Sustainable procurement isn’t just a buzzword or something that sounds nice. In 2024’s world, it is a core element of business strategy.
Ultimately, companies in all industries know they need to do better for the planet – it’s in everyone’s interest.
But the mission is underway. Many organisations are implementing sustainability programmes to try and cut costs, make their companies more competitive and create a greener future.
But, reaching the summit of sustainable procurement isn’t easy. For years, procurement was considered as solely a cost-saving function, but the function is today so much more. Balancing cost with sustainability is one of the toughest tasks on the CPO agenda.
In this exclusive article, we hear from leaders in the field who explore and highlight the biggest barriers to accomplishing sustainable procurement practices.
Rising to sustainability’s challenge in procurement
Bridget McCormick, Principal Consultant and sustainability expert at Proxima, believes that the biggest challenge to achieving sustainable procurement is businesses not translating their sustainability goals into a language that procurement functions can actually understand. “Without having a sustainable procurement strategy that supports your long-term ambition, organisations cannot effectively influence their supply chain, and will continue to operate as they have before,” she explains. “Without a sustainable procurement strategy, procurement’s success will continue to be measured by metrics that no longer tell the full story, be that altered payment terms, or percentage of savings.”
She believes that to achieve success, we must embed sustainability into every step of the procurement decision-making process. “Without giving procurement the tools to make positive change, businesses will miss an opportunity to influence 80-90% of their carbon footprint.”
2030 vision
With 2030 acting as the deadline for many near-term Net Zero goals, McCormick stresses companies don’t have time to lose. “Some strategic partnership contracts, like those in IT, are a mere contract length away from 2030, meaning that procurement can either be the biggest roadblock, or the greatest champion, in reaching those targets.”
Over the years, procurement has needed to transform itself in order to respond to shifting business needs, acting as everything from a buying organisation, to a cost-savings function and a strategic partner which ensures on-time supply. The past five years have hit the industry hard and there have been numerous fires that have needed dealing with swiftly. The likes of geopolitical tension, COVID-19 lockdowns and inflation issues have forced procurement to adapt almost overnight in some cases.
Supply chain visibility
Jack Macfarlane, Founder and CEO of DeepStream, believes that visibility continues to be one of the most significant challenges, as the complexity of global supply chains makes it difficult for organisations to assess supplier sustainability efforts and trace the origins of products and materials to accurately check credentials and make the right decisions. “Without a thorough assessment, businesses continue to struggle to measure and track the ecological impact of their current operations,” he tells us. “Limited access to reliable data on suppliers’ environmental practices also contributes to this problem. Cost considerations can deter companies from investing in sustainable procurement as these products and materials can come with a higher upfront expense. The immediate financial implications of pursuing more sustainable solutions can act as an immediate barrier for procurement teams operating on a tighter budget or in competitive markets.”
He adds that greenwashing is also a pressing hurdle to overcome and comes with its own set of problems. “Greenwashing is misleading teams as it can create confusion within markets and make it incredibly difficult for organisations to distinguish environmentally committed suppliers from uncommitted,” he notes. “It also undermines trust and credibility in sustainable procurement initiatives and efforts.”
Procurement’s biggest challenge
While Ian Nethercot, MCIPS, Supply Chain Director at Probrand, explains that one of the biggest challenges for procurement teams looking to embrace more sustainable practices is buy-in and adoption from the wider business. “While ethically sustainable products are becoming more valued in our personal lives, in a business environment, this is often superseded by productivity and the ability to secure products that enable users to work better,” he says. “Ensuring that suppliers have the necessary sustainability practices in place is another challenge, especially for organisations working with multiple providers.
“However, working with suppliers who can facilitate vendor engagement can help to paint a picture of the processes and technologies used by suppliers. This could include sharing product information and details on how energy-efficient equipment may be, as well as ascertaining whether they offer things like consolidated shipping, which can help to reduce multiple, low-volume shipments and the associated carbon and energy waste.”
And Shamayne Harris, Head of Procurement at Pagabo, is in agreement with Nethercot, believing cost pressures and receiving that executive buy-in sit as the biggest hurdles to overcome in order to reach sustainable procurement. “Ultimately, those within the supply chain are naturally focused on making a profit so very often enough sustainability is viewed as a nice to have, whereas cost saving is essential,” she discusses. “Another barrier facing sustainable procurement, particularly in the construction sector, is resistance to change. A lack of buy-in from senior leaders and a lack of awareness and knowledge around how sustainability can be objectively measured has meant that there is a reluctance to make sustainable solutions a priority. The appetite for risk can be low in certain sectors which reduces the opportunities for change even further.”
Navigating complex global supply chains
However, Adam Spurdle, Global Supply Chain Partnership Director at Communisis Brand Deployment, recognises that the road ahead for companies isn’t straightforward. Spurdle acknowledges that CPOs face a challenging job to navigate through complex global supply chains. “Each country has its own standards, making it tricky to ensure everyone follows sustainable practices,” he discusses. “Ensuring proper data controls and measurements is another tough challenge, especially when dealing with various tracking methods across different environments. Transitioning to sustainable practices often means facing higher initial costs and ongoing expenses, which can really squeeze the budgets of companies operating on tight margins. Additionally, cultural resistance within organisations and a lack of expertise in sustainable practices can slow down progress, making investment in L&D specific to sustainability crucial.”
He adds that inconsistent engagement with suppliers on sustainability only adds to the complexity. However, despite these challenges, Spurdle believes efforts to promote sustainable procurement should be loud and clear. “We need to advocate for consistent measures, drive resources into internal expertise, and put incentives in place to drive performance,” he tells us. “While technology will improve metrics and performance, it’s the culture and incentives in place that will drive meaningful change.”
Achieving sustainable procurement
But Jenny Draper, Commercial Director of procurement consultants Barkers, believes it is the amount of resources available that stands as the toughest challenge to achieving sustainable procurement. “The process can be a drawn-out one that needs both time and money to be invested, to ensure it’s done properly, and some businesses will struggle to fully commit to this,” she reveals. “Moreover, some will want to see immediate results rather than the slow burn that is sustainable procurement, and so are unwilling to dedicate the extremely valuable time it takes to see the value of the changes despite the long-term benefits of becoming sustainable.
“Of course, there’s costs involved, but there’s going to be costs for any kind of business transition, so you should make sure it’s one that matters. By operating as a sustainable business, you’re not only helping to secure the future of the planet, but also gain a new USP that you can use to garner some new business and continue to grow.”
