The Ultimate Guide to Sustainability in Procurement
Sustainability is no longer a buzzword; it's an imperative. The world is changing, and businesses need to adapt to meet the growing demand for environmental, social, and governance (ESG) considerations. One critical aspect of this shift is the reduction of greenhouse gas (GHG) emissions, a task where procurement departments play a pivotal role. Scope 3 emissions, which often make up a substantial portion of a company's overall environmental impact, require procurement's attention to engage existing suppliers and find new partners committed to greener practices. With net-zero targets looming and stricter regulations on the horizon, the need to reduce emissions is no longer a choice but a necessity.
Progress must be made, and it must begin today. In response to this, WBR Insights, in partnership with apexanalytix has published The 2023 Sustainability Report, which surveys 100 CPOs to find out about the key sustainability challenges they are facing, and the solutions that are out there to help overcome them. Featuring commentary from industry leaders at Bayer, Fujikura, CBRE and TUI, this is your ultimate guide to sustainability in Procurement. To reveal the findings of our research, get your free copy of the report by clicking here.
How Procurement Can Lead the Conversation in Lowering Greenhouse Gas Emissions
Yet, this mission is far from straightforward. Our research highlights the challenges faced by Chief Procurement Officers (CPOs) in this endeavor. The complexities of collecting and analysing emission output data, engaging with existing suppliers, and obtaining buy-in from key stakeholders are significant hurdles. Procurement, which has traditionally not been deeply involved in emissions data, had to develop new processes and tools to address these challenges. A crucial factor contributing to these struggles is the nature of averages, estimations, and the often inconsistent or absent emissions reporting from suppliers.
The path to achieving ambitious emission reduction targets lies in embracing technology. According to our research, technology is the key to supporting these goals over the next three years. Supplier tracking software, renewable energy sources (with a focus on solar and wind), and automation technologies are identified as key tools. Supplier tracking software can help keep a close eye on supplier performance, while renewable energy sources contribute to reducing reliance on fossil fuels. Automation technologies may prove essential for data collection and analysis in the future. Procurement is uniquely positioned to lead the way in reducing GHG emissions by adopting innovative methods, transitioning to renewable energy sources, and fully embracing technology.
ESG and your Supply Chain
While implementing technology is essential, it's not the only challenge procurement faces. Accurately measuring Scope 3 emission data is a daunting task due to estimation, the absence of standardised reporting, and reporting issues. According to a substantial number of survey respondents, the best solution involves a combination of industry standards and company-specific emissions factors applied to spending analytics.
Moreover, achieving ESG targets depends significantly on the relationships with suppliers. CPOs must be acutely aware of the ESG risks that all suppliers pose to their organisations. Comprehensive assessments, a deep understanding of supplier risks, and the identification of high-risk suppliers are a priority. These assessments come with their own challenges, with some CPOs taking varying amounts of time to complete them.
When conducting supplier assessments, waste management, regulatory compliance, and supplier diversity emerge as the primary ESG-related supplier risks for CPOs. Interestingly, greenhouse gases are not as frequently highlighted, possibly because waste management and regulatory compliance are closely linked to greenhouse gas emissions. However, our research demonstrates that CPOs prioritise supplier risk, with almost half of the respondents measuring ESG supplier risks on an ongoing quarterly basis. Supplier performance is continuously evolving, and maintaining a regular analysis of new and existing suppliers is vital to staying proactive and understanding risks.
Creating Value with ESG
To unlock sustainability success, procurement departments need a strong foundation. Our research reveals that many CPOs are confident in their ability to deliver on sustainability goals with their existing tools and resources. However, challenges remain, and understanding these challenges is crucial to plan a roadmap to success.
Among the challenges CPOs face, regulatory requirements and compliance controls stand out. Procurement departments often operate on a global scale, and regulations vary from region to region. Thus, a comprehensive grasp of obligations in all operational regions is essential to ensure full compliance and build a robust ESG strategy.
Influence matters, too. Regulations significantly drive organisations' focus on ESG, with a staggering majority of respondents acknowledging this. Ethical responsibility also plays a vital role, with 77% highlighting it as a key influence. This is partly driven by a younger workforce that strongly believes in ESG and can help organisations become leaders in sustainability.
The full report, made in partnership with apexanalytix delves deeper into these findings, providing essential insights into the role of procurement in achieving sustainability goals. It's a valuable resource for CPOs, business leaders, and anyone committed to making a positive impact on our environment and society. Download the full report today to gain access to the comprehensive data and insights necessary for navigating the challenging but vital path to sustainability success.