In a previous analysis, I laid out reasons why sustainability should be a priority for every chief procurement officer (CPO). Now, I’d like to focus a bit on how procurement can make a positive impact on sustainability. Taking just a few measures can set the right foundation for a meaningful program that helps your organization meet its goals in this area.
Drafting Governing Principles
Adopt a sustainability mindset. If your company has an ESG (environmental, social, and corporate governance) already, you draw your sustainability objectives from the policies to be found there. Procurement professionals, in particular, must remember that sustainability initiatives, to be effective, require actions in at least two areas: Purchasing the greenest materials from suppliers while also implementing sustainable practices within the company. A good place to start is with the overarching principle that whatever goes to the customer, whether it is a good or a service, is produced in the greenest way possible.
Most of your suppliers have sustainability initiatives of their own and you may already be buying green without realizing it. Tap into their knowledge base by asking what their other customers are doing or what initiatives they have in place internally or with their suppliers. There will likely be some good ideas for your company to adopt.
I’ve looked at the websites of competitors to see what sustainability initiatives they are emphasizing — everything from products made of post-recycled plastic to delivery via EV trucks — to get ideas on what my employer may have been missing.
Register here for your on-demand pass to view all content from Partners Ecosystem Digital Summit. The digital event, which took place on April 20, focused on analyzing the business and IT imperatives around cloud, AI, automation, data modernization, and cybersecurity that define the future of partnerships.
Purchasing the Greenest Materials From Suppliers
In a manufacturing company, changes to any materials that go into the finished product must undergo rigorous testing to make sure there are no compatibility or shelf-life issues. As such, direct materials and chemicals will not be a source of quick wins. Even so, it still makes sense to pursue green initiatives, even if it takes time to see sustainability results; the sheer volume of what gets purchased to support manufacturing will inevitably yield bigger sustainability gains than other parts of the business.
Here are just a few practices for procurement to consider regarding the sourcing and purchase of materials:
- Convert to recycled materials and packaging where it makes sense
- Prioritize sourcing wood products, such as corrugated packaging, that are certified by the Forest Stewardship Council
- Include sustainability questions in RFPs and evaluate potential new suppliers on their sustainability programs
- Rethink the global supplier mindset and make room for some materials coming from local suppliers, which would reduce the carbon emissions produced by transportation and help support local economies
- Choose energy-efficient equipment
Purchasing Indirect Materials
Not every company manufactures, but all companies buy indirect goods and services that are obtained to help their employees and facilities function. Typically, there is a wide range of items here, from carpeting to technology. Actions that procurement sponsors will be visible to the organization and reinforce that the company is “walking the walk.” Here are just a few examples:
- Source products that are designed for longevity and can easily be recycled. For example, reusable water bottles and coffee mugs are small items from a cost standpoint, but are visible indicators of a company’s commitment to sustainability.
- Require that office paper be made from recycled materials
- Ensure that the cleaning crews use biodegradable cleaning products
- As with direct materials, make room for local businesses in the supplier mix
- Include energy efficiency as a factor in equipment decisions
- Prioritize sustainable transport, such as using EVs or hybrid delivery trucks
Measure and Report
There are many ways to measure sustainability progress — carbon footprint, energy consumption, ESG performance, and waste generation, to name a few. Many businesses track their CSR (corporate social responsibility) score, which evaluates a company’s actions in the areas of the environment, labor and human rights, ethics, and sustainable procurement. It’s important to choose a few measurements — whatever is relevant to a given business — that can be tracked and understood. Too many metrics — especially at the start — can result in information overload and resources being focused in the wrong place.
I worked for a global facilities management company, and our clients typically expected both cost reductions and sustainability initiatives. One way to get both was to focus on energy. The first thing that happened when a new client came on board was to conduct a thorough assessment of their energy usage. We looked at carpets, windows, HVAC, lighting, and even the water usage on the landscaping, to make sure that improving energy efficiency was a priority. If your company is just beginning a sustainability program, this might be a great place to start, and there are third-party experts who can help you.
Which companies are the most important vendors in data? Check out the Acceleration Economy Data Modernization Top 10 Shortlist.
Take the Sustainable Procurement Pledge
Initiated by companies in the pharmaceutical and consumer sectors, the Sustainable Procurement Pledge (SPP) is a global non-profit organization whose member companies today cross many industry verticals. Its goal is that, by 2030, all supply chains across the globe will have embedded sustainable procurement practices. It’s loaded with information and opportunities for peer-to-peer sharing of best practices and ideas, and a great place for procurement professionals to begin a sustainability program.
Want more tech insights for the top execs? Subscribe to the Leadership channel: