5 minutes read: OpEd ” Procurement: Sustainability Gatekeeper” + The Green Link Ecosystem Alliance’s new ESG Sensing specialist Curation.
Op-Ed_
Procurement: Sustainability Gatekeeper
In The Green Link Sustainability Strategic Framework, which use every time a company asks our help to (re)design their sustainability strategy, the 2nd domain after Design (discussed in the previous catalyst), is Procurement.
Procurement is an essential function to address a company’s environmental footprint simply because they are the gatekeepers of the company. Nothing can be bought or can come in a production process without being vetted by Procurement.
Given the right focus, mandate & incentive, Procurement can help challenge the status quo from suppliers and identify new materials or services with less environmental impact.
Key levers that procurement teams can leverage include: responsible sourcing, alternative materials, technological enhancement, umbrella negotiations & suppliers’ education.
To start our review, these procurement-focused effort have been one of Nestlé’s sustainability strategy approach that led to 2 interesting results:
- A climate-smart sourcing program: switching to suppliers which already operate with regenerative agriculture practices while at the same time helping lagging farmers make the transition as well.
- Alternative packaging material: the most visible one being Nespresso‘s first range of home-compostable coffee pods made with responsibly sourced wood fiber from European forests.
Now how are other industry leaders leveraging procurement for a better planet?
1/ Chipotle rolling out RFID-based tracking tech benefiting suppliers.
Chipotle Mexican Grill , a US-based fast-food company has made local sourcing – always major GHG scope 3 emissions for this industry – a key component of its sustainability strategy since 2020. In 2021, Carlos Londono, Chipotle‘s Vice President and Head of Supply Chain & Procurement, launched a program to leverage RFID case labels technologies to track ingredients from suppliers to restaurants.
This RFID approach is a win-win for both Chipotle and its suppliers. Participating suppliers leveraging this RFID technology saved time on inventory management and stock rotation, mitigate human error, and increase expiration date visibility (thereby reducing waste) and accountability.
Chipotle also provides them with an RFID playbook with best practices and benefits of the program. Rolling-out this tracking technology provides Chipotle with greater capacity to buy responsibly sourced and humanely raised ingredients.
More information on this program here and here.
2/ IKEA helping suppliers on renewable energy transition.
In 2021, IKEA fully realised that while they had the “corporate weight” to negotiate interesting renewable energy contacts, the many smaller-size companies that makes their upstream value chain – like a 15 people strong sawmill company – struggle to purchase 100% renewable electricity.
Remember your scope 3 is your supplier’s scope 1. AsAndreas Rangel Ahrens , IKEA Head of Climate said “If suppliers do not switch to renewable electricity, it’s very likely that they won’t meet their climate goals, which will impact the strategic fit with IKEA” …
Meaning there would be no way for IKEA to achieve its ambitions strategic commitment to become climate positive by 2030, across the value chain. Unless, IKEA thew its weight into the fray and takes its suppliers under its negotiating umbrella…
In June 2021, IKEA rolled-out a program to help its suppliers negotiate affordable Power Purchase Agreement (PPA) contracts with renewable electricity providers consume 100% renewable electricity in their production without needing to make changes or investments.
Suppliers only need to sign a new electricity contract and they can also benefit from training sessions to increase awareness and improve understanding among suppliers about clean energy provided by the IKEA’s procurement teams.
Leading companies, in other industries, such as Walmart have replicated this approach with their “Gigaton PPA” to offer their suppliers access to renewable energy at favourable rate.
More on information available here on theIKEA‘s program and procurement-led training sessions.
3/ Join the Sustainable Procurement Pledge
The Sustainable Procurement Pledge (SPP) is a 12,000+ ambassadors strong international bottom-up non-profit organization for procurement professionals, academics and practitioners – created on October 18, 2019 by Bertrand Conqueret – Chief Procurement Officer of Henkel and Thomas Udesen – Chief Procurement Officer at Bayer.
Starting is always the hardest part of any journey .. but SPP has something to help you kickstart things: introducing “THE GUIDE – For Procurement By Procurement”, a free-to-download resource that will help you start & steer conversations internally.
The Guide includes really interesting, straight from the front knowledge & insights such as:
- Facing the ugly truths: a hard but honest look at the current situation
- Key factors for success: a checklist of ideas on how to make it work
- 8 Case-studies to learn from the experience of companies like GSK , CBRE , Thermo Fisher Scientific , Schneider Electric
The Guide can be downloaded here and we encourage you to read more on SPP here and it’s only one of the many resources available for SPP Ambassadors
Smart insights for sustainable success
We are extremely proud to introduce to our readers a new member of The Green Link‘s Ecosystem Alliance: Curation – a team of expert insight curators specialising in connecting the dots between headline-grabbing events and under-reported stories from across the sustainability and ESG spectrum.
Founded by Nick Finegold a decade ago, Curation is a unique business intelligence agency that helps its clients track the sustainability and ESG trends, risks, and market opportunities that matter most to their business. Some of the world’s largest corporates and asset managers trust Curation’s trend-tracking capabilities including Barclays , BNP Paribas and Rio Tinto .
To enable everyone to get a taste of Curation’s research and insights, Curation provides a free weekly newsletter, Sustt, covering a range of sustainability and ESG stories from the week.
To access it, click hereand enter your email address to register for a free weekly email that takes a fresh look at pertinent sustainability trends that should be on your radar.
In Curation COO Lee Shave own words: “Our specialist insights are instrumental in making your entire organisation more sustainability and ESG-conscious, ensuring you stay up to date with the ever-changing environmental, social and governance landscape and accelerate your journey towards corporate sustainability success.”
