2019 Sustainable Procurement Barometer: Sustainable Supply Chain Awareness Grows, ‘Compliance Trap’ Hinders Progress and Business Impact

July 24, 2019 EcoVadis

Biennial study from EcoVadis and NYU Stern Center for Sustainable Business reveals global sustainable procurement trends and progress

 

Paris/New York – (July 24, 2019) EcoVadis today released its 2019 Sustainable Procurement Barometer: From Compliance to Performance, which offers insight into how sustainability is evolving in procurement priorities, and the tools and processes being used to drive tangible improvements and business results. Conducted with NYU Stern Center for Sustainable Business, the analysis suggests organizations are placing greater emphasis on business ethics and labor and human rights practices compared to three years ago.

While commitment to sustainable procurement has increased significantly over the past three years (81%), most companies today are still managing programs from a compliance standpoint, a trap that leads to limited engagement and lacks incentives to drive performance and long-term improvements. The study found that 66% of procurement organizations cite regulatory compliance as a critically important aspect of their sustainable procurement programs, which could mean companies aren’t realizing that more innovative approaches are available that can drive competitive advantage and business value.

“The importance placed on regulations is quite striking, but not surprising given the global awareness and growth in supply chain due diligence and reporting laws. While keeping up with compliance is important, a compliance-only approach could compromise the business benefits awaiting companies that move beyond “checking boxes” to truly engage suppliers,” said Pierre Francois Thaler, co-CEO of EcoVadis. “Embedding programs into corporate strategy, leveraging external databases and integrating them via a balanced scorecard approach will inherently address compliance concerns while also delivering long-term value.”

Despite the emphasis on compliance, organizations in sustainable procurement are seeing their programs progress and drive positive impact. Other key findings include:

  • Executive-level support has increased significantly. In 2013, the number one obstacle facing procurement teams was executive and board support (50%). Today, leadership buy-in is only seen as a challenge for 13% of respondents (compared to 24% in 2017).
  • There’s a clear return on investment. Over half (58%) of respondents say they’re better able to mitigate risk through sustainable procurement, and 30% say their programs contribute to cost reduction. Other benefits include innovation and access to new categories (25%) and improved procurement metrics (24%). Companies with mature programs reported more benefits across the board – risk mitigation (88%), cost savings (35%), innovation (29%) and improved procurement metrics (53%).
  • Greater emphasis is placed on all sustainability themes. For 34% of procurement organizations, labor and human rights practices have become significantly more important over the past three years and 33% say business ethics have become more important. Only 22% observed the same shift in environmental concerns.

Depth of supply chain visibility is still a major challenge, with 45% of organizations saying this insight remains with tier-1 suppliers. Nearly a quarter have a line of sight into tier-2, and four percent say they have visibility past tier-3.

When it comes to the tools, policies and best practices used by buying organizations to encourage responsible behavior, most (64%) have a supplier code of conduct. Contract terms are the most common method used by buying organizations (35%) to engage suppliers on performance improvements, with 42% of organizations having a specific contract clause relating to sustainability. An encouraging 22% of procurement organizations collaborate on sustainability improvement strategies with suppliers and 38% say they have a sustainable procurement policy in place.

“We are delighted to partner with EcoVadis on the 2019 Barometer,” said Tensie Whelan, director of NYU Stern Center for Sustainable Business. “The findings underscore the need for companies to better monetize their sustainability strategies and transition from a compliance-oriented mindset to an innovative and growth-oriented approach that can drive competitive advantage and value for society.”

The Barometer analyzes data from 210 buying organizations across all industries and geographies and was complemented by an independent study of 399 suppliers. In-depth interviews followed with selected participants.

For a complete look at the key trends and issues in the sustainable procurement landscape today, download the 2019 Sustainable Procurement Barometer.

About EcoVadis

EcoVadis is the world’s most trusted provider of business sustainability ratings, intelligence and collaborative performance improvement tools for global supply chains. Backed by a powerful technology platform and a global team of domain experts, EcoVadis’ easy-to-use and actionable sustainability scorecards provide detailed insight into environmental, social and ethical risks across 198 purchasing categories and 155 countries. Industry leaders such as Johnson & Johnson, Verizon, L’Oréal, Subway, Nestlé, Salesforce, Michelin and BASF are among the more than 55,000 businesses on the EcoVadis network, all working with a single methodology to evaluate, collaborate and improve sustainability performance in order to protect their brands, foster transparency and innovation, and accelerate growth. Learn more on ecovadis.com, Twitter or LinkedIn.

About NYU Stern Center for Sustainable Business

NYU Stern Center for Sustainable Business (CSB) envisions a better world through better business. Housed within the Leonard N. Stern School of Business at New York University, the CSB works to ensure that current and future business leaders possess the knowledge and skills they need to embed sustainability in their core business strategy. In doing so, they can reduce risk, create competitive advantage, and develop innovative services, products, and processes—all while improving financial performance and creating environmental and social value. CSB’s seminal programs include educational offerings on sustainable business, cutting-edge research on the drivers of better business behavior, outreach and thought leadership programming and career development support for students. CSB was founded in January 2016 by Tensie Whelan, the former President of Rainforest Alliance, who continues to lead it today.

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Press Inquiries

US: Kate Bachman, Corporate Ink for EcoVadis

617-969-9192, ecovadis@corporateink.com

UK/EU: David McClintock

+33 6 03 77 84 74, dmcclintock@ecovadis.com

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