Rethink Sustainability with 6 Practices for Procurement

In today’s competitive business landscape, leading companies take control of their Scope 3 emissions and drive real change.

At the SievoFriends 2024 event, experts David McClintock, Global Director of Content and Communications at EcoVadis, and Janne Katainen, Sourcing and Procurement Lead at Accenture, shed light on how companies can accelerate their sustainable procurement efforts to decarbonize, achieve net-zero goals, and comply with ESG regulations. Their insights are not only timely but essential for any organization aiming to thrive in a sustainable future.

Want to dig in to sustainable procurement? Read our full guide to get started.

Rethinking Sustainable Procurement

While meeting regulatory standards is crucial, true sustainability demands are a profound commitment. Starting your sustainability journey requires a fundamental shift in how you view procurement.

"Compliance is the minimum requirement, but you can go all the way to strategic leverage for resilience and growth."

- David McClintock, Global Director of Content and Communications at EcoVadis

The Importance of Visibility

Visibility into your supply chain is the cornerstone of effective, sustainable procurement. Currently, only 27% of companies have visibility over 75% of their tier 1 suppliers. Carbon action starts with unlocking the power of your spend data to drive meaningful carbon reduction initiatives.  You need clean data to make a clear impact.

This lack of transparency can lead to compliance issues, diminished risk management capabilities, and difficulties in prioritizing improvement efforts. McClintock notes, "If you don’t have visibility, you start having compliance issues, your risk management capability will drop, and improvement efforts are harder to prioritize."

Here’s a short video on how to tackle Scope 3 emissions!  

Key Capabilities in Sustainable Procurement

To truly embed sustainability into procurement processes, specific key capabilities are essential:

• Sustainability on Everyone’s Agenda:  Balancing cots and carbon must be a company-wide priority, not a departmental focus. Don't react, just act.
• Green Procurement Strategy Skills: Developing skills specific to sustainable procurement is crucial. Your strategy should involve the identification of suppliers and categories with highest emissions and actionable mitigation plans. Boost your strategy and supplier engagement with AI-powered insights that pinpoint decarbonization opportunities, ready for immediate action. 
• Active Supplier Collaboration: Engage deeply with suppliers and ensure they are aligned with your sustainability goals. Drive meaningful reduction initiatives with relevant data and automated mapping of SBTi suppliers to see their share of total emissions and spend covered.  “Walk the talk with your suppliers," Katainen advises.
  

(Image: Janne Katainen and David McClintock at SievoFriends 2024)

Use Cases for Sustainability Data

Your sustainability strategy must be grounded in data to be effective. ESG leaders aren't the only ones who find sustainability data valuable; it also has multiple uses for a wide array of stakeholders.

Here are procurement processes where sustainability data can be effectively utilized:

• Sourcing and supplier selection: identify suppliers who are committed to environmentally friendly practices, ensuring that your procurement choices support your sustainability goals.
• Criteria in RFP/RFx: include sustainability criteria as part of your RFx to evaluate and select suppliers who outperform their peers with strong ESG performance.
• Supplier relationship management: establish collaborative efforts with key suppliers, encouraging them to improve their practices and achieve shared emission reduction goals.
• Contract negotiation: include clauses in contracts to ensure suppliers meet specific environmental standards and contribute to your overall sustainability strategy.
• Purchase ordering (PO) systems: prioritize products that have lower environmental impacts, guiding users to make greener choices.
• Risk management: identify and mitigate risks related to environmental compliance and potential disruptions.
• Spend management: manage spending on sustainable products and services, ensuring that procurement budgets are aligned with your sustainability objectives and overall strategy.
• Supplier recognition programs: reward and recognize suppliers who excel in sustainability, promoting continuous improvement and stronger partnerships.
  

However, despite the potential, only 25% of all ESG programs are integrated digitally into procurement strategies. This digital integration is vital for the scalability and effectiveness of sustainability initiatives.

Strategic Engagement and C-Level Buy-In

Strategic engagement and buy-in from top leadership are crucial for sustainable procurement programs to succeed. Expanding the business case to champion responsible procurement initiatives often presents a challenge, but it is necessary.

"Strategic engagement and C-level buy-in are significant for the success of your programs," stressed McClintock.

Commitment and taking ownership of sustainability topics is the first step in tackling scope 3 emissions:

6 Key Takeaways for Sustainable Procurement

1. Get Visibility and Set Priorities: Start by understanding your supply chain and prioritizing your sustainability efforts.
2. Engage and Collaborate with Suppliers: Deep supplier engagement is essential for sustainable procurement.
3. Build Skills and Invest in Training: Equip your team with the necessary skills for sustainable procurement.
4. Integrate Metrics into Your Processes: Ensure sustainability metrics are part of your regular procurement processes.
5. Digitalize Your Processes: Leverage digital tools to scale your ESG efforts.
6. Secure C-Level Buy-In: Keep sustainability top-of-mind for your leadership team to ensure continued support and resources.

By implementing these key takeaways, your organization can transform sustainable procurement into a strategic advantage. As highlighted in the expert insights, the journey to sustainability is demanding but highly rewarding for companies committed to making a difference.

With Sievo's AI-powered CO2 Analytics, you can unlock the power of your spend data, drive significant carbon reduction initiatives, and position your business for lasting success. Sievo enables you to tackle emissions hot spots with precise spend, quantity, and supplier-level calculations, supported by the highest data accuracy of 94% guarantee on the market.

Book a demo today to see it for yourself!