With the closeness and ownership of the supply base the Procurement function has a decisive role to play in shaping the company’s Environmental Social Governance (ESG) footprint and contribute to the Net Zero targets for greenhouse gas. Creating Procurement with Purpose is an important part of Procurement Transformation.
Procurements Connection to Sustainable Development Goals (SDG)
A base for any sustainability work (ESG) is the United Nations Sustainable Development Goals (SDGs). Since the release of the SDGs in 2015, almost all Procurement organizations has defined targets and initiated projects to play a bigger role in society and improve the overall value chain impact on people and our planet. A Procurement Done Right function should address the SDG goals as well as be specific about Greenhouse Gas Emissions. Estimations show that more than 50% of a company’s carbon footprint arises in Scope 3, i.e., all emissions in a company’s value chain that occurs outside the company itself, e.g., at suppliers. This highlights the importance of Procurement teams to engaging suppliers to implement strong sustainability initiatives.
Procurement for People, Planet and Profit
A good way for Procurement organizations to start their sustainability work is to assess today’s baseline in the area of People, Planet, and Profit and to create specific KPIs in each of these areas.
How do we work with social sustainability? Addressing fair treatment, ethical labor, health, safety, security, diversity and equality at our suppliers.
How do we work with environmental sustainability? Addressing renewable energy, sustainable water and land use, replenishing natural resources, limiting emissions and pollution when conducting sourcing events.
How do we secure financial sustainability? Securing supply, ensuring price stability and efficient processes in our supply base.