What are the benefits of sustainable procurement?
A sustainable approach to procurement can help:
Reduce greenhouse gas emissions and improve air and water quality
Promote fair employment practices and ethical sourcing
Create new jobs and opportunities for local economies
Improve business reputation and meet customer expectations
Boost supply chain diversity and competitiveness
As you can see, there are big benefits to be had. Beyond the transformational impacts on the environment, our communities and society as a whole, it also helps drive innovation internally, encouraging new growth opportunities to emerge.
How should companies take action?
When it comes to indirect spend specifically, a lack of supply chain visibility can be damaging. It puts your business at greater risk of being associated or involved with bribery, conflict materials, slave labour and other nefarious activities that contradict your organisational values and CSR commitments. While individual initiatives, like CSR reporting, are helpful, alone they are not enough to ensure a sustainable approach underpins your business and your supply chain.
For your sustainable efforts to be credible, proof points are essential. For example, complying with minimum legal standards and incorporating sustainable frameworks that address the supply chain as well as your organisation.
The Greenhouse Gas Protocol, categorises emissions into three scopes: 1) direct, 2) indirect and 3) from the value chain. Many companies only report on scopes one and two. But these are just the tip of the iceberg. It is by measuring, reporting and reducing scope three emissions where most organisations can have an impact.
Beyond carbon, according to McKinsey, two thirds of the average company’s environmental, social and governance footprint lies with suppliers. It’s clear this is the area to focus on for real change to be made. But it’s at this point that procurement hits a complexity barrier, and supporting platforms are needed to create the necessary transparency.
Tackling the attitude-behaviour gap
The intentions around sustainable procurement are high. Although it becomes increasingly important for businesses to select suppliers according to sustainability criteria, this doesn’t always translate into purchasing decisions. There is a clear gap between companies wanting to do the right thing and real action. This is caused by complex product-related issues and lack of visibility that make sustainable choices difficult.
Using a platform makes it much easier to set goals, coordinate internally and make sustainable decisions. By truly engaging with suppliers through a platform, your business can go beyond CSR compliance and cost savings and start to generate and share real value across its supply chain. Whether you’re sourcing from smaller, innovative businesses with carbon neutral credentials or buying directly from local companies, a platform can enable supplier diversity and support sustainability.
