There's a momentum on climate action, so think how a Procurement focus on sustainable supply chains can deliver your company's ESG goals
With COP 27 ongoing in Egypt, global attention is rightly on achieving solutions to the climate crisis. So we thought it was a good time to showcase a discussion from one of our previous Procurement Roundtables. This discussion forum brings together experienced procurement professionals to discuss the big topics of the day, using expert speakers as a jumping-off point. And when it comes to big topics, sustainability is probably the biggest one that the world currently faces. Given the fact that Procurement can focus on building sustainable supply chains, it can help shape a company's entire sustainability agenda. Our discussion was kicked off by expert speakers Mark Wood (MD, Alliance Procurement Solutions Ltd) and Shazia Hussenbux (Global Sustainable Sourcing Lead at Oatly). In the latest of our series of Roundtable blogs, we capture the essence of the conversation.
Who drives your sustainability agenda?
Of course, to have a chance of succeeding, sustainability should always be a whole-company initiative that starts with the CEO. However, Procurement's purchasing power positions them as an important enabler of change both within the organisation and across the supply chain. Indeed, this can be seen as like having purchasing “superpower” for sustainability.
The first goal is education and awareness. Everyone needs to be aligned on what ‘sustainability’ means for the company. Of course, carbon emissions are a key focus for us all. But improving on more concrete smaller-scale goals around reuse and recycling may be a good place to engender improvement. A great place to start is to create a single role responsible for sustainability. You can build from there, either by establishing a dedicated cross-company team or keeping it within Procurement. Over time, you can go on to embed sustainability experts in each team across the organisation to build a holistic approach.
How should you go about defining your sustainability strategy?
A practical approach to improving sustainability is to segment your supply chain based on your strategic needs, areas of greatest impact, and where there is greatest risk. Taking the most important, the next step will be to develop an appropriate set of sustainability requirements for each segment. When doing so, it's vital to consider whether you would be prepared to make it a condition of trade that all suppliers adhere to these requirements. For your remaining suppliers, you can go on to define a minimum standard that everyone is expected to adhere to.
Quick wins, even if not part of a formal strategy, can achieve a lot and help to inspire others to do more. For example, reducing the number and frequency of deliveries will reduce emissions, purely through better management of the existing supply chain. And of course, sourcing more locally where possible is an approach which has already borne fruit in many organisations.
"Quick wins are a great start when it some to implementing ESG goals, but it's important to think long-term and continue making incremental improvements to your sustainability footprint over time" Nick Verkroost, CEO, Canopy (OCG Software)
What should you measure and how can you measure it?
Measurement is a powerful tool to inform and improve. When starting out, you'd do well to decide which factors are important to you from an ESG perspective. You can then use these to define a baseline against which to measure progress. One simple way to make an instant impact is to include sustainability as a key criterion in your supplier selection processes.
Not every supplier will be able to give you the information you need to develop proper measurement today, so it's important to understand where to compromise. As with a lot of business goals, it's important not to let this prevent you or your suppliers from starting a sustainability journey. With no recognised standard of measurement, we are in danger of creating lots of different ways to measure the same thing. You should think of what's practical and possible but have an eye on achieving a perfect measure of sustainability over time.
How should you engage suppliers to build sustainable supply chains?
Everyone needs to be taking sustainability seriously. You are on a journey together with your suppliers, so it's crucial to keep an open dialogue and support each other. By making sure to ask the right questions of suppliers upfront, you can go on to secure their commitment through policy adherence. Suppliers should feel incentivised, for example by educating them about the potential for future business if they can demonstrate their sustainability credentials. A commitment to ongoing monitoring and enforcement helps to bring about lasting change and recognise suppliers’ efforts. And given the current focus on climate action, now's the time to advance your strategy to implement more sustainable supply chains.
"Procurement has a superpower, and that is their purchasing power, so it's important not to underestimate how much change they can influence just by choosing where to spend." Shazia Hussenbux, Sustainable Sourcing Lead, Oatly
To find out more about Canopy and The Procurement Roundtable, our programme of discussions on the biggest topics in procurement, contact one of the team today.
Post by Nick Verkroost
Nick is an experienced business leader and the CEO for Canopy (OCG Software), the rules-based Supplier Management platform. Nick's focus is on commercial and operational excellence and ensuring our clients maximise the opportunities that Canopy offers.