Many connect sustainability with higher operational costs. But is this really the case?
So, we have done the paperwork. We have a nice policy, procedures, and posters on the walls. However, this is only the start. Now we have to convince our stakeholders that this is the right way.
As procurement, we are involved in spending roughly 20 – 60% of the company’s money. And we can greatly influence how this money will be spent. On the other hand, we are equally responsible for the bottom line.
Savings through sustainable processes
Let us first focus on the core of our job. Back to our 5 rights of procurement
- Right product
- Right place
- Right price
- Right quality
- Right time
We need to add the 6th requirement
Sustainably created, whether it is a good, service or even virtual item.
Buying sustainably created products
Let us take the definition of a sustainably manufactured product from the US Environmental protection Agency²:
“Sustainable manufacturing is the creation of manufactured products through economically-sound processes that minimise negative environmental impacts while conserving energy and natural resources. Sustainable manufacturing also enhances employee, community and product safety.”
In addition to this, many countries are implementing legislation that requires manufacturers to remove certain chemicals and materials from the product or the packaging. As procurement professionals, we need to be aware of the requirements not only in the country where we operate but also in the countries where our business intends to sell the finished goods
Cooperating with vendors to create sustainable solutions
This is the part where procurement can play the leading role. If we go back to the vendor and re-engineer the product in order to have a sustainable product that still satisfies our needs, it is a win-win.
The usual cases would be:
- Removing the excess packaging and using reusable packaging
- Discussing changes in the product that result in reduced waste, while keeping the utility of the product intact.
- Buying local fresh produce, thus reducing waste through less damage and product quality deterioration
Sustainability and marketing
Putting these two words in the same sentence in a group of professionals is a great way to spark a heated debate. Perhaps the best way to describe the doubt is:
“Sustainability is attainable through the reduction of consumption while the objective of marketing is to increase it”¹
Sustainability as a marketing tool
On the one hand, companies can use their brand to promote ESG practices.
Here are some examples:
- Establishing non-profit arms of the company to support fair trade practices
- Supplier and 2nd-tier supplier audits, aiming at eliminating pollution and other environmental issues.
- Supporting research and development of new products or processes that reduce the usage of rare minerals or pollution.
On the other hand, companies gather brand recognition and loyalty based on their sustainability-related activities:
- Sustainability reports and supplier audits
- A watchmaker plants a tree for every watch they sell online
- Eliminating plastic from flights
- Replacing vehicles with electric solutions
- Assuring that their raw materials come only from “fair trade “ sources.
Also, companies publish bold commitments addressed for the far future, where it is not so clear how are the companies going to achieve this, or do they even have a plan:
- Being Carbon neutral by 2035
- Eliminate usage of fossil fuel by 2030
- Drop all non-recyclable materials from production by 2040
- The “climate pledge” – signed by 100+ multinational companies, aiming to become net zero by 2040
The question that pops out when it comes to marketing is:
“ To be or to appear”
As procurement professionals, our job is to be aware of the latest developments related to sustainability. In some cases, it may only be feasible to implement some things that are coming up in the market. Procurement needs to aim for continuous improvement, rather than flashy commitments without a realistic plan.
What gets measured, gets improved
As already mentioned, our (procurement’s) goal is continuous improvement. As the old saying goes:
“What gets measured, gets improved”
I can not detail how you will measure your sustainability effort. It depends from country to country, industry to industry.
In my current role the focus for 2023 is on the following:
- Increasing recycling, both internally and externally
- Setting the foundation for CO emission measurements throughout the Supply Chain
- Introducing reusable packaging for chemicals
Below you will find quite a list of links. Sustainability is a hot topic at the moment, and very soon you will be pushed into delivering an ESG goal for your department. So rather start working on it now.
Please leave in the comments activities your company is currently executing. It will help all to get ideas.
Sources and links:
- ¹Fabrizio Baldassarre, Raffaele Campo; “Sustainability as a marketing tool: To be or to appear to be?”; https://translateyar.ir/wp-content/uploads/2018/12/10.1016_j.bushor.2016.03.005.pdf
- ² https://www.epa.gov/sustainability/sustainable-manufacturing#:~:text=Sustainable%20manufacturing%20is%20the%20creation,employee%2C%20community%20and%20product%20safety.