthier. Realistically, C-suite executives are instituting sustainability practices primarily because of the consumer base.

But I think it goes beyond being healthy, it goes into sustainability, and into saving the planet. Some of the companies that have made major inroads into the plant-based protein market have done so using the sustainability pitch. Companies that I've had the pleasure to work for, like Oatly, for example, which is an oat milk product, are really playing up the sustainability piece of this. They're not claiming that their product is exponentially healthier than drinking dairy milk. And you can argue that moving away to plant from animal-based proteins maybe helps with certain inflammation and things like that in your body. But at the end of the day, they're not producing low-calorie, low-fat or low-sugar type of items. They're not selling themselves as being health-conscious companies only. They're selling themselves on being an alternative, sustainable option, because the amount of greenhouse gases that is produced with a gallon of oat milk versus a gallon of cow's milk, it's just night and day.

I think Oatly’s pitch as a company is what we're seeing a lot of from other companies like Beyond Meat and Impossible Burger. They're basically saying, “If you're choosing a plant-based type of lifestyle all the time, that's great. But even if you're not, if you could just incorporate plant-based meals into your normal routine on a regular basis, maybe one day a week, the impact that you're going to have on the environment could potentially be as great as driving electric car.” And that's a very powerful visual for people, they latch onto that. So, it's not just about being health conscious. It's also about being environmentally conscious as well.

Aligning Supply Chain with Corporate Social Responsibility
Companies can incorporate sustainability into their complete supply chain by looking at the vendors that they're choosing and making sure that they have sustainability plans in place, particularly for some of the larger pieces of the puzzle. That might include they raw materials that they're using. There are very few companies today that will take a product and make every single part that needs to go into that finished product.

So, companies could be looking at their suppliers that they're buying the raw materials from, and asking their suppliers to explain to them what their sustainability practices are, and if they’re adhering to those policies and practices. That can be an important step, but it goes beyond the materials that go into the products they're making. It also goes into the logistics and transportation issues.

Are companies utilizing methods of transportation that are more environmentally friendly? For example, are they using rail instead of constantly using trucks? If they are using trucks, are they looking at ways to incorporate alternative fuel vehicles into that process? There are a lot of options that are out there right now, even for trucks to be powered by alternative types of engines. Incorporating things like that into their practices, such as using more video conferences instead of jumping on a plane to fly across the country or an ocean to get to a meeting—all of those things can work in sync to bring a company's total carbon footprint down.

So, it really goes beyond just simply saying, “Here's our manufacturing site and here's what we're doing in our manufacturing site.” It really necessitates a total company effort. But obviously, when you look at a manufacturing organization, we know that the largest contributor to their carbon footprint is going to be their manufacturing output, so that is an easy place to start. But when a company's jumping in and doing it right, all of those things have to be taken into consideration.

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