Toronto, CANADA— October 6, 2020 — SAP SE (NYSE: SAP) today announced 5 & 5 by ‘25, a corporate initiative targeting five per cent of addressable spend with social enterprises and with diverse businesses by 2025. In setting this target, SAP aims to inspire organizations around the world to buy more goods and services from purposeful suppliers, making a positive collective impact on the communities they operate in.
Social enterprises are businesses culturally and operationally focused on changing the world. They are similar to other commercially viable businesses, but with three crucial differences: They are founded and governed on the basis of a clear social, cultural or environmental mission; they reinvest the majority of their profit back into this mission; and they are majority controlled solely in the interest of this mission. A diverse supplier is a business that is at least 51% owned and operated by an individual or group that is part of a traditionally underrepresented or underserved demographic; such as women-owned businesses, minority-owned business, and indigenous-owned businesses, among others.
According to the World Bank, global procurement spend in 2019 was at least EUR 12 trillion. The government of Canada alone spends CAD $22 billion, on average, procuring goods and services annually. If just a small fraction of what public and private sectors spend on procurement went to social enterprises and diverse businesses, those organizations would have the power to tackle some of the world’s most pressing social and environmental problems.
The announcement will impact all SAP’s global markets, but will initially be focused on Canada, Australia, and the UK. Based on early pilots, SAP estimates it could direct up to CAD $80 million of its addressable global spend per year to social enterprises and diverse suppliers by 2025. Across U.S. Fortune 500 companies, the amount per year could be up to CAD $34 billion.
SAP Executive Board member for Customer Success and recently appointed Global Buy Social Ambassador for Social Enterprise UK Adaire Fox-Martin announced the 5 & 5 by ‘25 initiative at SAP’s Procurement Reimagined event in Singapore. “Every company in every industry needs to procure,” Fox-Martin said. “We all need soap in our washrooms, landscaping for our offices, food and drink in our cafeterias, marketing services, office supplies, and even pest control. 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?”
Procurement with social enterprises
Recent efforts have shown promise. In a pilot program in the U K, SAP teamed up with Social Enterprise UK to define and execute on a social-procurement strategy. Within nine months, SAP had identified addressable spend of approximately GBP 30M and directed more than 2 per cent of this to over 20 different UK social enterprises. By including more purposeful suppliers into its supply chain, SAP has experienced better quality in products and services and has even lowered costs.
Seeing how scalable the program was and the potential for model replication in other markets, SAP established a relationship with purchasing with purpose partner Buy Social Canada, to ensure program success. “The global pandemic forced our economy to a standstill and drove many industries to reconsider how things are done. With that comes the potential to explore how we can build back better,” said Buy Social Canada’s Managing Partner David LePage. “SAP’s leadership and commitment through the 5 & 5 by ‘25 initiative will hopefully inspire other large companies to leverage their everyday business spend to benefit the communities in which they work and build a resilient, more sustainable economy.”
Buy Social Canada has demonstrated success partnering with other organizations in Canada, including Chandos Construction, Canada’s only B Corp Certified commercial contractor. Chandos has been advocating for social procurement in the Canadian construction industry and today also announces that it will shift 5 per cent of its addressable spend to social impact organizations by 2025. “The construction industry has a significant opportunity to lead Canada’s social procurement initiatives. By 2023 the construction industry is forecast to spend over $330 Billion US dollars in Canada. If we can shift just 2% of that nationally, we can make tremendous impact on Canadian society. We’ve had success partnering with social enterprises that train and prepare people who face barriers to employment to work in construction. Why wouldn’t we hire through those social enterprises and change a life at the same time,” says Tim Coldwell, President of Chandos Construction.
Procurement with diverse businesses
In support of supplier diversity, SAP and WeConnect are applying technology to make it easier for customers to pursue social-procurement strategies. According to WeConnect, while more than thirty percent of corporations are owned by women globally, only one percent of corporate procurement contracts are awarded to women-run businesses.
“When we provide access for women-owned businesses to competitively bid for procurement opportunities and invest in their growth, not only do we identify the best and most innovative suppliers, we also support inclusive and sustainable growth,” said Elizabeth A. Vazquez, WeConnect CEO and Co-Founder. “With SAP’s support, we can all work together to leverage our purchasing power to make a positive difference in the lives of women, their employees, their families and communities around the globe.”
In addition, SAP Canada Inc. has a strategic sponsor relationship with the Black Professionals in Tech Network (BPTN) – a Canadian based organization that promotes Black professionals and Black owned businesses.
Procurement with purpose with SAP Ariba
SAP’s Ariba Network is the largest business-to-business marketplace in the world, supporting nearly CAD $4.7 trillion in transactions each year. In Canada, SAP Ariba is used to process more than CAD $50 billion worth of transactions alone. In partnership with leading social-enterprise and diverse-business interest organizations, the company is opening this network up and connecting corporate-ready purposeful suppliers with more organizations who want to make a difference with their spend.
As part of the 5 & 5 by ‘25 initiative, SAP invites other organizations to begin or accelerate their social-procurement journey based on a simple framework of discovering the right partners, adopting a social procurement strategy, consuming the products and services they procure, and then continuously expanding their base of social enterprises and diverse suppliers.
“Together with our customers, partners, diverse suppliers and social enterprises, we have set out to expand social procurement where infrastructure exists and intend to establish the infrastructure and build capacity where it doesn’t,” Fox-Martin added. “We invite our entire ecosystem to learn more and take part, join us in this pledge, and help build the pathways and the momentum to realize this ambition and find a better way to grow.”