CSR Initiatives in Supply Chain and Procurement: Sustainability KPI Metrics and Trending
This series of posts (see earlier posts under Related Articles) is based on research conducted by EcoVadis and A.T. Kearney. EcoVadis’s Wim Peeters shared findings from this research during a presentation at the Dutch Sourcing Awards earlier this month.
When it comes to sustainability key performance indicators (KPIs) being used by companies in supplier management, there’s a significant divergence between certain metrics inside procurement organizations. Take for example the percentage of suppliers evaluated/audited, which is the most commonly adopted KPI. It rose from 35 percent in 2009 to 59 percent in 2011 and 70 percent in 2013. Contrast this with other “process” centric metrics, as EcoVadis defines them, such as percentage of suppliers signing sustainable procurement charters or contract clauses (29 percent in 2009 compared with 55 percent in 2013) and percentage of buyers trained (19 percent in 2009, 42 percent in 2013).
KPI adoption has even greater variation in the area of “results” driven metrics. For example, while a relatively high percentage of suppliers use results of supplier assessments in their general activities (up from 35 percent in 2009 to 64 percent in 2013), the percentage of spend with “sustainable suppliers” only rose from 22 percent in 2009 to 33 percent in 2013. Moreover, the use of CO2 emissions as a results metric has only climbed from 10 percent in 2009 to 20 percent in 2013. But perhaps there is a silver lining in KPI adoption. In 2009, 24 percent of respondents reported that they did not use formal sustainability KPIs. By 2013, this number had dropped to 11 percent.
The study findings in the area of KPIs suggest a few things to us. For one, outside of certain industries (e.g., high tech and retail/apparel), there still tends to be a lack of sustainability KPIs that are defined and adopted almost universally. And second, “results-driven” KPIs seem to be playing second fiddle to “process-oriented” ones, suggesting that procurement organizations want to do the right thing but aren’t necessarily equipped to hold themselves to a specific measurement standard.
We will cover more of the EcoVadis research in the coming weeks.