How is CSR a strategic lever for decision makers in procurement?

Video
Updated on September 20th, 2022
Share :
{{totalComments}} comments

Sustainable procurement is now a priority for organisations, no matter their size or business sector. More than two thirds of buyers[1] consider the achievement of companies’ sustainable development goals to be “very important”. Drawing inspiration from the testimonials gathered by EcoVadis, a global platform for business sustainability and Corporate Social Responsibility performance ratings, we listen to the procurement function. Through their procurement decisions, they play a key role in their company’s environmental and social transformation facing stakeholders’ growing demands. This is an opportunity to understand the real reasons that have encouraged them to shift towards sustainability within the framework of their procurement decisions and the lessons they are drawing today.

Sustainable procurement to be compliant

For the procurement function, sustainable procurement above all enables them to meet the social and environmental requirements of the legislation in place. As Erik Richter, the former Director of Sustainable Procurement within the PSA Group, recalls: "The first pillar, compliance, is in a way, quite obvious."

It is true that the regulations have become tougher over the years, whether in terms of the environment, business ethics, human rights, working conditions, public tenders, greenhouse gas emissions (scopes 1, 2 and 3), etc. This is especially the case within the European Union which wants to accelerate its efforts with the Green Pact for Europe. Here are a few emblematic examples of regulatory frameworks on the European continent.

The UK Modern Slavery Act

This French law obliges corporations to publish a vigilance plan to prevent risks to the environment, human rights, and corruption across their activities and the services they provide, as well as those of their subsidiaries, subcontractors, and suppliers worldwide. Other European countries also wish to draw inspiration from this law to apply similar measures.

The duty of vigilance

This French law obliges corporations to publish a vigilance plan to prevent risks to the environment, human rights, and corruption across their activities and the services they provide, as well as those of their subsidiaries, subcontractors, and suppliers worldwide. Other European countries also wish to draw inspiration from this law to apply similar measures.

The European Corporate Sustainability Reporting Directive

This directive, intended to replace the one on companies’ non-financial reporting (NFRD), should require a certain type of company to publish information concerning its supply chain, its impact on ecosystems, its governance, etc.

Sustainable procurement to strengthen the supply chain

The implementation of a sustainable procurement policy is essential in the search to build a resilient supply chain. This reality has been exacerbated with successive crises of a health, then geopolitical nature. In this respect, more than two thirds of the buyers and suppliers believe that their sustainable initiatives in the decision-making processes have helped them to get through this critical period.

For several years, Mars, Inc. has been massively investing in a more sustainable supply chain. Barry Parkin, Chief Procurement and Sustainability Officer for the multinational company, emphasises in the press the benefits that he draws from it today: "We have about 150 factories around the world. Amazingly, we were able to keep them all running throughout 2020 as demand went up and down, and logistics challenges. The real learning for me is just how resilient supply chains really are. […] Our belief is that by making them more sustainable over the last few years, they have become more resilient[2]."

For Bayer, this sustainable and resilient supply chain is above all based on healthy relations with its contracting partners. Thomas Udesen, Chief Procurement Officer of the industrial group specialising in pharmaceutical research and products, and co-founder of Sustainable Procurement Pledge, a procurement community committed to sustainable development, also explained to the press: "What Bayer has experienced as a company was the power of partnerships and that the investment that we have done into our meaningful relationships in the last 10 years truly paid off. […] We really saw no disruption in any of our physical supply chains during Covid so far. Better still, even if we are not out of the woods yet, it's clear that we have some great partnerships.[3]"

Sustainable procurement to create value

In addition to being compliant and increasing the resilience of their supply chain, companies want to go further in their procurement decisions. They want to make sustainable procurement a lever for performance and differentiation on the market.

Erik Richter, former Director of Sustainable Procurement of the PSA Group confirms this idea: "This is where things become more interesting: the aim is not only to be compliant but to convert this compliance into performance. This involves being cleverer than the market and faster than what is simply expected from us."

Clariant aims to become a global leader of the chemicals industry thanks to its performance in terms of sustainable development. Cesare Guarini, former Head of Procurement Strategy Initiatives and Sustainability for the Swiss company, explains how this translates in his procurement decision processes: "The aim is to contribute, by converting costs into added value and focusing on three main areas: sustainable development, innovation and growth markets. To do so, we are going to deploy collaboration contracts with our suppliers." 

In light of these testimonials, sustainable procurement policies seem perfectly in line with companies’ current challenges, thereby contributing to their Corporate Social Responsibility strategy. As a real path to competitiveness, there is no doubt that respect for humans and the environment has become an essential topic in taking procurement decisions. 


[1] EcoVadis & Stanford Graduate School of Business, Sustainable Procurement Barometer 2021