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The CPO's 10-Step Guide to Sustainable Procurement
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Whether you’re a passionate supporter of driving sustainability improvement or a sceptical follower, chances are you’ve been drawn more deeply into the sustainability debate over the past 12 months.
As the interface with the supply chain and an engine room for tangible improvements within sustainability, it’s wise to be on the front foot with your procurement function.
In this guide, we share our accumulated guidance on working with clients to drive measurable sustainability improvement through procurement practices. Be this your survival guide or support for your 2022 strategy and beyond, we hope you find it useful.
Step 1 – Understand organisational objectives
You can’t improve everything, at least not all at once, and this is especially true for a set of ideals as broad as those encapsulated by ESG. Make sure, therefore, that you know what is truly important to your organisation and where you can help.
Sustainability targets range in commitment levels from internal aspirations to being externally reported and audited. Clearly these require different levels of focus and rigour and will help define procurement’s agenda and where to spend its time.
Assess if your business has accurate baselines and target, as well as agreed measures to track against. If not, push for them and then translate them into something meaningful. For example, if there are targets to increase spend in the local economy, agree this definition, understand where you will reliably pull data from, and translate a % improvement into £s that the procurement team can action.
Step 2 – Engage sustainability leads
If your organisation has a sustainability function, then it should be setting the business-level strategy from which the procurement team derives its own strategy. It should also act as the Subject Matter Experts (SMEs) to guide around policy, sustainability approaches, and requirements.
Understand their key themes or ‘capitals’ and then agree those which Procurement is well placed to drive forwards.
Naturally, a dynamic tension will exist with one party favouring ESG objectives and the other cost; however, it’s best to proactively drive this dialogue and agree a rulebook that’s realistic and focusses on prioritised approaches. For example, when looking at facilities services, focus on moving the needle within local economic impact and welfare. When looking at fleet, focus on carbon and GHG emissions. Sometimes the right thing is to focus on cost and service and, in this way, support investment in areas where sustainability returns are greater.
Step 3 – Baseline your approach and capability
As the agents of change, your team needs to be equipped with the right targets, skills, and tools, so make an honest assessment of your current capability. Does the team understand the sustainability agenda and how it can play a part? Do you have a clear policy and playbook to guide and support the team? Do you have agreed tender questions, scoring approaches, and contract terms to hand? Is sustainability built into the fabric of the procurement process, especially in category strategies?
Many of these are quick to establish, and it’s fine to iterate.
Step 4 – Triage your spend categories
A key step is to triage spend against agreed sustainability themes to understand which spend areas can drive which themes. Weight these areas by spend, sustainability opportunity, and ability to impact. Ability to impact can be defined by several things but notably by the
complexity or likelihood of change or improvement and the sourcing pipeline.
Where (re)sourcing is not possible, you still have the option to improve through supplier relationship management (SRM) processes, including joint target setting and innovation.
Remember, again, that you cannot improve everything at once.