Implementing responsible and sustainable procurement practices can improve supply chain performance and create proven ROI, according to a new report from EcoVadis.
Called “The Substance of Purpose,” the report published this week looks at the effects of supply chain sustainability, especially for business leaders that align with the United Nations Sustainable Development Goals (SDGs). As EcoVadis points out, more than 10,000 companies worldwide participate in the United Nations Global Compact, 72% of global companies mention SDGs in their annual corporate or sustainability reports, and 50% of companies — Nokia, L’Oréal, and Air Liquide among them — have identified priority SDGs.
Citing previous research that EcoVadis and the NYU Stern Center for Business Sustainability conducted together for the 2019 Sustainable Procurement Barometer, the new report highlights the benefits of having mature programs. They include increased risk mitigation, improved procurement metrics, and cost savings.
Executives who are serious about accountability, purpose, and profitability should focus on their supply chains, EcoVadis says. In particular, their chief procurement officers can improve supply chain performance while limiting exposure and getting closer to the purpose aspect of the SDGs by adopting sustainable procurement strategies. For CPOs, the report recommends:
- Alignment with the SDGs.
- Supplier engagement to ensure buy-in and ownership of sustainability performance.
- Proven technology and methodologies for assessing suppliers’ sustainability performance.
- Evidence and validation of sustainability practices.
- Customization and benchmarking for location, industry, and company sizes.
- Clear expectations, transparent measurement, and a focus on continuous improvement.
“The globalization of today’s supply chains can often span less mature and unregulated markets,” the report cautions. “If left unmanaged, this can expose organizations to slavery, forced labor, dangerous working conditions, information security lapses, counterfeiting, quality issues, environmental waste, corruption, and more.”