SPP: Embedding Sustainability in Procurement & Supply Chain
New incentives including consumer demand, investor appetite and now, legislation are all encouraging more sustainable supply chain operations to mitigate detrimental effects and maximise positive social and environmental impact.
Procurement and supply chain decisions have a significant role to play, and practitioners are now being asked to consider additional stakeholders, aside from those concerned with creating shareholder value. The traditional model has seen buyers expected to optimise for price and speed of delivery. Now additional considerations are also carrying major weight, including human rights, labour rights, waste, and emissions. In the contemporary context, these crucial aspects need to be assessed when establishing and implementing any company-wide sustainability strategy.
For many organisations determining impact is not straightforward for a number of reasons.
Lack of clarity about supplier supply chains
Buyers are careful to select their own suppliers, because they will have a working relationship and will sign a contract. However, it is often not part of their process to vet the supply chains of the companies that they buy from. This is hugely risky for the buyer, as they will not know of, for example, modern slavery infractions, environmental thresholds or governance misalignments. Not knowing that these risks are present in your extended supply chain means that your supply chain is compromised and for any number of reasons both supply could fail or your reputation could be severely damaged.
Data about sustainability and impact is limited or unreliable.
Understanding which datasets are legitimate and trustworthy, and reconciling datasets which do not match are challenges for anyone that collects information from the open internet. It is integral to be able to determine which information is correct and what should be disregarded.
A complex landscape of ESG targets
It's not easy to compare organisations side by side to gauge their sustainability efforts. This is due to contradictory information, a lack of standardised datasets and much still being open to interpretation. Building in mechanisms that provide context and ongoing alerts is thus crucial. Transparency is at the heart of the solution, be this in regard to non-compliance of ESG measures, or active participation to promote sustainable practices.
Pricing and practicalities
Realigning existing processes to be more sustainable is often a transformational project for organisations that were previously accustomed to a different range of priorities. However, it is not simply a case of funding new initiatives to take sustainability forward. Sustainability in supply chain is a nascent and rapidly evolving field; proponents need to determine what is the right approach for their company, people, industry and geography.
The Sustainable Procurement Pledge has been playing a fundamental role in driving conversation over the past year and has provided thought leadership in a domain that is developing and changing at a rapid pace.
Whilst no one company or individual has all the answers, as a community we’ve already seen over 5000 people collaborating, sharing insights, wisdom, pragmatism and most importantly, case studies. These case studies and examples of projects that have gone well (or not) provide a huge advantage to those who need to figure out how to improve the status of sustainability in procurement teams. Large, global organisations that have resources that can be deployed on a large scale can have a massive impact, with leaders driving change across entire categories both through their own suppliers or by showcasing what can be achieved by creating communities of interest across hierarchies.