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The ROI of sustainability technology in procurement: Why buy ESG-enabled software

07/13/2021 By

“Sustainability goals cannot be measured only in terms of profit and loss. It must also be measured in terms of the well-being of billions of people and the health of our planet.” — John Elkington in “25 Years Ago I Coined the Phrase “Triple Bottom Line.” Here’s Why It’s Time to Rethink It.”

In the first post of this Spend Matters PRO series on ESG and sustainability technology, we defined sustainability and used an economical framework (the triple bottom line) to identify the elements that could be part of a ROI for sustainability. We also looked at what it meant from a procurement (technology) perspective. We did so at a high level, highlighting the fact that ESG is a vast topic that covers all procurement activities — the whole cycle for source-to-pay (S2P).

However, we only scratched the surface of the “ROI of sustainability” (S-ROI) and of the impact that procurement technology can have on creating a digitally enabled S-ROI. In order to do so, we need first to understand better where procurement has an impact on an S-ROI and how it can maximize impact and value, hence enhancing an organization’s sustainability agenda and, by doing so, positioning itself as more than a back-office function.

As we will see, the translation of the S-ROI into procurement actions and activities revolves around an almost DMAIC/Six Sigma-like approach that consists of measuring, assessing, reporting and improving.

Such a system is quite data-hungry. It also requires access to very specific data and information to develop the right knowledge/insights to be turned into actionable intelligence. Such an endeavor can be drastically easier when using the right technology as the process will be more efficient and effective.

Last but not least, we will see that technology can bring, on its own, benefits beyond these incremental traditional savings, thanks to its capacity to create ways of doing things that were previously impossible.

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ESG (Environmental, Social and Governance)