4 Ways Procurement Teams Can Support Sustainability

Download this article in PDF format.

Today’s procurement departments do a lot more than just secure the best possible price and delivery times for goods and services. In fact, they’re increasingly recognized as pivotal drivers of their organizations’ sustainability and environmental, social and governance (ESG) initiatives. 

“While the bottom line remains the main focus for procurement organizations,” the Institute for Supply Management (ISM) states, “investments toward [ESG] goals are increasingly becoming key components of corporate strategies.” 

Smart companies are making their procurement teams a part of these conversations and enlisting their help in advancing their organizational sustainability goals. Decisions about which suppliers to engage, what materials to source and how goods are transported, for example, all directly influence a company's carbon emissions, waste generation and adherence to ethical labor practices. 

4 Steps to ESG Success

By integrating sustainability criteria into the procurement process, organizations can make substantial strides towards their ESG goals. Here are four strategies procurement departments can use to champion and support sustainability within their own organizations: 

1. Build a business case for sustainable procurement. Factor in your organization’s needs, priorities, values, resources and stakeholder requirements. Next, procurement analytics provider Sievo recommends pinpointing specific focus areas and priorities. “Ensure that management, procurement, sustainability and compliance teams agree on the business case and benefits,” it adds, and ask yourself these questions: 

• Is sustainability a core company value and part of our DNA? 
• Are we incorporating sustainable practices to please our target market or to satisfy our investors and stakeholders? 
• Are we driving sustainable procurement initiatives to comply with government regulations?

2. Set tangible sustainability goals and targets. This not only helps provide direction, but it also bolsters commitment and helps you measure progress, according to Sievo, which offers these ESG goal examples as good pathways to a more sustainable procurement policy:

Environmental targets

• 100% compliance with environmental guidelines in your industry
• 100% of key suppliers’ environmental impact assessed
• X% reduction in consumption of resources such as energy and water

Social targets

• 100% compliance with paying living wages and eliminating child labor
• 100% compliance with health and safety audit standards
• 100% compliance with the Modern Slavery Act

Governance targets

• 100% compliance with regulations and applicable laws
• 100% compliance with terms for anti-bribery and anti-money laundering
• X% of key suppliers engaged in joint sustainability program 

3. Create a unified “source of truth” for all stakeholders to work from. ISM says the first step a procurement team should take toward effective ESG analytics is defining a single source of truth data set from which to track these metrics. “If different geographies or business units are operating with their own assumptions on how to calculate these figures, or are generally estimating where they might stand, it will be very difficult to get a concrete assessment of current behavior or track actual progress,” it says. “Aligning on a standardized set of definitions, calculations, and data sources will establish an agreed upon baseline from which to track and improve progress over time.”

4. Enlist suppliers and stakeholders in the effort. Collaborating with suppliers and stakeholders is essential for promoting sustainability, and procurement teams are well positioned to both identify and maximize these vital connections. “Manufacturers must work closely with their partners to exchange best practices, set sustainability goals, and drive continuous improvement,” INCIT says in 3 essential strategies to boost electronics supply chain sustainability. “[That way] they can create a network of like-minded organizations committed to sustainable supply chain management by fostering strong partnerships.”

Procurement departments are no longer just cost-cutters; they’re crucial agents of change. They’re actively shaping their companies’ sustainability narratives by strategically selecting suppliers, fostering collaboration and rigorously tracking progress—all of which solidify their roles as essential drivers of organizational ESG success.