Infrastructure projects should have the potential to provide notable opportunities for local communities. Often these opportunities lead to the creation of new jobs, long term investments and thereby, increases the chances of strong, long term economic growth. With this in mind, local governments are increasingly looking for policy tools to help promote socio-economic impacts, thus requiring infrastructure businesses to source locally, a policy referred to in North America and the UK for instance, as Community Benefit Agreements (CBA).
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The defense sector has many characteristics that are unique to its market due to its national security exemption to most international trade agreements. Amongst those characteristics is a firm set of offset (or industrial participation) agreements that are often required of prime contractors.. With approximately 130 countries participating in defense offset agreements, it’s important to note that these terms differ per location. Moreover, it’s important to acknowledge the growth in usage of these offsets and how this can affect your supplier relations.
Why Diversity & Buying Local is Key for Small Businesses
Buying local isn’t solely reserved for the final consumer or for big businesses. Although big business is an essential factor for social accountability, as per the Economist, small businesses are key in leading by example and practising what they preach too. While outsourcing globally may be convenient in terms of supply and economic reserve, spending locally can create a ripple effect in support of the primary community with an increased ROI as well.
Sourcing local is often mandated in order to receive approvals in the energy or mining sector, or to win government bids in infrastructure, transportation or the defense/aerospace sectors. It is also increasingly performed by companies who are wanting to put their best foot forward in demonstrating their commitment to the local community and to maximizing socio-economic impacts or meet their environmental, social and governance (ESG) goals. Assessing your local expenditure throughout your supply chain can provide you with an accurate assessment of your business’s potential performance in a more strategic socio-economic sphere.
What are the ESG Criteria and Why Your Company Should Position Them at the Center of Its Procurement Strategy
Considering ESGs in key decision making is becoming more and more prevalent internationally. By ESGs, we mean environmental, social, and governance standards. The ESG market is rapidly growing and evolving. It is placing more responsibility on supply chain management as well as ethical company practices in the process.