Socially Responsible Procurement at King’s College London

Part one of a blog series by Veronica Daly, Chief Procurement Officer, King’s College London, and Deputy Chair of HEPA

This blog, published in the March edition of the HEPA Digest, discusses the growing movement in the corporate world to change governance and cultures towards socially responsible goals and the steps taken by my employer, King’s College London, to deliver this agenda. Additionally it sets out the progress made over the past year since the establishment of the Socially Responsible Procurement Policy that I am implementing at King’s as their Chief Procurement Officer and touches on my work with other procurement teams through my membership of the Higher Education Purchasing Association Board and its Social Value Sub-Group.

The Corporate World

There is a growing movement in the corporate world for business to behave responsibly by minimising the harm that can occur from their operations and to positively contribute to the betterment of individuals and society. This goes beyond the traditional CRS approach, which typically involved companies contributing to good causes and undertaking voluntary work a few times a year. Being a responsible business necessitates changes to the way an organisation is run. This starts with the company’s objectives and flows into every strand of its operations, activities and culture.

It became clear by the end of 2019 that there had been a significant shift in the mind-sets of leading CEOs and the business press, most notably the Financial Times. In the U.K., the British Academy published Principles for Purposeful Business. In the U.S., the Business Roundtable issued its Statement on the Purpose of a Corporation. In Switzerland, the World Economic Forum published The Davos Manifesto 2020. As stated in the Harvard Law School on Corporate Governance ‘These statements gave voice to evolving trends and assumptions that had been transforming corporate governance over the course of the last decade, in particular:

1. Recognition that environmental, social and corporate governance policies (ESG) represent material risks and opportunities directly impacting financial performance;
2. Reassessment of the shareholder primacy doctrine and the narrow view of corporations as nothing more than profit machines;
3. Adoption of “sustainability” as both a strategic goal for companies, an antidote to short-termism and a path to strengthen public trust in business and the capital markets;
4. Acknowledgement that companies must serve the interests of their “stakeholders” as well as their shareholders;
5. Reassertion of the principle that corporations must be accountable for the human, social and public policy implications of their activities, with an urgent focus on climate change;
6. Understanding that a corporation’s “culture” is reflective of its integrity, its internal well-being, its sustainability and its reputation;
7. Acceptance of expanded board accountability for ESG issues, sustainability, purpose and culture and working with the CEO to integrate these factors into business strategy;
8. Emergence of the integrated reporting movement with its program of integrated thinking and integrated management as the basis for corporate reporting.

Major investors are now asking companies they invest in to report on ESG performance and predictions are that this will enter the mainstream so that in the near future the majority of investors, funders, regulators and stakeholders etc. will expect such issues to be reported alongside other performance indicators.

Companies are aware that having the best environmental, social and governance credentials is in today’s socially aware society also financially good for business. A report in February’s FT evidenced that those companies in the US with the top ESG rankings trade at a 30% premium to the poorest ERG performers. This is also a trend which is being shown across Europe where there is a link between ESG rankings and valuation discounts for poor ranking companies. While ESG reporting is not mandatory it is increasingly being undertaken voluntarily as a way of comparing a company’s performance and in future it may be used as a determining factor for investment, purchasing and funding decisions. As such, many companies are considering how best to assemble a ‘statement of corporate governance’ and also how to assess its corporate culture.

King’s College London

In 2016 King’s decided not so much to redefine it’s business objectives but to give greater prominence to a core value which it had practised since its establishment – ‘in service of society’. This followed a series of workshops seeking the views of students, staff and alumni on the future direction of King’s. One element that stood out was how the phrase ‘in service of society’ was mentioned in all 25 workshops run as part of a consultation exercise. Given the passion and unanimity with which this sentiment was raised it was decided to put ‘Service’ alongside education and research as comprising King’s academic mission. 

In practical terms this ‘new’ objective has allowed staff working in professional, rather than academic, services to directly and actively serve society and deliver on King’s academic mission through our work in the same way as a researcher or teacher in King’s. This really is important to staff who like me chose to work in a university rather than any other organisation as it can be quite isolating and demotivating to be a spectator rather than part of a common endeavour.  Having ‘Service’ as a central corporate objective allows everyone at King’s to contribute to its mission.

Socially Responsible Procurement at King’s

Over the past 10 years there has been a steady increase in the amount of social regulation that procurement officers like me need to comply with, largely to prevent harm to the environment or person and to ensure organisations behave as responsible citizens. For example there has been a steady increase in Health and Safety legislation, the Waste, Electric and Electronic Recycling Regulations, the Modern Slavery Act, Bribery and corruption legislation; all have to be considered by procurement officers when running procurement exercises.

However, compliance with such legislation doesn’t inspire or motivate staff or organisations to do more than the minimum required. The incentive to positively deliver benefits for customers, employees and the wider community relies on the organisation having governance that puts long-term outcomes ahead of short-term gain. King’s have recognised this by putting the concept of ‘service’ in its strategic vision and we now have a purchasing policy that is based on being socially responsible and achieving positive outcomes, not just for King’s staff and students (customers) but also for the local community and international society.

King’s has given my team the opportunity to help our local communities and society and not simply to perform the traditional role of a purchaser. To give a few examples:

• King’s aims to buy food and drink for its canteens from within its’ campus boroughs of Southwark, Lambeth and Westminster whenever feasible; 
• Kings encourage the use of external venues for away-days and other events within our boroughs, such as Coin Street, a social enterprise which supports local community groups in Southwark;
• King’s negotiate deals with hotels within our boroughs such as the London Bridge Hotel and the Strand Palace;
• King’s Procurement have just awarded a contract for our furniture requirements to Southern Broadstock, which not only scored highest amongst all bidders on their social value offering but are a supplier which puts doing good through business into practice (they have a Group-led Responsible Business Programme that aims to benefit and empower the local communities to which they deliver services). As such, 4% of our annual expenditure with this company will go towards a community fund to benefit local causes in our Boroughs, which reflect the UN Sustainable Development Goals that both King’s and Southern Broadstock have signed up to. This means that every time we purchase a piece of furniture we know there will be a benefit to the residents of our local boroughs;
• We have established a legal panel to provide King’s with expert legal advice across a broad spectrum from construction contracts to intellectual property advice.  A condition of being on this panel is to provide social value to our organisation and students. Proposals from the firms include sponsoring the King’s Legal Clinic to sponsoring a student throughout their legal studies.

Part two of this blog discusses Social Enterprises, HEPA and Responsible Procurement and can be read here.