Sustainable Procurement: Is this limited by our thinking, capabilities, motivations and opportunities to deliver competitive advantage?

Having consumed copious articles, research papers, statistics and the developing timetable of regulations coming our way over several months it is clear there are some emerging themes. Setting the scene for why we should care about the long term over the short term, the fact that no matter what our personal circumstances we are all part of one global community that is very much interconnected and that we do have formal and informal relationships with everything we produce and consume from data to food and everything in between through the very complex supply networks we rely upon.

First a few facts form a recent report¹ that should make anyone in finance, procurement, supply chain, operations and shareholders recognise that embedding sustainable practices is not a “nice to have” or  a “bolt” on, but a prerequisite to; enduring value and shareholder returns, the ability to produce and consume without creating a deficit in the resources upon which we rely to exist (as they are finite), operate and create value beyond current levels, enhance reputational or brand identification and standing, secure the best talent and skills and more. In short by investing and more importantly embedding sustainability as part of the strategy, organisational culture, processes/workflows and decisions it yields;

• 75% more likely to attribute greater improvement in revenue
• Outperform in term of profitability by 52%
• 16% higher rate of revenue growth on average
• 83% more likely to achieve innovation in product/service development (data driven)
• 44% reduction in energy consumption = Savings, CO2 reductions, Lower Scope 1, 2 & 3 emissions, etc.
• 56% better performance from their peers on talent attraction
• A factor of 2 in terms of operating cost improvements.

The above facts should be more than sufficient to create a compelling business case!

Some of the key factors seem to centre around the common themes of;

1. Embedding sustainability throughout the organisation and having data that is targeted towards actionable insights (only 4 in 10 organisations can currently do this), not just reporting or box ticking!
2. Trade-offs are not necessary if sustainable procurement is built in as an integrated approach.
3. Sustainability is an embedded part of an organisation’s governance.
4. Develop the people, skills and decision making deep into procurement but ensure the whole organisation has a core competency above the functional skills. This should be planned and supported as an ongoing BAU activity.
5. Utilise an ecosystem of partners and suppliers to support and bridge talent gaps.
6. Democratise insights on sustainability to the whole organisation as this will engage enterprise wide activity and engagement and tap into cognitive diversity.
7. Plan for both current and future legislation as reactive activity will be disruptive and suboptimal!
8. Double materiality is the new reality and is supported by an embedded sustainably driven organisation. Further it is a competitive opportunity not a threat to organisations if approached correctly.
9. Break the long term approach into short term actionable plans to align with the short term horizons of financial (quarterly/annual reporting horizons).
10. Prioritise, the bread and depth of a full programme will span many years and across many functional areas, often demanding time/input/effort from the same people/resources/systems, etc.   
11. Doing new or different things signals changes and invokes behavioural responses from all involved. Therefore, be sure to understand;

o   Do they have the right capabilities, if not address this first

o   Are there the right forums and opportunities for individuals to engage and be part of the change or decision making?

o   Understand what would personally motivate people to make these changes.

o   Create psychological safety to allow the change and transformation to be effective.

12. Build momentum in the change and transformation to an embedded sustainable organisation as a “big bang” approach is unlikely to be successful.

13. Express sustainability in the language of the recipient, e.g. from consumer, finance, sales and marketing ensure you have translated it into their language!

14. Be agile and flexible in your approach.

Comments and observations welcome as always: Chris McCann Kelly Barner Jo Jones MCIM Journal of Responsible Production and Consumption Demi Turner (née Smoloktou) Sarah R Robbins, MBA Mat Langley Andy Hale Luciana Salvatore Jo Parkin (MCIPS) Seb Butt Pia Pinkawa Jane Dickinson Kate Hutchinson Dominic King Diletta Broggian Simon Peters Chee Yew Wong Shaun McCarthy OBE Donal Daly Ingrid De Doncker Dr Hushneara Begum