Sustainability is no longer sustainable
The use of the term ‘color TV’ peaked in 1972. Its appearance in English language texts has declined steadily thereafter and will soon be indistinguishable from the X-axis. The term ‘digital photography’ peaked in 2007 and is also making its way to the X-axis.
The term ‘environmental sustainability’ peaked last century, in 1999 and it looks like ‘sustainable business strategy’ is at its peak about now.
Color TV is now just TV. Digital photography is now just photography. And now, sustainable business strategy is also just business strategy.
Surely, if all business strategy now has sustainability baked in, then it follows that sustainable procurement is also now simply procurement. Who in a modern enterprise or organisation is not thinking about their procurement being sustainable?
There is more to this than semantic amusement. Our understanding of sustainability and the need to adopt sustainable practices are now so widespread that they have become orthodox, they are part of business convention.
There is a gap between intention and action
Given the above, one could easily be forgiven for thinking that the whole sustainability quest is going very well. Unfortunately, that is not the case. Instead, we see a persistent gap between an organisation’s intentions and its actions.
Most organisations are making solid progress on Scope 1 and 2 emissions (direct emissions from their own infrastructure and their use of energy) but are struggling with Scope 3 emissions, those that occur upstream and downstream in our value chain. And this is where procurement stands to play a significant role.
The quest for sustainable businesses sits within the wider framework of environmental, social and governance principles (ESG). We also see social and governance dimensions of the ESG framework growing in maturity and influence. This is amplifying the pressure to ensure procurement becomes more strategic.
So, the first step is to stop talking about sustainable procurement and call it procurement.
Next, we need to ensure our day-to-day procurement and supply chain operations have sustainability fully embedded.
To be ESG-aligned, procurement shouldn’t simply be sustainable for the sake of it. A mature capability steers procurement towards specific regulations or is guided by specific organisational policies and/or values. Since the future means sustainability is hand-in-glove with procurement, our focus then is on fit, so to speak. Your procurement strategy and capability must fit – like a glove – with the unique circumstances of your organisation and its strategy.
For most businesses, strategy will include a focus on developing competitive advantages and, with the outlook being for tougher conditions, being competitive will become even more pressing. More strategic sourcing, along with smarter contract and category management, will be more important than ever before.
No one said it would be easy
Moving in this direction will not be without its challenges, and we need to be aware that in many cases we will be in unchartered waters. Some recent research identified the areas where sustainability intentions meet strong headwinds.
Early this year, in a survey of 150 chief financial officers, Open Energy Market found ‘CFOs identified an increase in overhead costs (27%), managing financial risk (24%) and complexity of renewable tech (21%) as the main barriers to signing off sustainability investments.’
In our experience working with clients on these issues, we make the point that another way to consider the three barriers identified is that they all relate to an organisation building new capabilities. New resources will be needed, which often relates to overheads, and financial risk is higher because there is often novelty and complexity, and typically the technology itself is either complex or unfamiliar.
It is at this point that we need to note that no one has ever said sustainability would be easy. But nor is it impossible and, if we don’t want the atmosphere to cook us, it is inevitable that we must get on with it.
To overcome the gap between intention and action organisations must quickly develop the capabilities, expertise and collaborative partnerships they will invariably need to achieve their ambitions.
In a more collaborative economy, we can rise to the challenge with all the imagination, ingenuity and intelligence that so often underpins human achievement.
