In 2020, you can bet your bottom dollar that consumers won’t be spending theirs on your products if you aren’t striving to operate sustainably.
For years, naysayers have argued that the consumers who say they want sustainable products aren’t actually willing to part with the extra cash to acquire them, opting for fast-fashion and plastic packaging over higher price points. Recent research proves this is simply not the case.
One study conducted by NYU Stern’s Center for Sustainable Business found that 50% of consumer-packaged goods (CPG) growth came from sustainably marketed products. In addition, these products grew 5.6 times faster than those not marketed as sustainable.
In turn, businesses are responding to this shift, with 93% of the world’s 250 biggest companies now reporting on sustainability, and the sustainability market predicted to be worth $150 billion by 2021.
For procurement professionals, this changing business landscape provides a fantastic opportunity to reinvent their supply chains. Sustainable procurement (sometimes referred to as green procurement or sustainable purchasing) means integrating corporate social responsibility (CSR) into all procurement processes and decision making, while ultimately still driving value for the business. It means going above and beyond government-enforced regulations to impart long-lasting, meaningful change.
Benefits of Sustainable Procurement
- Risk reduction: The process of evaluating supply chain sustainability will reveal those high-risk areas that have historically been neglected, whether it’s bad supplier practices (such as modern slavery) or environmental risks (including natural disasters). Investing in sustainable practices means working alongside suppliers that are compliant (or working towards being compliant) when it comes to factors like environmental regulations.
- Future-proofing your organization: Investing in long-term supply chain prosperity not only means you’re protected against future issues such as scarcity in supply, but you’re also working to meet current and future demand. This maintains your brand’s relevance and appeal for years to come.
- Improved reputation: As proven by the stats above, well-marketed sustainability initiatives will give your brand reputation a massive boost. Not only that, but staff retention and the attraction of top-talent will also improve because employees increasingly want to work somewhere where they feel they are making a difference and doing good.
- Reduced overhead costs: Sustainable procurement requires professionals and suppliers to streamline their processes to drive efficiency and minimize waste. The reduction of utility costs (as a result of opting for energy-saving products and services) and minimizing over-specification will save organizations money in the long term. The World Economic Forum found sustainable procurement practices could reduce costs by 9 to 16%.
Six Tips to Drive Sustainable Procurement in Your Organization
1. Make a business case
So you’ve decided it’s about time your procurement team shaped a comprehensive sustainability program, but where to start? The first step to making lasting change is identifying key stakeholders and decision-makers within your organization and communicating your business case to them. Put together a presentation that explains why sustainable procurement is essential and how it will contribute to the business’ bottom line. Identify other cheerleaders in the company who will advocate for you and support your efforts.
2. Create a strategy that works for you
Procurement teams and organizations come in all different shapes and sizes, which means there is no magic, one-size-fits-all approach to implementing sustainability initiatives. Identify your priorities, pain points, and high-risk areas in order to formulate a detailed plan. Which areas of your supply chain will most benefit from change? Figure out where you want to be and when, but be realistic with your goals. You’ll need to consider a wide range of stakeholders and account for your corporate policy. Sustainability initiatives should never come at the expense of business success; that doesn’t do anyone any favors.
Demand management is often a practical place to start, which means figuring out how to operate more efficiently. It’s also important to try and integrate sustainable practices into your existing procurement processes, rather than starting anew.
3. Find suppliers that align with your end-goal
Once you’ve figured out your sustainability priorities and ultimate aims, it’s time to review and audit your suppliers. Which of them accommodate, or can work to accommodate, your newly-established needs? It’s worth developing a scoresheet to rate and compare suppliers. This process is also a fantastic opportunity to better get to know your suppliers.
4. Work collaboratively
Change won’t happen without company-wide collaboration that ensures all areas of the organization are aligned. Indeed, 70% of companies claim that multi-stakeholder collaborations are key to more sustainable and ethical supply chains. You might also choose to work alongside other businesses or NGOs to share best practices in achieving your common goals.
5. Get the low-down
Sustainable procurement cannot be achieved without transparency throughout the supply chain, which means doing your homework – and lots of it. You’ll need complete visibility of all your tier 1 suppliers, require tier 1 suppliers to do the same for their suppliers, and so on. EcoVadis’ biennial report Sustainable Procurement Barometer found that 45% of organizations only have visibility with tier 1 suppliers and concerningly, 28% claim to have no visibility into their supply chains at all.
6. Take it one step at a time
One thing I can guarantee is that change won’t happen overnight. Implementing sustainability measures takes time, commitment and patience. Rather than biting off more than you can chew in a small space of time, start by focusing on the quick wins.
After all, it’s those seemingly insignificant incremental changes that can add up to make the greatest change.