Commitment to sustainable procurement is on the rise

From the top down, more businesses are recognizing the importance of sustainability practices, especially when it comes to procurement, according to the 2019 Sustainable Procurement Barometer, released this week by sustainability firm EcoVadis and the New York University Stern Center for Sustainable Business.

The study of more than 210 buying organizations and nearly 400 supplier organizations revealed that 81 percent have increased their commitment to sustainable procurement in the last year and that just 13 percent list "executive support" as a challenge to implementing such policies. The results indicate the growing importance of sustainability across global supply chains, the study authors said.

"Against the backdrop of an increasingly stringent regulatory landscape and growing pressure from stakeholders, it is evident that sustainability awareness is expanding among both buying and supplying organizations," the authors wrote in their executive summary to the report.

Sustainable procurement is the adoption and integration of sustainability principles into procurement processes and decisions; it encompasses both product and materials sustainability as well as the sustainability of supplier practices, according to EcoVadis, which provides sustainability rating platforms for global supply chains. 

The study also revealed the top three challenges to implementing sustainable procurement practices: a lack of internal resources, the inability to effectively and efficiently track supplier sustainability performance, and concerns about costs.

The study also found that most firms continue to measure sustainability progress from a compliance standpoint, "a trap that leads to limited engagement and lacks incentives to drive performance and long-term improvements," the study authors said. Sixty-six percent of procurement organizations cited regulatory compliance as a critically important aspect of their sustainable procurement programs, for example.

"The importance placed on regulations is quite striking, but not surprising given the global awareness and growth in supply chain due diligence and reporting laws. While keeping up with compliance is important, a compliance-only approach could compromise the business benefits awaiting companies that move beyond 'checking boxes' to truly engage suppliers," Pierre Francois Thaler, co-CEO of EcoVadis, said in a statement announcing the study's results. "Embedding programs into corporate strategy, leveraging external databases, and integrating them via a balanced scorecard approach will inherently address compliance concerns while also delivering long-term value."

Other study findings include: 

• Fifty-eight percent of respondents say they are better able to mitigate risk through sustainable procurement, and 30 percent say their programs contribute to cost reduction.
• Other benefits include innovation and access to new categories (25 percent) and improved procurement metrics (24 percent). 
• Companies with mature programs reported more benefits across the board—risk mitigation (88 percent), cost savings (35 percent), innovation (29 percent), and improved procurement metrics (53 percent).
• For 34 percent of procurement organizations, labor and human rights practices have become significantly more important over the past three years and 33 percent say business ethics have become more important.
• Only 22 percent observed the same shift in environmental concerns.