The case for sustainable procurement

Scrutiny from consumers, staff, and investors around sustainability and transparency is growing. The supply chain is perhaps the largest risk but also the biggest lever of opportunity for becoming a more sustainable business.

We believe that the procurement function is a key enabler for organisations who want to raise their environmental and ethical profile.

A significant proportion of most organisations revenue is re-spent through its supply chain, a recent report has calculated that supply chain emissions are 5.5 times greater than companies direct operations on average (CDP Supply Chain Report, 2019) [1].

Organisations must utilise the procurement function and engage their supply chain if they want to become more sustainable.

The procurement function is well-positioned to impact sustainability performance but there needs to be buy-in from business leaders. Fortunately, there is a strong business case for sustainable procurement with benefits including:

  • Increased brand value by sharing sustainable achievements with customers and shareholders
  • Mitigating reputational risk by improving the visibility of and engagement with the supply chain
  • Attracting and retaining high performing staff from an increasingly sustainability conscious talent pool
  • Greater access to environmental and social investment opportunities
  • Cost savings through improvements in resource efficiency, demand management and waste reduction
  • Competitive advantage in sustainable product and service offerings by utilising the expertise in the supply chain

 

“Sustainability is expected to become as big and disruptive in every sector over the next 15 years as digital technologies have become over the past 15.” [World Economic Forum, 2016]

 

A recent survey of 590 procurement professionals from across the globe suggested that driving sustainability and supplier innovation are expected to overtake cost reduction and risk management as the main purposes of the procurement function by 2030.[2]

 

The main purpose of procurement today

Cost reduction and risk management are currently regarded as the main purpose of procurement

Sustainability chart

 

The main purpose of procurement by 2030

Supplier innovation and sustainability expected to become core purposes of procurement by 2030

Sustainability chart 2

Procura has seen first-hand evidence of this from our clients. In executive meetings, CEO’s are turning to their Heads of Procurement and asking, how is our supply chain supporting the sustainability objectives of this organisation?

The COVID-19 pandemic has highlighted the fragility of global supply chains stretched too thin the name of efficiency and cost savings.

Procurement and Supply Chain leaders have now recognised that with global disruptions like the current pandemic and heightening tensions between trading nations like the US and China becoming more prevalent there needs to be resilience built into the supply chain. Resilience is synonymous with sustainability, investment funds with environmental, social and governance criteria have outperformed the broader market during the pandemic[3].

A sustainable supply chain that promotes and supports collaboration with suppliers and looks after the natural resources with which it interacts is a resilient network that both enhance operational performance and improves profit margins.

 

5 steps to begin your Sustainable Procurement journey:

  1. Understand your organisation’s sustainability goals, is the priority environmental responsibility, social responsibility, or both?
  2. Use the points raised in this article to get buy-in from key decision-makers
  3. Find out if your incumbent suppliers can support the sustainability goals using a Request For Information or by using external sustainability scoring providers like TruCost or CPD
  4. Prioritise spend categories where you can make the most impact. These should include a mix of “quick wins” to increase stakeholder buying and longer-duration projects to maximise results
  5. Measure your impact and communicate this with internal and external stakeholders to build the momentum of your sustainable procurement journey

 

Sustainable Procurement… where to start?

Procura can help you start with a Sustainable Procurement Impact Assessment to identify the greatest opportunity areas for improvement by focusing on both categories and current capability.

  • Sustainability Objective Discovery to define goals
  • Spend Analysis using our ProIntell tool to provide transparency of supplier spend and sustainable insights
  • Category Impact Assessment highlights spend categories with the greatest opportunity and risk based on your sustainability objectives
  • Sustainable Procurement Diagnostic measures how the procurement function is equipped to support the sustainable procurement

ProIntell Screens

Spider chart

Procura deliver solutions and tools that ensure best practise in sustainable procurement is embedded with a measurable impact on the supply chain. Our approach is flexible and adapted to each of our clients.

We understand the complexities, challenges and competing priorities faced by procurement professionals. Armed with the information in this article and your motivation you can turn any supply into an opportunity to advance your organisations sustainability agenda.

Procurement people are the potential superheroes of tomorrow, unleash your corporate spending power and do a great deal by finding the opportunities to increase the sustainability of your supply chain.

 

References:

[1] CDP_Supply_Chain_Report_2019

[2] Procurement 2030 Level 1 – Procurious & Micheal Page

[3] S&P Global Market Intelligence Report, “ESG Outperforms S&P 500”

 

Email us: info@procuraconsulting.com

Call us: +44 (0)203 693 7275

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