Is sustainable procurement still a unique selling point?
Kronos Group
Your preferred partner in Procurement, Finance & Project Management consulting.
TL:DR
Sustainability has shifted from a unique selling proposition (USP) to an industry standard. Companies must now innovate beyond compliance, integrating sustainability into their core business practices to stay competitive. Businesses can achieve differentiation by focusing on broader social impacts, transparency, and continuous innovation.
With 90% of businesses adopting sustainability initiatives, is it still a differentiator? While 90% of executives believe sustainability is important, only 60% of organisations have actionable sustainability strategies.
Sustainable procurement, which was once considered a distinctive advantage, has now become an essential component of corporate responsibility. This practice entails the careful selection of suppliers and materials that reduce environmental harm, adhere to ethical standards, and support overarching sustainability objectives. Currently, achieving corporate sustainability targets is a primary driver for procurement in more than 70% of organisations.
As sustainability increasingly becomes a standard expectation, the focus shifts to differentiation. A compelling unique selling proposition (USP) is vital for establishing brand identity. Businesses that possess an articulated USP are 53% more likely to be acknowledged as leaders in their respective markets. Additionally, 70% of consumers express a willingness to pay a premium for products or services they view as having unique advantages.
While sustainable procurement has become mainstream, its role as a differentiator lies not in its adoption but in the execution and innovation that elevates it beyond compliance to a strategic advantage.
When was there a rise in sustainable procurement?
Sustainability has become a key focus in procurement as a result of rising environmental issues, evolving consumer demands, and heightened regulatory requirements. The transportation industry, in particular, is responsible for 20.2% of global carbon emissions, highlighting the critical necessity for sustainable practices throughout supply chains.
Furthermore, organisations have come to understand that sustainability extends beyond mere compliance; it also yields significant business advantages. Research indicates that implementing sustainable practices can lead to cost reductions and impact operating profits by as much as 60%. Additionally, employees working in sustainable organisations tend to exhibit higher motivation levels, which contributes to improved performance. Findings from surveys further support this notion, showing that companies with inclusive and sustainable cultures experience 27% higher profitability and 22% greater productivity.
In the early days, companies that integrated sustainability into procurement processes gained a significant competitive edge. These early adopters not only met rising consumer demands but also set benchmarks for corporate responsibility.
A notable factor driving this shift is the alignment of environmental, social, and governance (ESG) initiatives with business value. A study found that 57% of executives believe ESG programs create shareholder value, with consumer-facing companies leading this belief at 66%. These organisations demonstrated that sustainable procurement is not just an ethical obligation but a powerful driver of stakeholder confidence and market differentiation.
By blending environmental stewardship with business innovation, these trailblazers transformed sustainability from a compliance task into a strategic advantage.
What is the mainstream adoption of sustainability?
Consumers driving change
Today’s consumers are more sustainability-conscious than ever. Not only are they willing to pay more for sustainable products, but 37% also actively choose stores that prioritise sustainability. This shift in consumer behaviour underscores the growing demand for environmentally and socially responsible business practices.
Widespread implementation
Sustainability is now embedded across diverse industries, transforming procurement strategies from optional initiatives to essential operations. The retail sector, for instance, has embraced circular economy principles, with companies like H&M and Patagonia promoting recycling and reuse programs. In technology, giants like Apple and Google have committed to carbon neutrality in their supply chains, while the automotive industry accelerates its transition to electric vehicles and sustainable sourcing of raw materials.
Even industries historically resistant to change, such as oil and gas, are integrating renewable energy solutions and sustainable procurement policies to adapt to rising stakeholder expectations and regulatory mandates.
Standardisation of practices
The adoption of certifications and frameworks like ISO 20400 has played a crucial role in normalising sustainable procurement practices. This standard provides clear guidelines for integrating sustainability into procurement decisions, ensuring organisations worldwide operate with accountability and transparency.
