Getting Strategic About Sustainability in Procurement

Tips for getting strategic about sustainability in procurement and the best practices to adopt to foster a more responsible future.

By Hugo Britt | August 8, 2023

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Sustainability doesn’t happen by taking ad hoc or sporadic action in procurement. It takes planning, commitment, policy integration, and, well, a sustained effort to turn sustainability from aspiration to reality.

Procurement professionals play a pivotal role in driving sustainability initiatives within the supply chain, and by extension, helping the wider organization hit its sustainability goals.

Getting strategic about sustainability

Let’s delve into the importance of strategic sustainability in procurement, how to avoid ad hoc behavior, and best practices to adopt to foster a more responsible future 

Procurement plays a crucial role in driving sustainability initiatives within the supply chain, and by extension, helping the wider organization hit its sustainability goals.

Why does sustainable procurement matter?

Strategic sustainability in procurement is essential not only in terms of doing the right thing, but for long-term business survival, growth, and profitability. Just a few of the many reasons sustainability matters in procurement include:

Future-proofing the busines

Sustainable practices secure resources for the future. By integrating sustainability into procurement processes, organizations can better adapt to changing regulations and societal expectations.

Reducing scope 3 emissions

Scope 3 refers to indirect emissions that occur across the value chain and are outside of the organization’s direct control. They account for 70% of the average corporate value chain’s total emissions. Best-practice sustainability efforts expand the focus beyond a company’s direct emissions (scope 1) to include scopes 2 and 3.

Mitigating risks

Unsustainable practices within the supply chain can lead to disruption, reputational damage, legal complications, and of course environmental and social damage. Embracing sustainability in procurement helps mitigate these risks and ensures a more resilient supply chain.

Cost efficiency

Sustainable procurement is not solely about increased costs for eco-friendly products. It involves optimizing processes, reducing waste, and improving resource management, ultimately leading to long-term cost savings.

Enhancing reputation

Consumers, investors, and stakeholders increasingly value organizations that prioritize sustainability. By demonstrating a commitment to sustainable procurement, your organization can enhance its reputation and attract conscious consumers who are often willing to pay more for a sustainable product or service.

What NOT to do when it comes to getting strategic about sustainability in procurement

Let’s consider a hypothetical situation involving a procurement team at a medium-sized manufacturing company that produces consumer electronics.

The company has recognized the importance of sustainability and its commitment to being environmentally responsible. However, the procurement team has been taking sporadic and ad hoc actions when it comes to incorporating sustainability principles into their procurement practices.

Here’s what sporadic sustainability looks like:

Occasional sustainable sourcing

The procurement team occasionally engages in sustainable sourcing practices but lacks a coherent and long-term strategy. For instance, they might place an order for a batch of raw materials from a supplier known for using eco-friendly manufacturing processes, but this action is not consistent and is based more on chance than a deliberate sustainability strategy.

Inconsistent supplier evaluations

The team does not consistently evaluate suppliers based on their sustainability performance. While they may have conducted a sustainability audit for some key suppliers in the past, they haven’t made it a standard practice to assess all potential suppliers against environmental criteria.

Lack of internal sustainability guidelines

The procurement team operates without clear internal guidelines or policies related to sustainability. As a result, each team member interprets sustainability differently, and decisions on sustainable procurement are not consistent across the team.

Ad hoc decision-making

Sustainability considerations are often an afterthought in the procurement process. The team may make decisions based on factors like cost, availability, and quality without systematically considering the environmental impact of their choices.

Minimal collaboration with other departments

The procurement team operates independently of other departments such as sustainability, ESG or CSR. They don’t actively seek input or collaborate with these departments to align their efforts and make sustainable choices.

Lack of data tracking and reporting

The team doesn’t maintain a comprehensive database to track their sustainability efforts, making it difficult to assess progress or identify areas for improvement.

Reactive responses to external pressures

When faced with sustainability-related inquiries from stakeholders, customers, or investors, the procurement team responds reactively. They might scramble to identify sustainable alternatives or practices on a case-by-case basis instead of having a well-thought-out response.

Avoid taking sporadic actions when it comes to incorporating sustainability principles into your procurement processes. This ad hoc behavior will hinder your ability to truly implement strategic sustainability.

Strategic procurement requires long-term thinking

Short-term thinking and focusing solely on short-term costs will inevitably hinder long-term benefits. Embrace a broader perspective that considers the lasting positive impacts of sustainable procurement.

For example, aggressively negotiating a discount with suppliers rather than pursuing a win-win outcome will harm the relationship and destroy any possibility of long-term, sustained value creation.

Best practices for strategic sustainability

Consider the following best practices to drive sustainability in procurement:

Supplier assessments

Incorporate and give appropriate weighting to sustainability criteria when selecting suppliers. Evaluate suppliers’ environmental impact, labor practices, and commitment to responsible sourcing before making your selection.

Supplier collaboration

Foster open communication with suppliers to understand their sustainability goals and challenges. Be willing to learn from your suppliers, and (where they are lagging) encourage them to improve their practices and provide support where needed.

Integrate sustainability in procurement policies

To be effective, sustainability considerations should not be bolted-on to existing policies, but incorporated at every stage. Set clear targets to hold the procurement team accountable.

Circular economy

Encourage suppliers to embrace circular economy principles, where resources are reused, refurbished, and recycled, reducing waste and promoting sustainability.

Continuous education and innovation

Stay informed about sustainable technologies and procurement practices. Educate your team and suppliers on the latest advancements in sustainability to drive continuous improvement, and stay abreast of the changing regulatory landscape.

Embracing strategic sustainability in procurement is not only an ethical obligation but creates a strategic advantage. By understanding the importance of sustainability, avoiding ad-hoc behavior, and implementing best practices, you can drive positive change and make a lasting impact on your organization. 

Want to learn more about getting strategic about sustainability in procurement? Check out Una’s articles about How To Grow a Sustainable Procurement Policy and How to Put Procurement at the Center of Your Procurement Strategy.

Una’s podcast, The Sourcing Hero, also features several guests discussing the importance of incorporating sustainable practices into your overall business strategy:

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