This blog highlights the often-overlooked issue of sustainability in commercial management, discussing why it's frequently omitted from contracts. The blog provides examples of factors contributing to this omission, such as short-term profit focus, lack of awareness, inadequate metrics, competitive pressure, and more. It emphasises the real-world consequences of ignoring sustainability in contracts and concludes by calling for a change in commercial management practices.
#SustainabilityInContracts #CommercialManagement #EthicalPractices
#EnvironmentalResponsibility #SustainableSupplyChain #StakeholderPressure #LegalCompliance #SustainableProcurement
#ContractNegotiations #SupplyChainEthics #BusinessReputation
#SustainabilityInContracts #CommercialManagement #EthicalPractices
#EnvironmentalResponsibility #SustainableSupplyChain #StakeholderPressure #LegalCompliance #SustainableProcurement
#ContractNegotiations #SupplyChainEthics #BusinessReputation
With its intricate web of contracts, negotiations, and profit-seeking strategies, commercial management often fails to pay due attention to sustainability. This oversight is surprising and concerning in a world where environmental responsibility and ethical practices are becoming increasingly critical. Let's delve into the reasons behind this glaring blind spot in commercial management and examine how commercial teams frequently avoid addressing sustainability in contracts.
1. Short-Term Profit Focus
Example: A manufacturing company sources raw materials from a supplier known for unethical labour practices because it offers a lower cost. The commercial team prioritises short-term cost savings over the long-term consequences of supporting exploitative labour.
Consequences: The immediate profit gains may lead to legal issues, brand damage, and supply chain disruptions due to labour disputes or regulatory actions.
2. Lack of Awareness
Example: A commercial manager negotiates a contract with a supplier without realising that the supplier's manufacturing processes are environmentally damaging, as they are unaware of the ecological implications.
Consequences: Lack of awareness can result in missed opportunities to engage with more sustainable suppliers or rectify environmental harm caused by the supplier's operations.
3. Inadequate Metrics
Example: A commercial team lacking standardised sustainability metrics signs a contract with a logistics provider that uses diesel-guzzling trucks without considering the environmental impact.
Consequences: The company may inadvertently contribute to air pollution and climate change without a straightforward method to measure or address this impact.
4. Competitive Pressure
Example: In a highly competitive industry, a commercial team avoids adding sustainability clauses to a contract with a supplier, fearing it might make their products less price-competitive.
Consequences: The company may miss out on the growing demand for eco-friendly products and risk being considered environmentally irresponsible.
5. Fear of Complexity
Example: A contract's complexity of sustainability clauses leads a commercial team to avoid addressing environmental or ethical considerations, preferring straightforward agreements.
Consequences: The company may face reputational damage if sustainability issues tied to the supplier come to light.
6. Resistance to Change
Example: A commercial team resists change and prefers to maintain existing, non-sustainable contract practices.
Consequences: The company may be left behind as consumers and investors increasingly prioritise sustainability.
7. Legal and Regulatory Uncertainty
Example: A commercial team hesitates to address sustainability in contracts because of changing and complex environmental regulations in their operating regions.
Consequences: Failure to adapt to evolving legal requirements can result in fines and legal troubles.
8. Perceived Expense
Example: A commercial team avoids implementing sustainability practices in their contracts because they perceive it as costly.
Consequences: Focusing solely on immediate costs can lead to long-term expenses due to environmental damage, fines, and reputational harm.
9. Lack of Stakeholder Pressure
Example: A company's customers and investors do not demand sustainable practices, so the commercial team sees no urgency to address sustainability in contracts.
Consequences: The company may miss opportunities to gain a competitive edge in the market and attract ethically conscious investors.
The Call for Change
In conclusion, the omission of sustainability from contracts in commercial management is a critical oversight with real-world examples and serious consequences. Commercial managers should address these issues by educating themselves on sustainability, developing clear sustainability metrics, and listening to the voices of stakeholders. Please share your insights and experiences in the comments section below.