The Wisdom of Sustainable Procurement
By Sunny Lewis
PARIS, France, March 7, 2017 (Maximpact.com News) – Sustainable procurement programs are more integral and widespread than ever before, but face a critical juncture as they scale to reach the next level of maturity, according to the results of the new EcoVadis/HEC Sustainable Procurement Barometer .
The 2017 Sustainable Procurement Barometer was conducted by EcoVadis, based in Paris, with offices in the United States, United Kingdom, Mauritius and Hong Kong, in cooperation with HEC Paris, or école des Hautes Etudes Commerciales de Paris, a business school specializing in education and research in management.
The new Barometer shows that 50 percent of sustainable procurement leaders experienced increased revenue from sustainability initiatives, a 33 percent increase over non-leaders, according to EcoVadis calculations.
“Sustainable procurement is no longer a nice-to-have. It’s an integral business function responsible for protecting and improving brand reputation, driving revenue and mitigating business risk,” said Pierre-François Thaler, co-founder and co-CEO of EcoVadis, a platform for environmental, social and ethical performance ratings for global supply chains.
“In order to scale up, the mature programs are investing in embedding sustainability into processes across their procurement organizations,” said Thaler from the New York office of EcoVadis.
“One key outcome of this benchmark study is to help inform and inspire all organizations to accelerate their progress toward leadership, and realize the rewards and return on investment,” he explained.
EcoVadis is the first collaborative platform to provide sustainability ratings and performance improvement tools for global supply chains.
Socially responsible corporations can use EcoVadis’ CSR scorecards to help monitor their suppliers’ environmental, ethical, and social practices across 150 purchasing categories and 110 countries.
Over 150 companies such as Nestlé, GSK, Heineken, Michelin, Johnson & Johnson, Schneider Electric, L’Oréal, BASF, and Subway, and more than 30,000 of their trading partners use EcoVadis to reduce risk and drive sustainability and innovation.
First conducted more than 10 years ago, the Sustainable Procurement Barometer monitors the evolution of sustainable procurement practices in global procurement organizations.
It aims to provide an understanding of the landscape, including sector and geographical differences, industry strengths, improvement areas, new frontiers for innovation, and the potential levers for success in the future.
The EcoVadis/HEC research was compiled through a survey of 120 supply chain professionals around the world.
The Barometer shows that 97 percent of all the organizations surveyed place a high level of importance on sustainable procurement.
Thaler says this reflects continuation of the “upward trajectory” of previous years, illustrating how established the field has become in less than 10 years.
Forty-five percent of the responding organizations said their sustainable procurement program covers 75 percent or more of their spend volume today. Thaler calls that figure “a significant jump” from the 27 percent that reported on their sustainable procurement coverage in 2013.
Yet while supplier coverage has increased, the depth of visibility into corporate social responsibility supply chains remains “elusive,” Thaler observes.
Only 15 percent of organizations said they have complete supply chain visibility into the CSR and sustainability performance of both tier one and tier two suppliers.
And only six percent of responding companies reported full visibility into tier three suppliers and beyond.
This is the number one challenge today for sustainable procurement teams, Thaler says, commenting that, “It is often further down in supply chains where the most significant risks lie, and the need to scale up programs to increase the depth of program visibility to the ‘long tail’ of global supply chains has never been more urgent.“
The EcoVadis/HEC study also found that organizations collecting sustainability data are actively using this intelligence to guide sourcing decisions.
“By making CSR data a key factor in the sourcing process, organizations are incentivizing suppliers to be more sustainable and act more responsibly across the board,” said Thaler. “The more procurement teams push to integrate sustainability in their daily roles and decisions, the greater – and faster – the trickle-down effect will be on a global scale.“
In the previous survey conducted in 2013, the number one cited obstacle to more effective engagement and commitment to supply chain and procurement sustainability was a lack of executive and board support.
In 2017, that challenge doesn’t make it into the top three obstacles. “The C-suite appears to be finally on board with sustainable procurement initiatives,” said Thaler.
“However, when you dive deeper into the data, an interesting picture starts to appear,” he said. “While executives are finally on board, procurement teams still report that a lack of internal resources holds them back.“
In 2017, the two largest obstacles for sustainable procurement programs are a lack of internal resources and difficulty tracking supplier sustainability performance, according to companies surveyed for the Sustainable Procurement Barometer.
Supplier commitment, on the other hand, was not cited as a primary challenge. In fact, only 14 percent of suppliers reported that they were not incentivized by buyers to be sustainable and socially responsible.
“With the right tools, executive support and supplier engagement, an organization can launch a sustainable procurement program and put a basic program in place, but it’s not enough,” Thaler explained. “To drive to full return on investment and value creation requires much higher coverage, and this means getting the rest of the organization to adopt sustainable procurement in their daily jobs – in procurement, supply chain, risk management and environmental health and safety.“
“This is an internal change management challenge,” Thaler said, “and it takes time.“
For a complete look at sustainable procurement today – including analysis on business drivers, implementation challenges, program maturity and the supplier perspective, download the full 2017 Ecovadis/HEC Sustainable Procurement Barometer Report, “Scaling Up Sustainable Procurement: A New Phase of Expansion Must Begin.“
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