Regulatory frameworks, such as the European Union’s Corporate Sustainability Reporting Directive (CSRD), further drive compliance, making sustainability a business imperative. Certifications like Fair Trade and LEED also allow companies to demonstrate their commitment to responsible sourcing and environmental stewardship.
The role of consumers and stakeholders
Sustainability is no longer a “nice-to-have”; it’s a “must-have.” Consumer expectations are backed by growing investor and stakeholder pressures. Shareholders increasingly evaluate companies based on environmental, social, and governance (ESG) performance, aligning their investments with businesses that prioritise long-term sustainability.
Organisations that fail to meet these expectations risk losing market relevance and stakeholder trust. To thrive in this landscape, businesses must go beyond adopting sustainability—they must lead in their innovation, ensuring their practices resonate with the values of today’s consumers and stakeholders.
What are the challenges to sustainability as a USP?
A recent survey found that companies with a well-defined unique selling proposition (USP) enjoy a 15% higher customer retention rate. But as sustainability becomes ubiquitous, the challenge lies in standing out. To truly differentiate, businesses must align their USP with what customers genuinely value—and avoid falling into common pitfalls.
Over-saturation
Sustainability which was once considered a unique concept, has now become commonplace. An increasing number of companies are promoting similar initiatives, resulting in a saturated market filled with brands that emphasise recycled materials, carbon-neutral objectives, and ethical sourcing practices. Although these advancements are commendable, the overabundance of such claims diminishes the competitive advantage of individual brands. When every company asserts its commitment to being "green," distinguishing one brand from another becomes increasingly challenging.
Greenwashing concerns
The emergence of greenwashing—where businesses exaggerate or fabricate their sustainability claims—introduces an additional obstacle. This behaviour not only misleads consumers but also undermines trust in genuine sustainability efforts. As customers and stakeholders grow more sceptical, they demand greater transparency and accountability. In the absence of solid evidence, even sincere sustainability initiatives may be perceived as insincere.
Cost vs. value
While sustainability initiatives often incur costs, an emphasis on promoting these efforts rather than implementing meaningful changes can be counterproductive. Some companies may prioritise marketing their environmental credentials over making significant operational improvements. Although this approach may yield short-term visibility, it ultimately jeopardises long-term credibility.
True differentiation lies in balancing the value of sustainability with the costs of authentic transformation. Companies must demonstrate that their sustainability initiatives go beyond compliance and PR stunts, delivering tangible benefits to customers, communities, and the planet.
To remain competitive, organisations need to stop merely following the trend and focus on aligning sustainability with their brand’s core identity—addressing what their customers “really, really want.”
Redefining sustainability as a competitive advantage
As sustainability becomes a baseline expectation, organisations aiming to distinguish themselves must transcend traditional approaches. The focus should be on innovation, broadening the concept of sustainability to encompass social responsibility, and developing genuine, transparent narratives.
Innovating beyond conventional practices
To achieve differentiation, businesses are adopting advanced strategies that surpass typical environmental initiatives.
These innovations exemplify a dedication to redefining sustainability as a progressive and impactful strategy.
Incorporating social impact
Sustainability has evolved beyond environmental concerns to include social responsibility as a fundamental aspect. Organisations are now embedding diversity, equity, and inclusion (DEI) principles into their procurement processes, thereby fostering supplier diversity and creating fair opportunities.
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Establishing clear narratives
In a time characterised by greenwashing, the importance of authenticity cannot be overstated. Organisations that leverage storytelling alongside transparent data to convey their sustainability initiatives can foster trust and create a meaningful connection with stakeholders.
By integrating innovative approaches, social responsibility, and genuine communication, companies can transform the concept of sustainability from a mere obligation into a significant differentiator that cultivates loyalty and distinguishes them in a competitive landscape.
What is the future of sustainable procurement?
As sustainable procurement matures, the next frontier lies in deeper innovation, technological integration, and holistic strategies that go beyond compliance to deliver measurable impact.
