“The mindset of the one million procurement professionals worldwide needs to shift. If you change the million, you save the planet. It is that simple.”
Organisations typically keep Procurement in a box, focussed on cost, quality, and reliability. “Procurement has been largely misunderstood in many organisations, and the ESG dimension has been knocking on shut doors. However, that is the legacy,” says Udesen.
“There is a growing number of people looking at Procurement from a completely different angle. There is no doubt that many organisations in the supply chain want Procurement to just keep taking a finance-focussed view. However, CPOs that report into other functions of the business, such as the CFO or the transformation leader, have a much more comprehensive picture.”
The head of sustainability at Bayer is the CEO. This top-down approach to ESG leadership ensures that sustainability is hardwired throughout an organisation’s processes and strategy. Additionally, employees are given a financial incentive to promote sustainability within the organisation. Udesen explains, “Everybody’s bonus is dependent on the company’s sustainability performance, not the financial performance in isolation – it is both.
Avoiding an administrative burden
Organisations are struggling to access accurate data from their suppliers on their ESG credentials. “It is a nightmare. Mostly, the data is poor, making it difficult for procurement teams to be aware of who they are actually dealing with.”
Whilst tech start-ups are starting to provide solutions, the data is still fragmented. “A platform solution that captures all the company’s data is needed to provide organisations with all the necessary information to access who they are dealing with and how they operate – but this does not exist.”
It is important that the supplier data gaps are not filled by placing a greater administrative burden on the companies with more frequent and complex questionnaires. Instead, there needs to be cross-industry collaboration. “If 50 different organisations are sending 50 different questionnaires to the same suppliers, the suppliers will be spending their time filling in these questionnaires, instead of working to fix these issues. An audit for one, must be an audit for all.”
In terms of public procurement, Udesen says, “It is subject to unreasonable regulation and procedures. As a result, nobody feels empowered to do the right thing. The solution is not difficult, but first, leadership needs to take the admin out.”
To enable the sustainability agenda to progress, “We need to activate a change programme for society. This starts with innovators developing great ideas that shift life away from fossil fuels. Private companies and public money need to support this group and their innovations. The regulator must ensure these great ideas make it to market, and consumers have to buy this stuff. We need to change our individual behaviours.”
“However, most importantly, Procurement needs to create the pull for these innovations by making ESG-based choices. The mindset of the one million procurement professionals worldwide needs to shift. If you change the million, you save the planet. It is that simple.”