Software firm SAP urges businesses to spend more with social enterprises diversify suppliers
Software firm SAP has called on businesses to spend more with social enterprises and “purposeful” suppliers in a bid to promote greater social inclusion.
SAP has today launched its “5 & 5 by 25” initiative which targets five per cent of addressable spend with social enterprises and diverse businesses by 2025.
Social enterprises are businesses that have a clear social or environmental mission in a bid to change the world for the better.
A diverse supplier, by SAP’s own definition, is one that is at least 51 per cent owned and operated by an individual or group that is part of a traditionally underrepresented or underserved demographic.
In joining the initiative organisations agree to formalise their “exploration” of social procurement and expand their relationships with social enterprises.
“Every company in every industry needs to procure,” SAP executive Adaire Fox-Martin said. “We all need soap in our washrooms, landscaping for our offices, food and drink in our cafeterias, marketing services and office supplies. These and many more are all products and services provided by social enterprises and diverse businesses. This is money we are spending anyway. Why not spend it with suppliers who are delivering social impact as well?”
World Bank figures show that global procurement spend in 2019 was at least $14 trillion. SAP predicts that directing even just a small fraction of this to social enterprises could give organisations “the power to tackle some of the world’s most pressing social and environmental problems.”
The firm’s early pilots in some markets suggest it could direct up to $60m of its addressable spend by 2025. Among companies listed on the German index Dax, the figure is estimated at €2.5bn, with up to $25bn across US Fortune 500 companies.