The expectations of procurement professionals have changed. No longer are they solely responsible for cost saving and supply chain continuity. They’re part of an organisation-wide focus on value generation. That means mitigating risk, boosting efficiency and aligning their work with organisational goals. And sustainability is front and centre.
In this blog series, we’re exploring the important role procurement has to play in helping companies become sustainable. Here, we look at what sustainability means in this context, the benefits of circular procurement, and the initiatives and technologies that enable it to happen.
When we talk about sustainability, it’s typical for people to focus solely on environmental impacts, but the real meaning is much broader. In 1987, the United Nations Brundtland Commission defined sustainability as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs.’ In the context of procurement decision-making, this means balancing short-term demand with long-term impact.
What does sustainable procurement look like?
Purchasing decisions are powerful. Whether we’re talking about the energy we use to power the lights in our offices or the factory working conditions where clothes are made, how we procure can have a real impact. According to the Sustainable Procurement Platform, sustainable procurement means ‘making sure that the products and services an organisation buys achieve value for money and generate benefits not only for the organisation, but also for the environment, society and the economy.’
The ISO definition, meanwhile, sees sustainable procurement as having ‘the most positive impacts on a whole-life basis’. That means a circular approach where we consider the full lifecycle of products throughout the supply chain – from raw material extraction, production processes, packaging, transport, retailing and usage right through to waste disposal or recycling.
It ensures that what we buy is linked to wider organisational objectives as well as the UN’s 17 Sustainable Development Goals. Adopted in 2015 as a universal call to action to end poverty, protect the planet and ensure that by 2030 all people enjoy peace and prosperity, they include decent work and economic growth, responsible consumption and production, and reduced inequalities.
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.
And there are developments all the time to make sustainable B2B buying and selling easier than ever, particularly at the point of sale. At Unite, for example, our Sustainable Choice label (currently only available in Germany) lets buyers know which suppliers have met the highest ESG requirements before they make a purchase. While that’s our current focus, the potential for platforms to advance sustainable procurement is limitless. It might be tempting to overpromise, but for us sustainability is not a one-and-done investment; it’s an ongoing journey to enable procurement and impact it for the better. And we’re here for the long haul.
Sustainability means responsibility
Platforms like Unite, powered by exciting new advances, are paving the way for supply chain resilience, helping organisations go beyond box ticking and make sustainability synonymous with value creation.