Sustainability and Procurement go hand in hand

Traditionally, Procurement has focused on optimizing and reducing costs, but in a more unstable world it is also necessary to focus on stable supply chains and not least to be a sustainable and green organization. Here, Procurement has taken on a new important role, which makes different demands than before.

Roughly speaking, you can say that sustainable procurement is based on three pillars:

1. 1. • The first pillar is efficient procurement. It can, for example, be calculated based on TCO - here it is measured whether the purchase is cost-optimized based on the traditional objectives that the total cost must be as low as possible.
      • The second pillar is green procurement, where you can, for example, start from the Science Based Target in relation to lowering CO2 emissions based on environmental and climate considerations.
      • And finally the social dimension, where you can, for example, take the UN Global Compact as a starting point. This dimension is the CSR dimension where the company, among other things, ensure that the social conditions for its employees, that the subcontractors ensure proper conditions for their employees, that no child labor is used, etc.

The requirements for sustainability are diverse and the expectations come from many places:

• • The consumer: Today, consumers are much more aware of where things come from. As procurement is responsible for the supply chain and suppliers, sustainability awareness in procurement and being on top of it is more important than ever.
  • Society: Society expects you to act in an ethical and sustainable manner, otherwise your company's reputation may be damaged.
  • Investors: Investors are increasingly focused on green investments and ESG. You will be judged based on your strategy in the long run.
  • The employees: Employee retention and recruitment are more important than ever and employees are highly interested in working for companies they can be proud of and which behave in an ethical and sustainable manner. Many employees today are largely purpose driven.
  • Regulations and laws, e.g. is the government's strategy for green public procurement:

    "The public purchases must contribute to achieving the national goal of reducing the emission of greenhouse gases by 70 percent in 2030."

    Source: Oes.dk

     

This new role in the Procurement Department is important and requires new skills. It requires insight into models and legislation in both the public and private sectors. As this area is new territory where there are not yet common KPIs and standards, it is difficult to navigate. But one thing is certain, doing nothing is not the way forward. You have to jump out into this new area and "lay asphalt while driving". In addition, it is a good idea to see and learn from others, so sharing knowledge in this area is paramount.