Regenerative sourcing
The future will focus on regenerative practices, where supply chains actively restore ecosystems rather than just reducing harm. This includes sourcing materials that replenish biodiversity, reduce water stress, and restore soil health. For instance, fashion brands like Stella McCartney are exploring regenerative cotton farming to positively impact the environment.
AI-driven sustainability metrics
Artificial intelligence and machine learning will transform sustainability monitoring, offering real-time data insights into carbon emissions, resource usage, and supplier compliance. Tools powered by AI will not only track these metrics but also recommend actionable strategies for improvement. Predictive analytics will enable businesses to foresee sustainability risks and opportunities, driving proactive decision-making.
Sustainability integration in procurement software
Digital procurement tools will increasingly embed sustainability features, from automated ESG scoring of suppliers to blockchain-enabled transparency that verifies ethical sourcing.
Why is sustainability no longer a USP?
Sustainability once served as a clear differentiator for companies like Starbucks, helping them stand out in a competitive market. However, as the Starbucks case study illustrates, sustainability has evolved into a baseline expectation rather than a USP.
Here's why:
Industry standardisation
In the early 2000s, Starbucks pioneered the C.A.F.E. Practices program, which focused on ethical sourcing, equitable wages, and environmental sustainability. This initiative was groundbreaking at the time, as relatively few companies emphasised these aspects within their supply chains.
As the importance of sustainability gained traction, rivals such as Dunkin’ Donuts and McDonald’s began to implement comparable sustainable sourcing strategies. Certifications like Fair Trade and standards such as ISO 20400 contributed to the widespread acceptance of ethical sourcing and sustainability practices.
Key insight: What initially distinguished Starbucks as a leader in this area has now become a standard practice across the industry, diminishing its competitive advantage.
Consumer expectations
Starbucks’ sustainability efforts were designed to appeal to socially conscious consumers. Yet over time, these consumers came to expect sustainability as a default from any reputable brand.
For instance:
Key insight: Sustainability shifted from a value-added benefit to a "must-have" feature for businesses targeting socially conscious audiences.
Competitor imitation and market overcrowding
Rivals of Starbucks swiftly acknowledged the increasing consumer preference for sustainability and initiated their programs.
For instance:
This swift embrace of sustainability throughout the sector diminished Starbucks’ initial competitive edge.
Key insight: When sustainability becomes a common offering, it no longer serves to distinguish one company from its competitors.
Broader sustainability expectations
As sustainability became mainstream, consumers began looking beyond ethical sourcing to assess brands’ overall impact on the planet and society.
Starbucks' efforts in coffee sourcing, while significant, were no longer enough to meet rising expectations for sustainability in areas like:
Key insight: A narrow focus on sustainability in one area (e.g., sourcing) is insufficient; consumers expect comprehensive, organisation-wide sustainability efforts.
Key takeaways from Starbucks
Sustainability has transitioned from a unique selling proposition to a fundamental requirement across numerous industries. The Starbucks case study highlights that while initial sustainability initiatives may provide a temporary competitive edge, maintaining leadership necessitates continuous innovation, comprehensive strategies, and transparent communication. Companies must now integrate sustainability with broader, genuine impacts to stand out in an increasingly crowded marketplace.
Get in touch with a procurement consultant
Today, standing out is more challenging than ever. While sustainability and innovation have become table stakes, it’s strategic procurement that can unlock new USPs—turning a commodity purchase into a market differentiator.
Procurement consultants bring valuable expertise, helping companies refine sourcing strategies, optimise supplier relationships, and integrate sustainable practices that align with brand values. By aligning procurement with a broader business strategy, organisations can create a lasting impact that resonates with customers and stakeholders alike.
If your organisation is looking to elevate its USP and stay ahead of the curve, a conversation with a procurement consultant could be the key. They can help you uncover new opportunities, drive meaningful change, and ensure your procurement practices are a source of competitive advantage.
Interested in learning more? Let’s connect and explore how procurement consulting can unlock your company’s true potential.