Procurement & Sustainability: Your Company's Yin & Yang

For those that aren’t familiar, or like myself are more familiar with the symbol than the concept, the principle of Yin and Yang is a concept of dualism, used to explain “that all things exist as inseparable and contradictory opposites, for example, female-male, dark-light and old-young. The pairs of equal opposites attract and complement each other” (worldhistory.org 2018).

Procurement and Sustainability are two disciplines and business functions that exist in a perfectly harmonious contradiction. At their root, these two roles coexist with conflicting purposes, but function stronger together than they do apart, as they are — at times — seemingly contrary forces that actually are complementary, interconnected, and interdependent in any business.

Procurement is fundamentally centered around the act of acquisition and/or buying. Procurement can be seen as a primary propellant of production that inevitably leads to consumption.

Sustainability is fundamentally centered around the act of conservation. Sustainability can result in the sacrifice of profit or production in order to balance the well-being of people and the planet.

The above isn’t suggesting that procurement isn’t committed to sustainability, that sustainability doesn’t value the importance of procurement and/or that either of the two comes at the expense of the other. Procurement and Sustainability are disciplines and functions that need to do more than simply coexist to take a strong position in your organization’s value chain.

Procurement and Sustainability must remain mutually committed in their relationship, find areas of compromise and exploit opportunities of common gain.

Procurement Is Committed

Procurement, as an industry, is committed to positive growth and sustainable development.

“According to the 2020 Ovation Pulse, 92% of CPOs remain committed to their long-term goals. This, they say, includes value delivery through supplier- enabled innovation (SEI); sustainability through environmental, social and governance (ESG) goals; as well as agility through digitalization — all of which will enable the business to deliver on its growth agenda” (Procurement Leaders 2021).

At the crossroads of sustainability, technology, and the broader supplier base lies smart, sustainable, and scaling supply chain growth; growth that comes with a balance of people, planet, and profitability in mind.

Commitment from procurement is a great starting point, but in order to truly deliver on long-term goals, procurement teams will need to shift priorities, sacrifice some traditional procurement methods, acquire greater transformation/technology budgets, build a culture that excites change, and adopt modern solutions as a means to speed up time to delivery on ambitious objectives.

Chief Procurement Officers’ priorities seem to be changing with the times in order to further implement initiatives necessary to meet broader organizational goals. CPOs “gave supply chain sustainability a ranking of 7.2 out of 10, on average — an increase from 6.2 in 2020, according to Procurement Leaders’ CPO Planning Guide 2021” (Procurement Leaders 2021). This is, yet again, an affirmation that procurement leaders understand the importance of being a role player in broader sustainability initiatives and sustainable development goals.

High-performing procurement organizations follow up on sustainable procurement goals, ensuring that these are taken into account within KPI measurements. This is good for your procurement team to measure in order to drive sustainable development, but also provides a more nuanced picture of the value that procurement can create within the broader business. As seen below in the graphic taken from the Deloitte 2021 CPO Survey, one can easily determine that there is a large discrepancy in how KPIs central to sustainability & sustainable development (Diversity, risk/compliance, innovation, quality, etc.) are reported in high performing procurement teams vs. others

The complexity of sustainability and procurement is evolving. High-performing procurement organizations don’t fear change but embrace it as a core part of their business culture and strategy.

High-performing Procurement teams embrace Sustainability!

Sustainability Is So Much More in 2021

As mentioned above, the complexity of sustainability and procurement is evolving in modern times.

People, planet, and profitability remain the three core pillars to sustainability, but their definitions are becoming broader and their impact upon global value chains more significant.

Internal & external pressure from stakeholders, leadership teams, executive boards, investors, and society-at-large are evolving from demands to legislation. This is visible in Europe and materialized in examples like EU Taxonomy regulations and/or the German Supply Chain Act putting the spotlight on climate impact and supply chain compliance. Diversity has also been accelerated as a top priority in sustainability and procurement strategies alike. Supplier diversity programs are a growing priority, rapidly advancing on global corporate agendas after a year-and-half packed with protests for global equality.

Simply… Sustainability is so much more in 2021.

Sustainability has evolved from a business discipline applied as a means to conserve, to an integrated strategy — applied in the organization across functions— to realize social, financial, and environmental change.