Building your organization’s sustainability mindset
As leaders race against time to meet and exceed their company’s environmental, sustainability and governance (ESG) goals, they must put sourcing – once considered a back-office function – at the forefront. Most of an organization’s environmental, social and governance risks reside with suppliers managed by a procurement team. To minimize risk and achieve ESG objectives, the C-Suite must understand why sourcing functions are critical to enabling sustainability efforts.
While ESG metrics have gained ground in holding companies accountable for sustainability efforts in recent years, many leaders view C-level engagement and a lack of organizational alignment as barriers to achieving ESG goals. Considering that only 50% of leaders view procurement as a key driver for achieving the Sustainable Development Goals, this perception is not surprising.
Leaders need to embed sustainability into their organization’s DNA and start thinking creatively about better use of procurement resources to advance ESG efforts. As supply chain is one of the major industries driving the demand for sustainability skills, procurement teams should not be overlooked.
Strategies for optimizing sourcing operations to achieve ESG objectives
Leveraging procurement to influence and manage the sustainability impact of the supply chain will drive transparency, profitability and competition. Workforce and operations will be better equipped to drive a more responsible and sustainable future. While there is no “one size fits all” approach, organizations should explore strategies in back-office functions that generate revenue and increase employee retention, while helping organizations meet ESG criteria .
1. Initiate core training programs to align with ESG objectives
Organizations have long viewed procurement as a support function rather than a primary driver of sustainability. As a result, these employees may not have the skills needed to achieve their organization’s sustainability goals — a recent Accenture Study of business leaders reveals that many sourcing teams lack the strategy, expertise or incentives to ensure their ESG performance.
To understand the nuances of sustainability reporting, internal teams and suppliers should receive training on data collection and analysis strategies. Without the understanding and alignment that strategic ESG data collection and analysis provides, sustainability is pushed into an organizational silo.
2. Invest in on-the-job sustainability and technology skills development for procurement teams
Many procurement and procurement teams lack a common definition of success and little incentive to do anything other than cut costs. They also lack digital resources and tools, including sustainability measures and awareness.
Yet research shows that most employees are open and enthusiastic about learn new skills in the workplace. Improving the skills of purchasing employees with the right tools and knowledge can help develop the career trajectory of each team member, giving them new skills that are essential in this new era of priority to the sustainability. As technological advancements continue to shape Industry 4.0, the supply chain is becoming increasingly connected.
Consider, for example, that corporate hiring departments cannot control their vendors’ operations, but are held accountable for vendor emissions. Sourcing teams must now consider suppliers through an ESG lens to weigh how they can fit into the organization’s ESG goals.
3. Look at the big picture to expand the sustainability mindset
Focusing on suppliers and those who manage them is key to building a more sustainable future, but just as ESG goals shouldn’t exist in silos, sustainable procurement is moving into other areas of the organization. According Accenture Researchrespondents see energy, travel and logistics as the top three priorities.
For many companies, reducing energy consumption has become the “low hanging fruit” for achieving ESG goals. Companies are paying more attention to carbon implications in travel and logistics. Leaders need to think about how to use the transition to less impactful modes of operation, including road and sea transport.
Organizations that embed sustainability practices in their DNA can create a competitive advantage by becoming more efficient, transparent and profitable while building a future-ready workforce. Progress requires a different mindset, detailed data, governance tools, and collaboration across organizations. Leveraging procurement to achieve ESG goals is just the first step to creating a pervasive sustainability mindset in every organization.