Procurement leaders are increasingly held up as the drivers of all things new, strategic, and sustainable within their organisations.
Sourcing and procurement is no longer just a way to cut costs. It’s almost become part of the necessary preamble to any article about procurement strategy. Every article glibly notes that the discipline is evolving, and therefore take a more strategic, considered view that looks beyond simple cost containment. Box: ticked.
“Sourcing is getting smarter. To start, many organisations have already pivoted from a tactical to a strategic sourcing mindset—which can make all the difference when it comes to gaining and retaining a competitive advantage,” writes Alexandra Jonker for the official IBM blog. She adds that “organisations with strategic sourcing mindsets look beyond price and cost savings-centred supplier selection initiatives. They instead focus on continuous improvement. They consider factors—like supplier performance or sustainability—that support long-term partnerships, advance business needs and increase purchasing power.”
However, new data gathered by sustainability software provider Sedex has uncovered a worrying gap between rhetoric and reality.
Sustainability? In procurement? Never heard of it
The Sedex report surveyed 250 senior procurement leaders at North American companies at the end of last year. Polling procurement leaders at some of the US’ largest companies led to some troubling results.
According to Sedex, 40% of procurement leaders in North America are “ignoring sustainability” when operating their procurement functions. Half of all procurement leaders “acknowledged that sustainability remains an afterthought, or isn’t considered at all, for business decisions generally.”
Maurizio Capuzzo, Sedex CMO, called the findings “a wake-up call for any business that is serious about its social and environmental performance,” adding that the report “underscores the urgent need for executive teams to realign ESG commitments and operational goals, to truly embed sustainable practices in their organisations.”
Why the discrepancy between rhetoric and action?
The alarmingly widespread inaction on procurement sustainability is likely down to a combination of trends. These include a slow global economy, as well as other disruptive events. Ironically, one of the biggest drivers of increased logistical costs and shipping disruptions has been extreme weather: a glaring symptom of the climate crisis.
However, the fact companies are choosing to prioritise cost over meaningful sustainable reform shouldn’t be surprising. By design, companies beholden to their shareholders require extraordinary pressure to prioritise anything but profit maximising behaviour. It’s why there are laws saying you can’t put lead in the paint and asbestos in the ceilings. Earnest corporate rhetoric has proven time and again to be insufficient. As soon as cost comes into the equation, concrete steps towards progress are set aside. Unless, of course, there is adequate regulatory motivation. Regulation is a necessary step in curtailing corporate irresponsibility, and the procurement sector is, it turns out, in much more dire need of regulation than it seemed.
The Sedex report supports this assertion: 37% of procurement leaders surveyed said they were “unaware of sustainability-related legislation that impacts their businesses.” A worrying 34% of respondents didn’t also said they couldn’t identify any benefits to behaving sustainably when measured against short-term procurement goals such as supply continuity and competitive pricing. The report’s authors added that their findings “highlight the gulf between company commitments and the day-to-day realities of business operations.”
