When making purchasing decision, more and more buyers are looking for sustainable options. What is driving this trend?
We are seeing more and more people choosing to do the right things. They are not turning a blind eye to anything. The moral compass of society is stronger than ever.
So where is this coming from??
Greater awareness of social, political and environment topics
- The ageing population. This is not what you think! The ageing Millennials, or those born after 1980, are making up a greater proportion of the decision makers in business and place value on sustainability initiatives. 73% of millennials are involved in B2B purchasing decisions according to Thomas.net.
- Options! Increasingly forward-thinking companies are able to evidence what they are doing on sustainability, their impacts and their tangible targets. This makes decisions easier for purchasers to partner with like-minded companies.
One of the big drivers is public sector procurement, where people are seeing sustainability impacts taking a bigger share of tender evaluation scoring. One client recently experienced a tender where 25% of the available marks were linked to sustainability impacts.
Probably more significant is the environmental, social and governance funding trend. ESG funds cannot afford to be caught out from any of their portfolio companies doing the wrong thing. They want no risk of issues emerging like:
- child or slave labour in the supply chain
- deforestation
- pollution events
- ethnic or gender discrimination accusations.
Fund managers are looking to attract the institutional investors, so they need to be confident and secure that their investments are genuinely safe from environmental, social and economic viewpoints. The G of ESG is governance, and for procurement this means having the right policies and controls in place.
The UN Global Goals driving the overall government agenda, are driving regulation. Everyone is behind here we need to be to hit the 2030 targets, so increased regulation is highly probable. To make people react and do the right thing to get us back on track with this.
Some high profile examples
Examples of issues and skeletons includes the governments procurement of PPE during COVID. If the government were a business, they would have significant reputational damage on the back of the scandal that is the PP procurement. Thousands of gowns airlifted from Turkey for a small fortune all to the wrong specification! £21m payment to a middleman for PPE. A £100m contract awarded to a company with £20k of assets. Investors would run a mile from those revelations, and there would be a risk to recruitment of employees.
Cotton in clothing procurement is an interesting example. Inorganic cotton is a really polluting crop due to high water usage, pesticides and deforestation. There are alternatives. If you look at some of the big players like Nike, they’re using recycled elements, others are using organic cotton and alternative fibres like hemp and bamboo are in the mix. If you are procuring cotton, you are in a risky position if you haven’t mapped how you will shift from inorganic if you choose to, or any stakeholder pressure forces your hand.
The big things to do are…
Build that deep understanding of your supply chain. Not just who you buy from but where what that complete journey is.
Look ahead and predict the regulations likely to apply to your sector. This could focus your attention as you cannot tackle everything at once.
Purchase with purpose. Take the perspective that all your procurement can ultimately have positive impacts. That sets the bar high, and you’re going to be somewhere on the spectrum towards it, so you can pick the best opportunities to move forward.
Get evidence, get validation, get proof. When people ask you or even in your search for like-minded employees, customers and investors you can then confidently say “here’s what we’re doing, here’s the evidence and maybe here’s this third-party certification to reinforce that”.
If you would like a discussion around your procurement and sustainability initiatives, just get in touch.