Companies struggle to realise sustainable procurement ambitions
As companies continue to shape their drive to net zero, procurement is coming increasingly under the microscope. A new survey by BearingPoint finds that over half of leaders consider sustainable procurement as a key pillar for future success.
Tackling climate change is one of the most urgent shared endeavours demanding bold action. Among a cross-section of 700 company leaders and procurement and sustainability experts, BearingPoint found that 98% agreed that sustainable procurement is essential.
98% of the respondents agreed that having a sustainable procurement approach is key for a company’s future success, whereby half of the respondents (51%) claimed the importance as ‘extremely’ high (state 9 or 10 out of 10).
Ralf Dillmann, a partner at BearingPoint, said, “Sustainable purchasing transformation is the next CEO challenge, with leaders inspiring their teams to act sustainably.”
Re-tooling the entire procurement function is easier said than done, though. Only three out of four organisations (73%) rate their own company’s approach to sustainable procurement as very advanced, going down to 43% of them considering them being extremely advanced.
While all companies consider sustainability as a key success driver, then, fewer can claim being already advanced in their journey. Dillmann: “This inconsistency comes from several challenges and barriers that all companies face when turning their vision into result.”
“Leaders need to take ownership to support organisational change and allocate budget to make their strategy happen.”
One possible explanation for the strategy to execution gap is that many leaders are still viewing procurement as a priority from a defensive standpoint – instead of a matter they ought to be on the front-foot about.
When asked what their main reasons were for implementing sustainable procurement, the largest number of 85% responded that they were looking to ensure compliance with current or future environmental regulations. In contrast, while it was still a majority, only 55% of those polled said they thought they could gain a competitive advantage from sustainable procurement.
At the same time, many companies seem to underestimate what processes need to be in place for effective change management. While 81% said a substantial budget had been allocated to achieve sustainability targets, simply throwing money at the problem is not working. Almost eight-in-ten businesses said their firms lack “the capacity to turn our sustainability targets into action”; lack “the tools and processes” necessary; and lacks a clear baseline measurement for our carbon emissions.
BearingPoint’s report suggests that companies with a baseline measurement of their carbon emissions are better prepared and structured for successful initiatives to source more sustainably and ultimately decarbonise their supply chain.
Dillmann: “Companies without baselines are three times more likely to experience barriers and frustration in achieving sustainability targets.”
At the same time, by viewing sustainability as an area where ground can be gained on competitors, there may be more traction for change. According to the report, to solve this, CEOs as Chief Environmental Officers should focus on overcoming barriers such as insufficient training, difficulties in translating impacts into financial benefits, and the lack of reporting on supply chain sustainability.
