Sustainable Procurement – Becoming More Widespread and More Important

EcoVadis (providing sustainability ratings and performance improvement tools for global supply chains) has published its 2017 Sustainable Procurement Barometer, which sets out the results of its joint study with HEC (educational programmes for business leaders).

The study was compiled from a survey of 120 supply chain professionals globally and found that almost all organisations (97 percent) place a high level of importance on sustainable procurement.

Placing high importance is one thing, but doing something about it is another. The study finds that Fortune 500 companies are actually investing heavily to ensure sustainability and are experiencing major returns. “50 percent of sustainable procurement leaders experienced increased revenue from sustainability initiatives, a 33 percent increase over non-leaders.”

As the 7th sustainable procurement study in 10 years of benchmark reports on sustainable procurement practices, it confirms a continuation of the upward trajectory seen in previous years. The last Barometer was published in 2013 and found global organisations struggling to get senior management buy-in without solid metrics behind performance and objective setting. But this study reveals more maturity in the landscape; it shows that sustainable procurement has evolved into an integral business function responsible for reducing costs, mitigating business risk, protecting and improving brand reputation, driving revenue, and supporting innovation and growth. Many organisations are now at the point of growing or scaling up their programmes to cover more breadth and depth of the supply chain.

Highlighting how sustainable procurement has become more important to organisations and more widespread in general, the study finds that almost half (45 percent) say their sustainable procurement programme covers most (75 percent or more) of their spend volume today (27 percent in 2013). But visibility of the supply chain has emerged as the number one challenge to sustainable procurement teams: only 15 percent said they have complete supply chain visibility into the CSR and sustainability performance of both tier-one and tier-two suppliers, and only 6 percent have full visibility into tier-three suppliers and beyond.

And for the first time they have carried out an additional survey, this time with suppliers to get their perspective. Findings suggest that increased engagement and better internal alignment with suppliers “will be critical to develop strategic partners to innovate on sustainability and beyond. In the coming years, sustainability in procurement will need to rapidly evolve into a new phase of maturity in order to meet the growing demands of stakeholders and executive management ...”

Also notable is the shift in procurement priorities from 2013, when cost savings, compliance and risk reduction were cited as key. Now there is a sharp increase of compliance as a key procurement priority, overtaking risk as the number 2 priority, behind cost savings. “We attribute this shift to increasing regulations in Europe and in the United States which have directly affected procurement and supply chain CSR (e.g., California Supply Chain Transparency Act, UK Modern Slavery Act, Dodd-Frank Act on Conflict Minerals). The priority for Sustainability & CSR build on 2013 results, moving up 5 points as a critical factor for 23 percent of procurement organizations,” the report says.

The report is packed with useable findings on changes and direction in the sustainable procurement landscape, but it is also a call to action for CPOs: “CPOs around the world: do not wait! Your CEOs are eager to further integrate your performance and results in their decision making. Furthermore, SP is a thriving discipline that any procurement professional would be thrilled to implement. Partner with your CSOs and Suppliers who are your best allies on the roadmap to sustainability and responsibility in the supply chain ...”

The report is free to download here: Scaling Up Sustainable Procurement - A New Phase of Expansion Must Begin

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