Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

How Procurement Can Succeed in Sustainable Sourcing

The new business and macroeconomic landscape positions procurement at the intersection of two pressing objectives: efficiency and sustainability. Sustainable sourcing, thus, is one key area of focus.

In many organizations, procurement is still singularly about being faster and cheaper. The shift toward sustainability can seem like an added complication, potentially slowing down processes. There is also a lack of clarity. Without actionable aims, sustainable sourcing can seem like a vast, nebulous area with no definitive starting point or tangible benefits. Add to that are data hurdles in driving sustainable sourcing decisions. The acquisition of accurate data, let alone the investment in tools to analyze it, often faces internal pushback. Then there is the issue of limited visibility into supply chains.

Yet, all these are conquerable challenges once procurement starts to see sustainability as a huge opportunity.

How Can Procurement Then Succeed In Sustainable Sourcing?

1. Set Clear, Actionable Aims

For any initiative to work, especially something as expansive as sustainable sourcing, clarity is paramount.

Start with high-level objectives; be gradual in your approach. Celebrate small victories and learn from setbacks. Also, a crucial note to remember – tailor your goals to regional nuances. Sustainable sourcing practices in Sweden might look a bit different than those in Singapore.

2. Hold Onto Core Procurement Principles

Striving for sustainability doesn’t mean sidelining essential procurement principles. Suppliers must meet specific cost, quality, and quantity requirements. If they don’t, you risk losing internal stakeholder support. While you might need transition programs to manage expectations, always set a clear end goal.

3. Harness the Power of Data

Sustainability thrives on data. Whether you’re tracking Scope 3 emissions or mapping the supply chain, data provides the clarity you need. While obtaining this data might meet resistance, it’s crucial to reframe its acquisition from a cost perspective to a cost-avoidance strategy. Remember, data not only helps in compliance but also in avoiding the cost of non-compliance.

4. Find the Right Focus for Sustainable Sourcing

Regulators see sustainability as a safe bet, and consumers understand its long-term benefits. So, for many procurement functions, the challenge is how to operationalize this growing call for sustainability. This is so because a sustainability agenda that works for one procurement organization may not work for another organization. 

For instance, if a company’s supply chain ends with agricultural commodities, then the focus should be on issues such as human rights, deforestation, pesticide use, and water consumption. However, for other enterprises, these issues may not be relevant. 

Focusing on the wrong areas might not only have a negligible real-world impact but could also expose the business to critiques from activist organizations.

5. Assess Suppliers Closely 

With tightening regulations – for instance the monitoring and reporting requirements of the Germany Supply Chain Act, or the U.S. Securities and Exchange Commission’s proposed sustainability rules on companies making climate-related disclosures to investors – sustainability is no longer optional.

Rather than switching suppliers at the first sign of risk, engage in proactive risk assessment and collaboration. 

Identify potential sustainability threats, and then collaborate with suppliers to reduce or, at the very least, closely monitor those threats. 

6. Embrace Long-term Supplier Relationships

Sustainability offers a chance to redefine supplier relationships. Instead of viewing supplier selection as a mere transaction, see it as the beginning of a long-term collaboration. 

A supplier’s sustainability performance can strengthen this partnership. The goal should be to establish relationships focused on sustainability—covering emissions, environmental effects, equitable employment, and diversity—alongside best-in-class cost, quality, and performance. This responsibility is very strategic, and no other department in the organization is better suited for it.

Conclusion

The journey toward sustainable sourcing can seem challenging. But with a clear road map and an open mindset, businesses can turn these challenges into opportunities, unlocking a future where profitability and sustainability coexist.

Learn how GEP can help procurement organizations in responsible sourcing.