3 Ways to Get Sustainable Procurement Off the Ground – Even If You’re Not in Charge!
Feel like your organisation could be doing more in its sustainability efforts? The good news is you can make an impact… even if you aren’t the boss!
Rising summer and winter temperatures.
Rising CO2 levels.
‘Earth Overshoot Day’ is getting earlier and earlier each year.
Extreme Weather.
Irreversible impact on wildlife and the natural environment.
Everyone is aware what climate change means for the planet and individuals and organisations are starting to make changes to reduce their own impact. Our recent research with Procurious found that, across the globe, the motivation for sustainability has changed and the top two priorities for investing in supply chain sustainability today are to make a positive impact on the environment and society.
And it seems increasingly clear that the power to make or break the planet is in our hands. The recently published IPCC report provides further support for rising global temperatures being ‘unequivocally’ attributed to human activity.
But it also says that limiting future climate change is possible. And we’re starting to see action taken when it comes to business and consumer practices…
The CSR effect
An increasing number of organisations are required to disclose their environmental impact publicly, with more than 71% of the world’s top 500 companies now doing so. This makes sense when you consider the impact of CSR reporting on consumer spending habits. Studies have shown that more than three-quarters of consumers are more willing to purchase from companies with strong CSR credentials. Consumers are also increasingly likely to call out any ‘greenwashing’ on the internet or social media.
However, the reality is that too few companies are taking real action. A new study by Forrester Research, commissioned by Ivalua, looks at the state of corporate social responsibility globally, including the challenges and successful strategies being employed. While 55% of respondents said carbon emissions reductions were very important to their business, only 26% have official targets or policies. This disparity between words and actions was similar for other CSR initiatives as well.
There is a very good chance that you are working for an organisation that you feel could be doing more, either internally or with its supply chain, to embed sustainability practices.
While you might feel like you lack the influence or seniority to make this happen on your own, the good news is that you can still progress sustainability at work, even if you aren’t the boss.
Here’s how:
1. Show that you (and other employees) care
Sustainability shouldn’t just be about external benefits like boosting your organisation’s brand, increasing compliance and growing sales. A strong sustainability culture can create a myriad of internal benefits that are just as important.
According to the Forrester survey, the top sustainability and CSR action companies are taking is increasing participation in local offices. When asked the reason behind increasing local initiatives, nearly a third of respondents (31%) stated that changing employee expectations was the main factor.
In order to make organisations understand the importance of sustainability, employees need to show how much it means to them. By doing this, organisations can be pushed into taking formal action and increasing their support for company-wide programs.
One way to demonstrate the importance of sustainability to employees is for them to start their own, smaller programs. These frequently have little or no resource or time commitments associated with them, but do make a noticeable impact.
For example, setting up bins to separate recycled materials, placing reusable items in communal areas and kitchens to cut down on disposable bottles, cutlery or cups being used. This can help to start conversations with colleagues and persuade more people to lend their support.
Organisations who support these initiatives and build a reputation of having a strong CSR culture can realise benefits relating to employee retention and satisfaction, as well as when it comes to attracting new talent. In the past year, 67% of businesses who responded to the Forrester survey saw some, or a major, benefit in these areas that was directly attributable to their CSR activities.
As these activities grow with support from organisations, they can become company policy and be linked to objectives and strategies. Nearly two-thirds of survey respondents stated that company policies were the number one factor in helping procurement meet its CSR objectives.
2. Engage and empower suppliers
Even with a great sustainability program, complete with company-wide engagement and support, organisations will struggle to drive significant progress in this area without the buy-in of its supply chain. There is an expectation that organisations will ensure that their supply chains are operating sustainably and ethically, but it’s not enough to mandate this to suppliers, or be prescriptive about what your expectations are.
Organizations must also empower suppliers to improve and, while systems and company policies are certainly important here, procurement and supply chain employees can also drive change by how they engage suppliers. According to survey respondents, the most effective strategies for improving supply chain sustainability were: 1) giving suppliers more flexibility in how to meet requirements; and 2) improving collaboration.
Interestingly, from a procurement perspective, allowing suppliers greater flexibility in meeting requirements was also seen as the top strategy to optimise the balance between cost and sustainability.
With ‘green’ products frequently having a higher cost, this strategy may hold the answer to lowering overall costs and making products more attractive to potential customers. It’s the most effective way to drive a win-win result.
When it comes to collaboration, procurement can work more closely with the same key suppliers, as well as those that are willing to be involved. Procurement can start this by clarifying their minimum targets, before working with suppliers on future plans and how both organisations can improve CSR results.
Key to the success of these is embedding sustainability in procurement’s processes for supplier qualification, selection and performance management. Each supplier should be measured against KPIs, the outcomes of which are then used to direct future actions and strategies. At least half of the Procurious and Ivalua survey respondents agreed, reporting that including sustainability KPIs into employee performance reviews would improve performance and impact.
3. Scale up
In order to maximise the benefits from CSR initiatives, organisations need a fully empowered procurement team able to build scalable collaboration across internal stakeholders and with as many suppliers as possible.
This will require executive-level support as procurement will need resources released to allow access to data and analytics systems. The business case for this can be built upon the engagement and early wins generated by the first two actions, creating a compelling case to present to senior management.
The systems required will provide data management and analytics of both third party and supplier provided information to help assess suppliers’ performance. Having access to this data will help overcome the main challenge holding businesses back from achieving CSR objectives – a lack of transparency.
In the Forrester survey, transparency issues were most commonly seen as the inability to effectively assess individual supplier CSR performance and the inability to measure overall supply chain CSR performance. Procurement will need to capture information on Tier 1 suppliers initially, but will have to extend data collection throughout sub-tiers in order to achieve full transparency. And without the correct systems in place, this just won’t be possible.
Remember to make technology your friend
A lack of digitisation in the procurement process is a barrier common to all three of the actions detailed here. Scalable, efficient collaboration with key suppliers can only be created with the help of digitisation, enabling procurement to embed CSR initiatives in procurement processes governing all suppliers, not just key ones.
Scaling up CSR and sustainability activities will make the benefits to the business, both internally and externally, more significant. As success grows, so does the level of support for programs, seen in more resources and investment. creating a virtuous loop for an organisation, benefiting them and wider society in turn.
We know sustainable procurement has big pay-offs.
That’s why this year’s Big Ideas Summit Chicago will focus on sustainability. We’re ready to empower businesses to lead the charge to establish greener supply chains and sustainable procurement processes.
Our Big Ideas will be delivered by internationally renowned speakers to our free, fully digital event proudly sponsored by Ivalua. So what are you waiting for? Register today to secure your place!
