Valerie has a pinapple farm in Eastern Rwanda, and is part of a women’s co-operative. The profits from sales are invested back into the business and shared between the members. Photo: Aurelie Marrier d'Unienville / Oxfam

Fairer procurement: The equitable business tool

Inequality, Private sector Leave a Comment

Today, Oxfam launches a new procurement tool to help buying teams source products from fairer businesses. Alex Maitland, who developed the tool, describes the unique approach we have taken, and looks to its potential for reducing inequality in global supply chains.

Valerie has a pinapple farm in Eastern Rwanda, and is part of a women’s co-operative. The profits from sales are invested back into the business and shared between the members. Photo: Aurelie Marrier d'Unienville / Oxfam

Valerie has a pinapple farm in Eastern Rwanda, and is part of a women’s co-operative. The profits from sales are invested back into the business and shared between the members. Photo: Aurelie Marrier d’Unienville / Oxfam

Growing inequality in global supply chains is a barrier to a decent standard of living for many workers and producers around the world. Oxfam’s research has found that alternative, fairer, business models can significantly improve the livelihoods of the most marginalized women and men in the global food system.

Oxfam’s Behind the Barcodes campaign includes a call for supermarkets to buy more from businesses using fairer models including social enterprises, co-operatives and community interest companies. As a retailer with over 650 shops in the UK, Oxfam has developed an internal tool to help our own buying team to do just that. Today, we’re making this tool public in the hope that others will adopt and adapt it.

How is this procurement tool different?

The procurement tool looks at the structure of organisations to answer three key questions about the intention of the business:

  • Is there a social mission and is it locked-in? For instance, through a constitution or legal form that keeps the focus on social impact.
  • Who has power? Do workers, suppliers or members of the community have a say in decision making? Are they represented on the board?
  • What happens to profit? Do all those who contribute to the company’s success get a share?

Together, these three areas: purpose, power and profit provide the crucial ingredients for fairer business. All three matter. Some social enterprises reinvest profits, but are not so inclusive. Not all co-operatives are driven by a social purpose. And some mission-driven businesses pay dividends to already wealthy shareholders.

The distribution of power, purpose and profits are the things that matter most in business.
Unlike other tools, we only use publicly-available information that is available for buyers to assess, and we focus on structure rather than outcomes or outputs. For example, we don’t consider trade union representation, taxes paid or environmental considerations.

Many other diagnostic and assessment tools can be very complex, and only represent a snapshot in time. We have developed something for those who, like us, think that the distribution of power, purpose and profits are the things that matter most in business. These are ultimately what drive the behaviours, practices and outcomes measured by other tools.

Development and future applications

Step into an Oxfam shop and, as well as pre-loved clothes and goods, you’ll find the Sourced by Oxfam range of beautiful, quality products. Oxfam shops pioneered the idea of fair trade back in the 1960s. Times have changed, but our commitment to fair trade hasn’t and we’re proud to work with suppliers who pay people a fair and decent price for the goods they produce.

Try the tool online

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To demonstrate this commitment, Oxfam’s buying team is developing a sourcing framework which includes a new category of ‘Hero Suppliers’. Our heroes will be selected using the procurement tool and will benefit from preferential treatment, such as being our first choice for any new product development. The tool adds to, rather than replaces, our existing standards and audit processes.

There are other areas where the procurement tool is already proving valuable. Oxfam’s Enterprise Development Programme is using the tool to help assess the companies they support and invest in, and Social Investment Business have adapted it for their impact assessments.

Our learning-by-doing approach puts us in a good position to advise and support companies. We’re currently working with the University of York to develop a knowledge-sharing platform for brands and retailers who are interested in developing the tool further.

The procurement tool will continue to evolve, and we welcome feedback and ideas for improvements. Download and try out the tool, read more about our approach and case studies of fairer business models, and comment below to let us know what you think.

If you work for a brand or retailer and are interested in fairer value chains we’d love to hear from you; both to discuss how to create your own hero suppliers programme, and to understand what your business is doing in this space. Please use this form to get in touch.

Try the procurement tool for yourself
Author
Alex Maitland

Alex Maitland

Alex leads Oxfam's Future of Business Initiative which challenges the shareholder-first business model and promotes fairer ways of doing business. He joined in January 2017 from the think-tank Tomorrow's Company and holds an MSc in Corporate Responsibility and Sustainability from Birkbeck University.

The procurement tool was developed by Alex Maitland and Dan Gregory. Our gratitude to Professor Bob Doherty at University of York, Principal Investigator of IKnowFood, and Erinch Sahan, CEO at World Fair Trade Organisation for their comments and endorsement.