Communicating with supply chains about sustainability
It’s become a key part of procurement. Purposeful businesses today need to put processes in place to ensure that their suppliers and supply chain are responsible too. But, what’s the best way to integrate sustainability into your procurement process? How do you engage and mobilise supply chains in this area? For those with considerable supply chains – how do you approach this pragmatically, knowing it’s a work in progress?
The new mandate of transparency
Just a few years ago, this was all a ‘nice to have’. Today, sustainability within the procurement process is an expectation that comes from clients, as well as new legal requirements which will mean obligations around reporting.
This sees an increasing reporting burden for procurement teams to ensure they are fully compliant– and resourcing this, is one of the challenges. Often, time constraints make this tricky. It’s recognised as important but is also incremental over and above everything that’s been done previously. However, it’s also something that drives increased communication and transparency.
Many companies have experienced an increasing demand for transparency, which ties in with its mission and goals. That means understanding what’s happening in the supply chain, motivating engagement and transparent communications with suppliers.
Finding the expertise
A further challenge for procurement teams is not only ensuring people have the skills to incorporate sustainability requirements into procurement and supply chain management – but also to work out where that expertise sits. Organisations need to question whether sustainability should sit within a central reporting function, the ESG team, or a bit of both. It is important to deliver clarity and accountability around this.
Challenges and Opportunities
By having conversations around sustainable procurement with your largest suppliers, you can uncover ways to work together that means win wins for both your organisation and the supplier. There are a lot of opportunities to be found within this area of engagement. It also helps build relationships and understand better the challenges within the different sector industries of your suppliers.
There are certainly challenges of time constraints and ensuring teams are properly skilled. Taking into account the different sectors, locations and type of services provided by suppliers – and how exposed each supplier is to regulation - also creates a challenge around navigating all these nuances from a sustainability perspective.
A solution is collaboration and support, whilst also achieving your own goals as a business.
Where to start?
It’s best to begin with a strategic commitment at the very top level. This signals that sustainability matters to the business. We often find that this doesn’t filter down however to become a part of the day to day conversation.
Take a look at the overall business objectives and see how the various topics around sustainability fit into them. Then examine the role procurement could play in delivering them as an enabling function, helping the business to achieve its objectives.
Clear, consistent messaging is as important to embedding actions within a wider team too. Break sustainability down into bite sized chunks for your team, with focused, practical actions for their individual areas, using resources that aren’t too general, but which provide specific templates and actions to support the wider colleagues.
Organisations such as the World Economic Forum and supply chain forums publish excellent free materials that allow individuals to self serve and then become accountable through team meetings and KPIs.
You don’t need to be an expert. You need to know to ask the questions.
Taking sustainability out of silo
You may have separate procurement and sustainability teams. But they should work closely together. This involves a lot of communication, awareness-raising and having open conversations around ambitions and milestones.
Stakeholders need help getting up to speed with terminology and nuances around science-based targets, and proper engagement is important. It takes time to get to a point where you can have a level conversation around practical steps and solutions.
It is important to bear in mind that sustainability functions are dealing with procurement colleagues who already have an established role which comes along with its own challenges, pressures and objectives. Sustainability actions add to procurement’s existing work load. Here, allow for ‘digestion time’ ; the space and the time for people to digest sustainability concepts and connect them with the existing procurement scope of work. Individuals can then come back to a conversation and contribute to it. This is the way to move towards making sustainability in procurement a part of ‘business as usual’.
Who, Why and How
Undertaking a stakeholder mapping exercise within procurement can be helpful, with awareness that buy in is needed from across the business, and not just procurement itself. Seek to discover who has the power and urgency to unlock the activities and outcomes you are looking for.
Consider templating out decks for each function to put in front of business leaders and category managers. Each can be customised to speak to their individual priorities as a team. Engage with them frequently, to support their needs and check in on their outcomes.
Put background processes in place to make onboarding and awarding contracts to diverse suppliers as seamless and easy as possible. This could be a weighted tender scorecard for ESG considerations. This allows consideration for these responsible business responses alongside price and quality, as part of an holistic activity rather than an aside. You can also update procurement guidance, payment terms, insurance payment caps and any other possible barriers to onboarding diverse suppliers and small businesses.
Communicating with stakeholders
‘Early engagement’ is key. When there’s an upcoming need, it’s about having the conversation early on around the key things that matter to your stakeholders, and introducing sustainability into the conversation if it’s not already on there. It avoids the need to put pressure on to integrate it further down the line.
It’s also important to be able to articulate what that means for the supply base and how they can demonstrate those sustainable credentials.
There is often frustration around commercial trade offs. This can be a challenge sustainability and procurement functions need to rise to. It helps if incremental investments can be demonstrated in line with overall business strategies such as Net Zero.
It’s important to acknowledge procurement decisions which lead not only to commercial, but also sustainable benefits, for positive messaging. If there’s a true commercial trade off it’s good to look at the longer term picture, and which option has the better outcome; and have a fact-based conversation about the benefits overall, what’s the right thing to do, and what fits into the organisational strategy.
There isn’t a perfect recipe and there’s a lot to take into consideration. Leadership support and buy in helps more difficult conversations.
It’s also about finding what will drive the activities within the organisation as an individual place. Setting goals and cascading objectives to all regions. How these are tracked and monitored alongside business performance, so that sustainability KPIs are also included. This helps make it relevant to leadership. Making it relatable to different stakeholders is also important, so each person understands the role they play in the sustainability journey, finding common points and priorities. Getting to a point where it’s ‘business as usual’ around stakeholder engagement.
Strengthening engagement with suppliers
This starts with building on communications. If your team knows to ask about it, suppliers start knowing they need answers for it. Sustainability can become a formal part of quarterly reviews. It also helps suppliers to narrow down on what’s important to your organisation and what it wants to hear about from you.
Hosting launch events with your top suppliers, demonstrating what you are doing, what the priorities are and what you expect of them, either now, or at some point in the future is beneficial – all tailored to supplier size and category within the business.
You can also consider providing suppliers with plenty of inspiration and resources to support them. It is about collaboration, so if you can acknowledge where your organisation is at in the sustainability journey and some of the challenges you have overcome, you can learn from each other. This often allows suppliers to open up about the challenges they have faced and they can then work with you to find solutions and support.
Top Five Tips
Support procurement teams to have transparent conversations and upskill knowledge around sustainability
Recognise the existing challenges and pressures on time and skillset, and work together to find ways to incorporate sustainability into the day to day so it becomes ‘business as usual’
Engage with internal stakeholders early on, so everybody is involved in incorporating sustainability into procurement processes
Set goals and KPIs around sustainability alongside other business goals within the procurement function
Have open conversations with suppliers, outlining current and future sustainability expectations, explaining how they tie in with business goals, and support them to comply
