Now more than ever, consumers and investors alike are evaluating how companies behave on environmental, social and governance (ESG) issues. Consumers increasingly want the goods and services they purchase and companies they do business with to be taking visible and accountable steps to reduce the negative impacts of their operations and contribute positively to society. For organisations who perform well and with authenticity, this represents an opportunity. However, it poses a risk for those businesses whose social or environmental malpractices could be exposed, with the threat of significant impact on revenue and stock price.
Here we discuss the vital role that procurement teams can play in embedding sustainable procurement practices into an organisation.
Sustainability and the role of procurement teams
Many major brands are now putting sustainability targets at the forefront of their business goals. More and more consumers are drawn to brands that can demonstrate that they are effectively lowering their impact on the environment.
Sustainability should authentically sit at the heart of supply chain management, driving innovation as well as reducing emissions and increasing efficiency. When implementing sustainability into procurement strategies, it is imperative that there is a high degree of transparency and accountability between buyers and suppliers.
Because sustainability performance depends on your supply chain, procurement teams are crucial to an organisation’s sustainability strategy. Procurement teams are in a unique position to inform your sustainability strategy and will be essential to develop a tangible roadmap and realistic objectives. Furthermore, procurement skills such as sourcing, supplier collaboration, and category management will all be crucial when it comes to driving sustainability as well as cost reduction.
How procurement teams can improve supply chain sustainability performance
The first step for procurement teams is to determine a sustainability strategy. Start by gaining a full understanding of your organisation’s objectives. You should also consider your customer base, your investors and your corporate and brand strategies in order to ensure your strategy is properly tailored to your key stakeholders.
In order for your organisation to perform well and be seen as authentic (rather than just jumping on the sustainability bandwagon), you should only commit to objectives you know you can fulfil, and which are measurable. Procurement teams should have clarity on the KPIs measured in order to deliver sustainability goals, as well as access to the datasets, scorecards, templates and emissions calculators required for measuring success.
Organisations should ensure that their procurement teams are equipped with the knowledge and tools to deliver on the sustainability strategy and able to drive sustainability from and into the supply chain. Procurement teams should also be empowered to build an in-depth understanding of the extended supply chain to give insight into not only your suppliers, but their suppliers. A high degree of transparency means that you will be able to perform well and with confidence.