What does sustainability mean to you? Our respondents’ answers distilled and analyzed

This summer, Spend Matters poured a lot of attention onto the theme of ESG and particularly sustainability from a procurement lens (and we will continue to give this important subject greater focus going forward). For the “What does sustainability mean to you?” series, we talked to a cross section of the industry — from analysts, to vendors, to consultancies, to buyers and suppliers — and published their answers. Each representative was asked the same three short questions designed to help us understand at a top level what being sustainable really means to them.

Those questions were:

• How would you ensure in your organization that sustainability and responsibility is not just a tick-box exercise?
• What would help you embed sustainability and responsible practices/thinking into procurement?
• If you could have one wish from procurement tech/software vendors (to help with your sustainability goals/supply chain visibility/operations/ measurement) what would that be?

We distilled this into a set of interesting and useful answers for procurement software vendors to take note of, and for other practitioners to consider.

We’d like to take this opportunity to thank the people who contributed with their answers, but as always with market research, its value lies in how we interpret it, put it into context and relate it to the business of today. So Spend Matters senior analyst Bertrand Maltaverne turns his analytical eye to what the industry is telling us, and reports here with his findings:

Procurement and the cycle of change

2021, much like 2020, was dominated by Covid. And, as we collectively make progress into this unprecedented crisis, we are moving in a cycle of change. The consequences of the pandemic are still unfolding and with time passing, society as a whole is facing Covid’s ripple effects, and we are not yet back to what we traditionally perceive as normal. The question is: Will there ever be a normal?

Other major challenges are still ahead of us. As we made progress into 2021, the looming climate crisis made itself very visible and added to, hopefully, the creation of the right sense of urgency required to move at individual, organizational and societal levels to the next stages of the change cycle.

What we see at Spend Matters on an almost daily basis, thanks to our proximity with the procurement (technology) market and to what practitioners told us during interviews conducted by my colleague Nancy Clinton, show that we are at a much-needed turning point in terms of the influence that procurement can have on our future.

The realization of the relative fragility of (business) ecosystems and of the interdependence in a value-web created by a globally connected world have put both supply chain and procurement practitioners in the spotlight. Seasoned practitioners know that with every supply crisis comes opportunities for procurement to shine and to be viewed as a critical function and not just a back-office one. However, they also know that once the situation comes back to normal, the short-lived recognition of the fire-fighting efforts quickly fades away. The difference between now and then resides (and I say that optimistically) in the magnitude of the challenges at hand. They require a profound change. Covid has shown the need for a new way. Climate change and social unrest are paving the way for an even deeper and broader shift to a new economy.

‘With great power comes great responsibility’

Buying decisions are what shape our future, at home and at work. And, to almost paraphrase the title of a best-seller, the habits of sustainability-conscious (Procurement) organizations are a source of inspiration. They are moving the needle and putting in place a system to move sustainability from the circle of concern to their circle of influence and, eventually, to their circle of control.

Meaning and purpose

Experienced professionals know that change initiatives often fail because of the lack of an answer to the great “why.” The “art of the start” requires making meaning. With regard to sustainability, this is both an easy and complicated process.

It is, first, easy because sustainability speaks to every individual in terms of impact and actions. And, from a procurement point of view, sustainability will resonate at individual level, procurement team level, and in the extended collaboration ecosystem, including stakeholders and suppliers.

As Martin Thompson of the ITAM Forum responded: “Sustainability needs to be the responsibility of everyone.”

And as Rob Bonnar of SHV Energy concurred: “There needs to be actionable targets embedded in objectives for everyone, throughout the organization. It is easy to have a sustainability team but the responsibility and action relies on the whole organization pulling together.”

However, it is also complex as it requires profound behavioral changes and also because, as highlighted in our ESG series, sustainability has many facets.

So it is critical to create a sort of mantra for cultural change to impact behaviors to “make the sustainability and responsibility practices a part of [a company’s] DNA [and not] solely a compliance requirement,” as Jaroslaw Richert of Schneider Electric suggests. And it is not, according to Gail Evans at Brightman Consultancy “the current tick-box approach with very specific CSR criteria” that some companies and organizations have.

It all “starts with embedding responsibility and sustainability into the highest-level strategy, core values and measuring progress at every level” to create a virtuous circle, as Chad Gottesman at Accenture Operations told us. Sustainability requires a new type of management operating system.

Value-creation management system

After developing the right vision, it is critical to put in place an operating system (people, process and technology) enabled by culture and data to execute the strategy.

According to Wouter Machiels of Imec “a framework that is accepted would help. … The process trumps the tool, [and we have to] get that fixed first.”

This management system is aimed at addressing the proper value-creation levers of the ROI of Sustainability (S-ROI) defined, among other things, in terms of “goals [to] be able to measure them and properly communicate progress on achieving them.” Also, because the supply chain has such a large impact on an organization’s sustainability, this becomes very quickly a matter of communicating and sharing requirements that vendors must meet.

As sustainability is about the impact on people, planet and profit (the 3 Ps of sustainability), the goals and requirements we mention are broad and strongly depend on markets, industries and geographies. And, for procurement, it even varies from category to category. However, they can be boiled down to being “efficient by nature [and] sustainable by design,” as Andy Davies and Kimberley Lewis of London’s Natural History Museum tell us. Interestingly, these are areas under procurement management: demand management (consuming less and better) and new projects/products/services development (design for sustainability/supply).

Technology-enabled sustainability

In the management system we mentioned, technology has a peculiar place. It is not a magic solution that will fix the (any) problem. But it is a critical enabler that will ease the aforementioned shift by creating opportunities for efficiencies, effectiveness and innovations in the ways things are done.

ROI for technology = Efficiencies (data aggregators/hubs reducing data management efforts) + effectiveness (process orchestration improving results of activities) +innovation (new capabilities to “obliterate, not just re-engineer”).

The ROI of sustainability technology is there, and our conversations with practitioners and providers clearly show that the interest in this market is growing. Companies are investigating and investing in such technologies to get a better understanding of their footprint (environmental, risk and so on) to identify opportunities and capture new value. They do it by looking at options to enhance their current solutions (benefiting from investments from many providers that have added new sustainability/ESG-related capabilities to their offerings) and/or by looking at acquiring new point solutions addressing specific areas.

However, technology is not a silver bullet, as is oftentimes said. “What we [also] need is a deeper engagement that comes only from collaboration.” And, looping back to the start of this article, sustainability needs all of us, more than any other topic. The clearest finding for professionals in procurement and the supply chain is that sustainability is no longer a nice-to-have feature. It’s time to bake in the measurements for a company’s commitment to ESG — the environmental, social and governance policies that set businesses apart these days. It is time to walk the talk!