An Operations and Supply Chain Perspective
The Brundtland Report (1987)1 defines sustainable development as any development that "meets the needs of the present without compromising the ability of future generations to meet their own needs". Various terms have been used to refer to the concept of sustainable development in relation to an organisation. Some of these include corporate social responsibility (CSR), corporate citizenship, sustainability, etc.
This article focuses of the CSR practices in context of Australian public private partnerships and discusses some of the CSR initiatives led by NSW Government.
Over the last twenty years, CSR practices have continued to expand and evolve as organisations align their CSR policies more and more efficiently to their daily business practices. CSR has evolved into a broader concept today, typically incorporating employee working conditions, hiring practices, procurement and supply chains relations, energy and infrastructure investments, fair trade and much more. Growing consumer and investor expectations are placing additional demands on companies to deliver on CSR performance in areas such as environmental issues, community contributions and governance.
Public debates on sustainability and climate change have created greater awareness across all sections of our society. While the individual perceptions may vary, there is unanimous expectation that a positive effort is needed to reduce the degradation of our planet for future generations. This is driving increasing levels of transparency and public disclosure on sustainability practices beyond traditional financial reporting. The impact of the recent global financial crisis has further highlighted the need for more comprehensive information to investors and stakeholders and has driven corporate accountability reforms2 and integrated reporting initiatives3.
The increasing globalisation of supply chains stretches the scope of corporate responsibility and presents new challenges. Some of the challenges include:
Varying standards of business ethics, legal and social norms in other countries compared to Australia
Implementing effective CSR policies are perceived to increase the sourcing and supply chain costs and make businesses less competitive
Growing population of discerning and demanding consumers and employees created by internet revolution esp. social media and ecommerce
Inadequate business systems and processes to meet increased demands for public disclosure, reporting and transparency
Public Private Partnership - CSR Initiatives
The Australian regulatory environment and securities market structure are conducive to high standards of corporate governance and generally supportive of sustainability reporting. Additionally various state and local governments have introduced a number of environmental and social policy programmes within their jurisdictions, impacting procurement and supply chain decisions.
With $21 billion expenditure per annum on capital works and goods and services, the NSW Government holds a strong position to influence CSR behavior across its supply chains. The CSR policy requirements [Exhibit 1] are generally incorporated across various preferred supplier/panel arrangements, prequalification schemes and tenders. These arrangements present significant opportunities to improve operations and supply chain practices across various categories.
Robust performance measurement and monitoring processes and guidelines accompany these procurement arrangements. This helps to ensure accurate, consistent, objective and transparent information on supplier performance. The businesses that demonstrate better overall performance (including CSR performance) enjoy increased tender opportunities. Besides businesses have reviewed and improved their management systems to meet the CSR policy requirements in public tenders.