Sustainable procurement programs are more integral and widespread than ever before, but face a critical juncture as they scale to reach the next level of maturity, according to the results of the new EcoVadis/HEC Sustainable Procurement Barometer.
“Sustainable procurement is no longer a nice-to-have—it’s an integral business function responsible for protecting and improving brand reputation, driving revenue and mitigating business risk,” said Pierre-François Thaler, co-CEO of EcoVadis, a platform for environmental, social and ethical performance ratings for global supply chains. “In order to scale up, the mature programs are investing in embedding sustainability into processes across their procurement organizations. One key outcome of this benchmark study is to help inform and inspire all organizations to accelerate their progress toward leadership, and realize the rewards and return on investment (ROI)."
The EcoVadis/HEC research—which was compiled through a survey of 120 supply chain professionals globally—found that almost all organizations (97 percent) place a high level of importance on sustainable procurement. This continues the upward trajectory of previous years, illustrating how established the field has become in less than 10 years.
Sustainable Procurement Becomes Widespread, with Intentions to Scale
Nearly half (45 percent) of organizations said their sustainable procurement program covers most (75 percent or more) of their spend volume today, a significant jump from the 27 percent that reported the same in 2013. Yet while supplier coverage increased, depth of supply chain corporate social responsibility (CSR) visibility remains elusive. In fact, only 15 percent of organizations said they have complete supply chain visibility into the CSR and sustainability performance of both Tier 1 and 2 suppliers, and only 6 percent reported full visibility into Tier 3 suppliers and beyond. This is the No. 1 challenge today for sustainable procurement teams. It is often further down in supply chains where the most significant risks lie and the need to scale up programs to increase the depth of program visibility to the long tail of global supply chains has never been more urgent.
The EcoVadis/HEC study also found that organizations collecting sustainability data are actively using the intelligence to guide sourcing decisions. “By making CSR data a key factor in the sourcing process, organizations are incentivizing suppliers to be more sustainable and act more responsibly across the board,” said Thaler. “The more procurement teams push to integrate sustainability in their daily roles and decisions, the greater—and faster—the trickle-down effect will be on a global scale.”
Challenges Shift, but Still Need to Be Addressed
In the previous survey conducted in 2013, the No. 1 cited obstacle to more effective engagement and commitment to supply chain and procurement sustainability was a lack of executive and board support. In 2017, that challenge doesn’t crack the top three. “The C-suite appears to be finally on board with sustainable procurement initiatives,” said Thaler. “However, when you dive deeper into the data, an interesting picture starts to appear. While executives are finally on board, procurement teams still report that a lack of internal resources holds them back.”
In 2017, the two largest obstacles for sustainable procurement programs were a lack of internal resources and difficulty tracking supplier sustainability performance. Supplier commitment, on the other hand, was not found to be a primary challenge. In fact, only 14 percent of suppliers reported that they were not incentivized by buyers to be sustainable and socially responsible.
"With the right tools, executive support and supplier engagement, an organization can launch a sustainable procurement program and put a basic program in place, but it’s not enough. To drive to full ROI and value creation requires much higher coverage, and this means getting the rest of the organization to adopt sustainable procurement in their daily jobs—in procurement, supply chain, risk management and environmental health and safety (EH&S), to name a few. This is an internal change management challenge and it takes time," said Thaler.