Monday, 13 July 2015

Sustainability Offers Opportunities. Procurement Should Grab Them

Doing more on sustainability is not just about the feel-good factor, efforts here can make a significant impact on the bottom line. 

Sustainability efforts worldwide received a jolt recently from major players in the coffee industry. Nespresso, the coffee-making unit of Nestle, reported on progress in its Positive Cup sustainability programme, including investments to rebuild the coffee industry in Sudan and efforts to help coffee farmers in Columbia through a retirement savings plan. Additionally, the company’s agroforestry plan is introducing new trees to provide resilience to climate change.

Likewise, Starbucks announced further investments in its Global Farmer Fund Programme, which includes efforts to manage climate variables through agronomy, restoration, and infrastructure improvements, among other things.

Those programmes reflect good business strategy as well as good corporate citizenship.

Procurement should take note. Sustainability can produce big payoffs. A recent report by The Conference Board revealed that for companies developing sustainable products, revenue from those products grew at six times the rate of overall revenues. Indeed, revenue at some of those companies grew at an astounding rate. For example, at Kimberly-Clark, topline revenue from sustainable products from 2010 to 2013 grew 296% versus an overall corporate revenue growth of 7.6%. Part of the reason for such growth could be that, according to a Harvard Business Review report of a few years ago, sustainability is a major driver of innovation.

Procurement is, naturally, a key player in sustainability efforts through its management of the supply chain. As a recent Procurement Leaders report found, the function has integrated corporate social responsibility into its processes, even if only at the grass roots level. Procurement was a consideration in sustainability efforts by Biogen Idec that resulted in the company being named the world’s most sustainable company in 2015 by Toronto-based media company Corporate Knights, according to a company spokesperson, and will play a greater role in the future. Other US companies getting high marks for sustainability in a different report (The RobecoSAM Sustainability Yearbook) were Alcoa, Ball Corp., and Wyndham Worldwide.

Procurement can do more though, as the Procurement Leaders report suggested. For example, it can push CSR up the business agenda by highlighting opportunities in the supply chain. Given the potential for profit, that effort alone could increase the value the function provides to the organization.

Members can read the full Procurement Leaders sustainability report here



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The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

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