12 recommendations for making procurement more sustainable

17 March 2022 Consultancy.uk 11 min. read

The procurement function is a key enabler for the net zero ambitions of organisations. At the same time, however, there are many barriers to achieving sustainable procurement, with research from Procura finding that over nine out of ten procurement leaders face obstacles in their drive for a more sustainable procurement function.

For its ‘Sustainable Procurement Pulse Survey’, Procura (an international procurement consultancy) surveyed 120+ organisations from a range of industries and geographies to understand what’s holding them back in their journey towards sustainable procurement excellence. 

Based on the study, the authors identified the key barriers to sustainability leadership, and offer insights and recommendations to overcome these challenges. 

12 recommendations for sustainable procurement

Insight 1: There is still a lack of knowledge

The key issue cited by leaders in procurement as an obstacle to sustainable procurement was simply a lack of knowledge. Whilst there is a lot of discussion and high-level guidance it remains very conceptual. Survey respondents highlighted a lack of detailed, practical knowledge. 

Recommendation #1: Get support from internal stakeholders and external partners
To define business requirements for a product or service, procurement should work with end-users and those setting the sustainability agenda like the Head of Sustainability.

If there is no sustainability knowledge within the business, then lean on suppliers and independent experts to help you understand what is possible and what good ‘looks like’ when building sustainability factors into procurement.

Recommendation #2: Develop your knowledge, policies and processes
We recommend using ISO 20400 as a framework to develop skills, policies and processes. This is not a standard an organisation can be accredited with. However, it gives guidance on how to embed sustainability into your procurement function.

Recommendation #3: Use external expertise to provide clarity of direction
Defining the direction, strategy and plan can be difficult. In any complex journey, having a map is essential. External expertise can help you understand where you are now, where you should aim for, and enable you to build a clear roadmap to get there.

Independent experts include procurement networks like CIPS and the Sustainable Procurement Pledge, specific industry groups like WBCSD and procurement consulting firms.

Insight 2: The difficulty of measurement

Sustainability metrics can be hard to pin down and understandably organisations are hesitant to begin initiatives if they cannot measure and communicate the results. The key is to focus on what can be measured and take action while iteratively working to improve metrics. The answer is not waiting until you have a 100% perfect baseline of metrics for all sustainability issues before taking action.

Recommendation #4: Put KPIs related to sustainability into supplier contracts
Key Performance Indicators (KPIs) can address a range of specific issues like removing all single-use plastic packaging, reducing carbon emissions from deliveries by 80% or passing 100% of Modern Slavery audits at production facilities:

Work with suppliers to understand what data is captured and what could be recorded and measured. KPIs should flow from the business requirements and align the supplier with your organisation’s sustainability objectives.

KPIs should be backed with incentive structures to ensure they are upheld. The Chancery Lane Project is a great resource for finding environmental contract clauses that you can include in your procurement contracts.

Recommendation #5: Use digital solutions to support sustainable procurement
Specialist digital solutions help procurement professionals monitor the sustainability performance of suppliers across a range of issues:

Responsibly – Combines external and internal data on suppliers and products to calculate impact scorecards that can be tailored to the supplier category or geography.

EcoVadis – Scores suppliers on environmental, labour & human rights, ethics and sustainable procurement practises.

Sedex – Looks through multiple tiers of the supply chain to highlight any ethical and environmental risks and score suppliers based on their standards.

CDP – Calculates the Carbon Emissions produced by organisations in your supply chain and monitor how these change over time.

EcoChain – Calculates the Carbon Emissions of products organisations actually buy by hooking into your purchasing system.

Recommendation #6: Don’t rely on supplier sustainability ratings alone
Many organisations look to supplier sustainability rating providers as a ‘silver bullet’ to finding out how sustainable their supply chain is. There is no ‘silver bullet’. 

To illustrate this with an example, a supermarket with an objective to reduce its carbon emissions may be buying products from Unilever, which has a glowing record for sustainability. However, if this supermarket is buying products from Unilever that have been shipped across the world when they are produced locally then the supermarket is not doing the best sustainable procurement. 

Recommendation #7: Don’t reinvent the wheel
Don’t reinvent the wheel, use existing standards to hold suppliers to account. A lot of thought has already gone into developing standards that hold organisations to account for specific sustainability issues:

Standards can be specific to the supplier’s industry like the Aluminium Stewardship Initiative.

Standards can also relate to sustainability issues like carbon emission Science Based Targets initiative.

To illustrate this in action, Salesforce announced it has added a sustainability clause to all supplier procurement contracts to reduce the company’s collective carbon footprint. The clause requires the suppliers to sign up to the Science Based Targets initiative which commits them to reduce their carbon emissions in line with the Paris Climate Agreement and reach net zero by 2050.

Insight 3: Lack of focus on where to start

“Where to start!” is a commonly heard obstacle to sustainable procurement. Sustainability is an overwhelming topic covering a wide range of environmental and social issues. This paired with a lack of clarity on what the impacts of your purchasing decisions are leaves many organisations stuck in paralysis.

Recommendation #8: Focus attention on the most material issues
To focus your efforts on the highest impact areas, procurement professionals should understand:

  • What sustainability issues are most important to my organisation? Annual reports are a great place to look for this.
  • What impact does the spend areas I manage have on these sustainability issues? If it is not obvious tools like the SASB Materiality Map are useful or ask your suppliers!

In reality, organisations will have not just one, but a wide range of sustainability objectives. Use a model like the Sustainable Procurement Materiality Matrix. This will help to map out precisely which sustainability issues require focussed effort in order to deliver the biggest impact.

Recommendation #9: Focus on the highest impact spend areas
Once you understand the sustainability issues that are material to your organisation, narrow the focus to the highest impact areas by spend. In order to do this:

Gain visibility of your supplier spend and categorise suppliers into supply-market focused categories.

Assess the overall impact of products or services procured in each category against each material sustainability issue and give it a ‘Red Amber Green’ (RAG) score.

Use the ‘heat map’ to identify the spend categories with the greatest opportunity, and risk, based on your sustainability objectives.

And then focus on the categories with the most reds!

Insight 4: Time for action! Stop talking. Start doing

It is easy to get stuck in a loop talking about sustainability. We have seen organisations and, even, nation states stuck in this trap. We must put intent into action. Organisations need to get the ball rolling, and learn as they go, because across a spectrum of sustainability issues we are simply running out of time. 

Recommendation #10: Don’t get stuck in “paralysis by analysis”
Whilst planning is important, aim for pragmatism, not perfection. Having a perfect plan to address sustainability across your entire supply base might be a theoretically interesting challenge but the planet will be dead by the time you work it out. Remember, doing something is always going to be more effective than doing nothing. If you are facing resistance, you can start small and build momentum, one sustainable procurement success at a time. 

Recommendation #11: Select the most impactful target project & do it!
Working on a pilot project is ideal to test the ground. Use the learnings from the pilot to finetune and optimise the blueprint for the full roll-out. 

Recommendation #12: Demonstrate the impact
Once you have delivered the first project, get on with the next one. And once the results have been reaped, demonstrate your organisation’s commitment to sustainability and shout about its impact.