Session

Impact Sourcing and Investing: Innovative Approaches to Sustainable Supply Chains

Global supply chains provide critical jobs and capital, which can help people around the world raise their standard of living and improve their social mobility. Leading companies are experimenting with different investing methods to maximize these benefits within their own supply chains. For example, impact sourcing seeks to create jobs for people with limited opportunities for sustainable employment—often in low-income areas. Meanwhile, impact investing continues to grow as a sector that generates measurable social and environmental impacts alongside a financial return. Other companies are investing in innovative efforts to empower supply chain workforces at the sector level. This 90-minute interactive session will explore examples from several BSR members who are experimenting with these transformative approaches in their global supply chains.

Speakers

  • Kelly Goodejohn, Director, Ethical Sourcing, Starbucks Coffee Company
  • Tu Rinsche, Manager, International Labor Standards, The Walt Disney Company
  • Deborah Kops, Managing Principal, Sourcing Change
  • Tara Norton, Director, Advisory Services, BSR (Moderator)

Highlights

  • According to a GlobeScan survey, employment and education present the biggest opportunities to achieve positive impacts and create an inclusive economy by generating decent, empowering jobs.

  • Impact sourcing and investing inspire companies to adapt the business in order to have a positive impact.

  • The BSR HERfinance program implemented in India has proven that providing financial education to women offers positive impacts on the women themselves and their communities.

Memorable Quotes

“Impact sourcing has inspired us to adapt our business and have a positive impact.” —Greg Priest, IKEA Group

“We know that transformation takes a lot of time and it’s hard but, through what we have learned and measured, it is possible.” —Tu Rinsche, The Walt Disney Company

Overview

Norton opened the session by introducing the two key topics of impact sourcing and impact investing, which unlock the possibility for companies to strengthen the link between their social objectives and core business practices.

Norton explained that, according to a GlobeScan survey, employment and education present the biggest opportunities for achieving positive impacts and fostering an inclusive economy by generating decent, empowering jobs for the more than 1 billion people who still live in poverty and in environments where women are especially vulnerable.

The session explored impact sourcing not only from the outsourcing perspective, but also from all kinds of sourcing, whereas the impact investing discussion considered the financial return not only for the original investor, but also for the beneficiaries of the programs.

Kops kicked off the impact sourcing discussion, talking in particular about the experience of Digital Divide Data (DDD). DDD was founded in 2001 in Cambodia with the objective of taking high school students out of the slums by teaching them how to work and providing them with scholarships. DDD operates in Kenya, Laos, Cambodia, and the United States with a hybrid nonprofit/for-profit structure.

Kops explained that the DDD business model focuses on providing impact sourcing services that support clients’ business and CSR objectives. The company achieves this in part by using a “multiplier effect” strategy, partnering with many companies and recruiting and training many employees in order to allow them to earn degrees, build careers, and help the communities where they live.

Priest provided another example of impact sourcing by explaining an IKEA impact sourcing project, which is focused on social entrepreneurship in communities and employing women as a pioneering way to source handmade products to be sold to IKEA’s customers. According to Priest, this program has proven to be scalable in many countries and high impact both for people and their communities. And from a business perspective, he said it offers real value, because customers appreciate the products and it has inspired the company to adapt the business in order to have a positive impact.

Goodejohn provided a concrete example about a Starbucks project in Chiapas, Mexico. While deforestation was happening very quickly with huge impacts on the environment, Starbucks and Conservation International collaborated with farmers to help reforest the region, creating additional opportunities for farmers to sell carbon credits in voluntary carbon markets.

Goodejohn also explained the example of the Starbucks farmers loan program, through which the company invests in programs that provide access to credit though social investment funds, thereby helping farmers manage risk and strengthen their businesses. This has a huge impact on the company’s supply chain because it makes both the company’s sourcing stability and the farmers’ income more resilient.

Rinsche offered The Walt Disney Company’s perspective on impact investment, through the example of Disney’s projects on worker empowerment in the factories that produce Disney’s labeled products around the world. In 2012, Disney established the supply chain investment program that allowed the company to make targeted investments addressing poor working conditions. These programs, in Brazil in particular, are currently being measured with the help of SAI, which could measure the tangible business benefits deriving from addressing health and safety issues in factories in Brazil.

Disney is involved in the BSR HERfinance program implemented in India, which has proven that, by providing financial education to women, they can achieve positive impacts for women as well as their communities, for example, through increasing their and their families’ rates of savings and helping them open bank accounts. Rinsche concluded that transformation is hard and takes a lot of time, but it is also possible and results in positive impacts that may be measurable. She offered the example of the BSR HERproject, which is working on a report on the project’s impacts.

Norton then opened up the audience to small group discussions at the tables, which then reported back to the room, focusing in particular on the enablers and obstacles. The group that discussed impact investing stressed the fact that the replicability and scalability of the projects are strong enablers, while the obstacles are investors’ willingness to accept more risks, which are often associated with greater reward.

The group that discussed impact sourcing explained that for them scalability is a strong enabler, while often the obstacle is the measurement of the business case. They stressed that mainstreaming in the business has a lot of potential as well, especially when, while working with procurement systems, the focus is on capacity-building for local suppliers.

Date

November 4, 2014