Five reasons to stay on course with sustainable procurement

Sustainable procurement
July 14th, 2020
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With the peak of the COVID-19 crisis seemingly behind us, procurement departments may be tempted to temporarily sacrifice sustainable procurement in the hope of a more effective recovery. However, a recent article by Procurement Leaders presents five compelling arguments explaining why corporate responsibility is actually key to boosting recovery and should be considered a top priority.

Sustainable procurement policy, which was already underway before the pandemic, must therefore be upheld and developed even further. Businesses have everything to gain by maintaining their sustainability standards:

Sustainable procurement strengthens the supply chain

In the past, any breaches in suppliers' commitment to protecting their employees were classed as "reputational risks" in the eyes of buyers. These breaches could even result in a fall in a corporate customer's share prices if it emerged that its suppliers were not meeting requirements.

However, the COVID-19 crisis has shown us that working with suppliers who are negligent when it comes to human rights could also have operational consequences, such as critical disruption to supply chains. Compliance with employee health and safety regulations must therefore remain a priority or become a key indicator when choosing suppliers.  

Sustainable procurement gives businesses a competitive edge

While some have called for environmental constraints on companies to be relaxed under the pretext of COVID-19, most organisations have chosen to continue upholding their commitments.

In their experience, fighting global warming has actually led to increased growth, even at the height of the crisis. Needless to say, these organisations have no intention of relaxing their sustainable procurement policy when recovery now seems to be just around the corner.

The general view is that companies falling behind on these issues actually run the risk of losing their competitive edge.

Customers are looking for sustainable procurement

Customers' preference for sustainably sourced purchases is not a new phenomenon. Indeed, companies with a structured approach towards sustainable procurement were receiving more and more positive feedback from their customers long before the pandemic. 

However, a by-product of the crisis is that it has demonstrated the extent to which businesses and economic activity are to blame for air, water and environmental pollution. This is why new categories of buyers now include environmental issues in their criteria for choosing suppliers.

Sustainable procurement improves share prices

The evidence speaks for itself. Share prices of listed companies are rising as a result of two factors:

  • Respect for the environment
  • Responsible behaviour towards each of their stakeholders, including local residents and society as a whole

Engaging with the most vulnerable sectors of society during and after the crisis is clearly a factor that helps to further strengthen business value. Moreover, shareholders are committed to reminding companies if they stray too far from their sustainable procurement policy.

Sustainable procurement is the only way forward

The fifth reason for pursuing a sustainable procurement policy is essentially the most compelling: there's no other feasible option.

Time is running out for the planet and urgent action is needed now more than ever. The good news is that investing in sustainability is also likely to boost recovery.

Collectively redoubling efforts towards corporate responsibility is a valuable way for companies to stimulate growth by:

  • Creating high-quality jobs
  • Developing stakeholders' skills
  • Improving business resilience 

To conclude, the COVID-19 crisis has not changed the fact that the deep, systemic climate crisis is still ongoing. This is why procurement departments must stand firm in pursuit of their approach to sustainable purchasing. Undoubtedly, the most compelling reason for doing so is that there is no planet B. However, the development of sustainable procurement is also, for once, supported by economic and financial motivations.  

The COVID-19 crisis has revealed just how fragile supply chains are, highlighting two weaknesses in particular:

  • Exposure in the Far East
  • Focus on one part of the world

As a consequence, the question of moving supply chains has become a major strategic focus, combining economic necessity with the requirement to contribute towards sustainable procurement policy. To learn more about relocating supply chains, take a look at the recent article by Julie Dang Tran, Managing Director of Manutan France, entitled, Thanks to COVID-19, moving supply chains is once again a prime topic for discussion.

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