When referring to sustainability and ESG, there are many angles to be considered due to its complexity. When deciding on improving sustainability and reducing risk, in most cases, procurement functions are the ones that come first in companies’ priorities. More recently, sustainability, digitalization, savings and risks have been high on the agenda of many CPOs around the world.
Out of these, savings account for an important part of procurement leaders’ strategical activity for a few years now and digitalization gained important attention for higher management in the pandemic context. Due to prioritization in what concerns resource allocation, and the need to keep up with digital trends, sustainability keeps losing ground. Even so, the momentum for a sustainability strategy is present and growing in most companies, from small to large ones.
Many affirm that suppliers are the cause of most problems, but when it comes to sustainability or corporate social responsibility, they are not the only reason things go in the wrong direction. Rather, the internal strategy influences a lot of green initiatives and enhanced sustainability.
It’s not easy to deal with sustainability issues, especially during this time of social and economic uncertainty It is actually the root cause of many internal and external imbalances and can solve many procurement problems if managed properly.
Based on more than 20 years of experience in the procurement space and working with the leading procurement technology solution providers, we would like to propose 3 effective practices for implementing a more sustainable procurement process. Our framework is focusing on 3 main actions: establish, start and continue.
1. Establish a dedicated team and suitable framework Some eco-friendly processes might push organizations to take change management initiatives in their desire to accomplish sustainable procurement development. Establishing a dedicated team for sustainability, risk and corporate social responsibility can be a strong advantage in achieving your goals.
On top of creating a team to educate and spread awareness about sustainable decisions among employees, customers, suppliers or potential prospects, companies should prepare a proper framework for all these activities.
CPOs should evaluate their current framework and develop a suitable decision framework in the name of sustainable development. We also propose an alternative for small to medium-sized businesses that do not have resources to create a dedicated team – encourage online training programs to better communicate the message or involve third parties for short-term commitments.
2. Start from the inside – align core strategies This strategy focuses on the importance of initial establishment of appropriate practices to be at the core of any decision on the sustainable development side. It is best to start from the inside and educate employees, managers and partners and continue to train them so that they can align their actions with the main strategy. This will enable companies can continue with clear strategies, such as including green initiatives at an internal level, collaborating mainly with eco-friendly suppliers or evaluating the footprint of their businesses.
It is the power of example that encourages partners, suppliers and customers to adhere to your sustainable strategy and adapt eco-friendly actions in regard to your company or even outside that relationship. We would advise all companies that want to implement a more sustainable procurement process to lead by example: promote and advertise a powerful message that sustainability is rooted in your business strategy.
3. Continue outside – reward good behavior Implementing a streamlined method of communication is important not only internally but also externally with third-parties. Open communication is one of the best ways to start a collaboration and can be beneficial to make sustainable engagements more marketable for customers, suppliers or partners.
Involving all these parties into creating a sustainable communication strategy can bring up multiple benefits to your marketing initiatives. Co-working and co-creation of messages to be communicated helps companies build long-term relationships and engage all parties involved in monitoring the evolution of the changes after implementing sustainable procurement processes. After starting this line of communication, companies will continue to be consistent. The dedicated team with support from marketing should communicate with all stakeholders to both evaluate and help improve collaborative processes.
Another good practice in implementing sustainable procurement processes is to incentivise good behaviour. Companies are encouraged to evaluate and respond to stakeholders’ sustainability related progress and achievements. We would propose a framework to evaluate their commitment to sustainability and reward on different stages achieved. It’s not necessary to include monetary incentives, but more important to value partners’ culture, values and long-term objectives.
With this in mind, we advise businesses to guide their strategies based on the triple bottom line framework where procurement is considered sustainable when organizations take decisions by meeting their needs so that it encourages positive outcomes not only for the organisation itself but for the economy, environment, and society. Make sure to adopt CSR principles into your procurement and decision-making processes to make important steps in attaining an effective sustainable procurement function.