Sustainable procurement was top of mind for companies before COVID-19, but the pandemic shone a spotlight on supply chain failures that led many to fear global sustainability progress would come to a crashing halt. But the opposite was shown to be true in the EcoVadis 2021 Sustainable Procurement Barometer.
As executives increasingly recognize that their companies’ sustainability practices have contributed to the resilience of their value chains and helped them endure the crisis, the importance of sustainability increased. The number of executives who view corporate sustainability goals as “very important” more than doubled – 63% say it’s very important, compared to only 25% two years ago.
While hundreds of global organizations have or are launching sustainable procurement programs, there are clearly leaders emerging who report significantly more benefits from their programs than the rest. The Barometer study identifies these as “Sustainable Procurement Leaders”, a cohort of respondents who aggressively integrate sustainability criteria into their procurement process, identified by breadth of criteria addressed, depth of integration to policies, coverage across supply base, geographies, and more. What are these leaders doing differently to achieve stand out results? What can other organizations learn from these leaders so they can more successfully achieve supply chain resilience beyond the pandemic? Here’s what was uncovered in this year’s Barometer.
Embracing a Holistic Viewpoint
The business case for sustainability is no longer just centered around business-as-usual factors such as cost saving, reputation, risk management, and resource efficiency. A mindset shift to embracing a holistic approach toward resilience procurement can create profound system transformation and growth. And sustainable procurement leaders are getting this right.
For example, a much higher percentage of leaders integrate sustainability criteria into a broader range of procurement processes, such as when selecting new suppliers, in RFP/RFX/tenders, when implementing incentive/recognition programs, to determine whether to discontinue their relationship with non-conforming suppliers, and more.
Leaders view sustainable procurement as an important piece that influences every part of their procurement strategy, processes and decisions. Since these outcomes are very important to these companies, they are likely willing to invest more in sustainable procurement and in increasing their supply chain visibility.
Investing in the Right Tools
For too long, the supply chain has been regarded as a cost and risk to manage, optimized for just-in-time efficiency to minimize costs and tactical risks. But these insights from the leader teams show that now is the perfect time to go beyond crisis readiness and to build resilience as part of an agile engine that can drive innovation, respond quickly to changing business conditions, and seize opportunities.
To do this, procurement must partner with value chain partners even more closely on sustainability than ever before, developing common metrics and focusing on sustainability performance and improvement. This is why the leaders make bigger investments into the tools and assessment programs needed to ensure their suppliers maintain good sustainability performance throughout the relationship, and to also see if and how that performance is improving.
A higher percentage of sustainable procurement leaders use each of the tools listed in the Barometer -- category/country risk evaluation models, supplier self assessments, supplier audit programs and corrective action plans, total cost models including sustainable development criteria, and third-party supplier sustainability databases. And more than half of the leaders (compared to less than 20% of the non-leaders) also use two proactive tools: supplier training programs and guidelines for buyers on best practices.
This may be attributed to the maturity of the leaders’ programs, as well as the greater emphasis they place to ensure their supply base follows sustainable practices.
Sustainable procurement is not something that should be done after establishing processes to run supply chain programs efficiently. Rather, these practices -- integrating a holistic approach across procurement processes and investing in the right tools -- are integral to managing a supply chain effectively and building for a resilient future. Sustainable procurement leaders have been making these practices an essential part of building resilience within their supply base, and companies everywhere would do well to adopt similar practices before the next crisis hits.
Read all the insights in the 2021 Sustainable Procurement Barometer report here.
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