Mark Boswell, Director at BearingPoint, delves into procurement’s role as a driver of sustainability within the organisation.

Sustainabiliy is becoming a bigger part of business’ agendas. Increasingly, organisations are focusingon how to deliver and accelerate their environmental, social, and governance objectives.  There are many dimensions to sustainability. Tackling climate change is just one piece of the puzzle. It also includes ending poverty and addressing social needs like education, health, and equality. 

Organisations must address all aspects of sustainability, rather than focusing solely on their immediate impacts on sustainability and climate change. Achieving these goals and objectives is crucial, with procurement playing a pivotal role in this success.

Sustainability agreements and summits

The UN’s 17 Sustainable Development Goals are a good guideline for what sustainability encompasses. The last one of these is “Partnerships for the Goals”, which focuses on how governments can work together with the private sector and civil society. The yearly UN Climate Change conferences demonstrate how important collaboration is to delivering on the Paris Agreement

The COP summits are examples of collaboration on a macroeconomic level, but there is also a benefit to businesses having a strategy for collaborating on sustainability on a smaller scale, within their own networks of suppliers and partners

Scope 3 Emissions

According to the UN Global Compact, Scope 3 emissions* comprise more than 70% of a business’ carbon footprint. Organisations must collaborate with suppliers throughout the value chain to ensure an accurate understanding of Scope 3 emissions. They must then ensure appropriate actions are implemented which will reduce Scope 3 emissions, helping to achieve sustainability targets.

Influence 

Businesses can promote sustainability with their supply base through the same criteria they use to evaluate tenders, such as requesting ESG certifications. This approach fosters a sense of urgency around sustainability and compels suppliers to consider their environmental and social impacts. By embedding sustainability criteria into the tender evaluation process, businesses set a clear expectation that suppliers must meet high environmental and social standards.

Procurement has the ability to have a great deal of impact on supplier selection through the creation of purchasing strategies. These strategies, when developed in collaboration with internal stakeholders, ensure that purchasing decisions are aligned with the organisation’s sustainability and climate goals. Engaging with suppliers to drive positive change and promoting innovation and transparency throughout the supply chain further amplifies this impact. By doing so, procurement helps mitigate the risks associated with missing regulatory obligations and shareholder commitments.

To effectively implement these strategies, it is essential for procurement to work closely with departments such as Corporate Social Responsibility (CSR), Legal, Finance, and Operations. This cross-functional collaboration ensures a cohesive approach towards sustainability goals, aligning procurement decisions with the organisation’s broader sustainability and climate objectives. Such integration enables a unified effort in achieving sustainability targets, ensuring that all departments are working towards the same goals.

Moreover, procurement can play a pivotal role in encouraging suppliers to be more transparent about their sustainability practices. By fostering a culture of transparency and requiring suppliers to report on their sustainability practices and progress, procurement not only promotes accountability but also enables the organisation to track and report on its own sustainability achievements. This transparency is crucial for building trust and demonstrating the company’s commitment to sustainability to all stakeholders.

Helping suppliers gain visibility and reduce emissions 

In addition to promoting transparency, procurement can also support suppliers in gaining visibility of their CO2 emissions and collaborate with them to reduce these emissions. By working together, procurement and suppliers can identify and implement strategies to lower their carbon footprints. Ensuring suppliers are respectful of the environment is further reinforced by gathering their environmental certifications and policy documentation. This verification process ensures that suppliers adhere to recognised environmental standards and practices.

Procurement teams play a crucial role in supporting suppliers’ sustainability transition. They can support bringing in external experts, particularly in start-ups and SMEs, to offer advice, benchmarks, and new technology to help deliver sustainability objectives. This cross collaboration supports suppliers in achieving their sustainability objectives and ensuring compliance with legislation.

By integrating these later practices, procurement departments can significantly contribute to the sustainability objectives of their organisations. Through strategic supplier selection, fostering transparency, and supporting emission reduction efforts, procurement drives positive environmental, social, and economic outcomes, ultimately helping the organisation achieve its sustainability goals.

Direct materials

In the manufacturing or consumer goods sectors, procurement teams can play an additional role, working with suppliers to provide direct materials to design more sustainable finished products.

To collaborate successfully with suppliers on sustainability, businesses need a clear strategy, which should address questions like which processes and tools to use, and which suppliers to focus on. Once the strategy is defined, any sustainability initiatives will also need to be project managed.

Final thoughts

Sustainability is only going to become more important in the coming years. Taking carbon emissions as an example, the 2023 UN Emissions Gap Report concluded a large possibility global warming will exceed a 2°C or even 3°C temperature rise by the end of the century, well above the 1.5°C target. Delivering on sustainability goals is not something businesses can do in isolation, and procurement will be key to success.

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