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Practices to Achieve Sustainable Procurement

Practices to Achieve Sustainable Procurement

May 8, 2024
EcoVadis suggests Integrating supplier sustainability data into a company's end-to-end procurement approach.

There is untapped potential to business value through sustainable supply chain programs. Given that, EcoVadis offers its 2024 Sustainable Procurement Barometer report, as a way to help companies to “drive business value through sustainable supply chain programs, and transform into a key agent of an organization’s resilience and growth in a rapidly changing world.”

In the aftermath of the pandemic, combined with business and industry risks (e.g., accelerating climate crisis, cost volatility and more), and increasing regulations, sustainability has emerged as a key force for procurement’s transformation into a central driver of an organization’s resilience and value creation. In fact, a recent study from Accenture and the United Nations Global Compact showed that more than half (54%) of CEOs are strengthening visibility into the social impacts of their supply chain and CEOs are also focused on encouraging their suppliers to adopt sustainable behaviors, with 33% of companies now incentivizing ESG outcomes for their supply chain. However, the Barometer shows a significant number of companies are still in the early stages of integrating sustainability visibility and indicators into their procurement processes and other business functions. 

For example, the research indicates only about half of companies have visibility into more than 50% of their Tier-1 suppliers, and even less for deeper tiers. Supplier engagement practices are not broad or deep enough with less than 50% of programs engaging suppliers with sustainability assessments. And only about 6%-25% of companies have programs that digitally integrate ESG into their procurement processes.

“Business is at a pivotal juncture where leaders are recognizing sustainable procurement’s strategic role for long-term business resilience and growth,” said Pierre-Francois Thaler, co-founder and co-CEO, EcoVadis, in a statement. “While many companies are adjusting to this change, the most advanced programs are continuously tuning strategies and investments to accelerate the transformation needed to thrive in a new era of business that also benefits people and the planet.”

By examining best practices of the highest-performing 10% (“leaders”) of programs surveyed, the Barometer unveils five strategies to help organizations transform their procurement programs into a key driver of sustainable growth and innovation across their business:

  • · Integrate supplier sustainability data into your end-to-end procurement approach. Programs with high integration are three to four times more likely to have strategic-level engagement with C-suite stakeholders. 
  • Engage supplier more deeply to accelerate the adoption of sustainable practices. Activities like corrective action plans, carbon reduction, e-learning or innovation programs drive supplier ESG improvement and produce richer data and insights. 
  • Enhance ESG technology and digital tech foundations. Data can be packaged into insights that drive tactical and strategic decisions, ultimately driving more effective and impactful sustainability initiatives.
  • Use new tools to gain greater N-tier visibility. Risk and or hotspot mapping can inform decarbonization priorities, pinpoint risks and inform engagement strategies and investements across responsible sourcing practices. 
  • Engaging internal and C-suite stakeholders with sustainable procurement data is critical to realizing benefits and supporting program expansion. Between 72% and 93% of leaders are able to strategically engage or operationally inform critical business functions such as CFO/finance, sales, product design, operations, risk and compliance with their supplier ESG data and insights, nearly double the rest of the sample. 

 “Financial success and sustainability aren’t mutually exclusive. Embedding sustainability practices with procurement can be an engine for broader enterprise value creation, reducing cost and improving brand reputation and stakeholder relationships,” said Matias Pollmann-Larsen, Accenture’s global lead for sustainable value chain, in a statement. “Aligning procurement with broader ESG goals makes supply chains not just more compliant but also more agile and resilient overall.” 

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