Why Sustainable Procurement is Commercially Savvy

Why Sustainable Procurement is Commercially Savvy

The pandemic has done its best to divert our attention from the issues of global warming, but the latest report from the IPCC (Intergovernmental Panel on Climate Change) has once again made it front and centre – where it should be. What the report detailed was predictable and dire. Longer droughts, more intense fires, more severe floods. Cyclones won’t occur as frequently in the future but, when they do, they’ll be fiercer.

Sustainable procurement is one of the most effective weapons we have to combat this apocalyptic scenario. Without it, not only will we never achieve the key targets set by the Paris Agreement or individual governments, but we will never take advantage of the benefits sustainable procurement can bring to business. We know and accept this. The challenge is implementing changes to supply chains that benefit the organisation and the environment.

What is sustainable procurement and how can it help the world?

Our supply chains are dirty. By far, they are the biggest contributors to greenhouse gas emissions within any business that uses one. In a typical consumer company, the supply chain accounts for more than 80 per cent emissions and more than 90 per cent of the impact that particular business has on air, land, water, biodiversity and geological resources.

If we want to make a real contribution to climate change, we need to target our supply chains, which is what sustainable procurement is all about. Basically, it involves:

  • identifying suppliers that are fair trade, low impact or environmentally friendly.
  • using materials that have been sourced responsibly (recycled products, for instance).
  • using materials that can be used more than once.
  • encouraging suppliers within our supply chain to adopt the measures above.

How can sustainable procurement help you?

Sustainable procurement can help your organisation in three ways.

Mitigate the damage

The more we can do to limit climate change, the less disrupted our supply chains will be. In 2014, GrainCorp reported a 64 per cent drop in annual profits after drought affected its grain deliveries. This is just one example of literally thousands of disruptions that are occurring every year. If you think you can’t afford to implement change to your supply chain, we would argue that you can’t afford not to.

Retain (and attract) consumers

The digital age has opened a world to consumers that previously didn’t extend beyond their own neighbourhood. You’re no longer competing with a business down the street; you’re competing with businesses all over the world. It’s more important than ever to tap into what consumers want, and consumers want to buy sustainably.

New research indicates that nine in 10 Australians are more likely to buy ethical, sustainable products, and 85 per cent want more transparency from the companies about the sustainability of their products.

It’s no longer good enough to claim your supply chain is green, or at least getting greener. Consumers want proof. The good news is that once you provide that proof, you’ll have consumers for life who are more interested in how a product is made than how much it costs.

Make you robust and responsive

A more sustainable supply chain is better for the bottom line. The more energy and waste-efficient suppliers you have within your supply chain, the less your overall costs. Not only that, but working with suppliers that are more profitable means working with suppliers that can be relied upon because they’re better able to weather tough times. If you want a robust supply chain, you need robust suppliers. 

How can we help you get sustainable?

The biggest challenge of sustainable procurement is obvious: supply chain visibility. Typically, it’s poor. The vast majority of organisations have great visibility of their tier 1 suppliers, but things get murky beyond that. Software like Comprara’s ProcureTrak has been designed to capture all of your data and present it in an easily digestible format that can be adapted across departments. The modern supply chain is complex and often vast; we can’t expect to transform it all overnight. Getting artificial intelligence to capture and break down your spend allows you to create targets that are realistic and meaningful.

Of course, recognising the best areas to target isn’t easy. Courses like Academy of Procurement’s Social & Sustainable Procurement have been built to equip procurement officers with the skills required to see the opportunities and determine a path to sustainable procurement while balancing economic value and any risks involved.

Sometimes, the best way to see things clearly is to step back. One of the most effective moves you can make is having an objective party run an eye over your procurement function to see things that familiarity blinds us to. Comprara’s Strategic Consulting is an invaluable tool that gives you access to some of the most experienced minds in the field, resulting in unbiased feedback that will enable you to align overall business objectives with sustainable procurement.