Sustainability and Supply Chains – engage, mobilise and get sustainable procurement right

February 23, 2024

It’s become a key part of procurement.  Responsible businesses today need to put processes in place to ensure that their suppliers and supply chain are responsible too.   We wanted to combine our experience with that of experts bringing best practice in this area into their organisations.  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 latest Verity webinar discussed these challenges head on.  Our CEO, Debra, was thrilled to be joined by three experts :  Pauline Potter, Director of Procurement and Sustainability for EVRi, James Havey, Supplier Diversity Specialist, Global Procurement, IHG @ Hotels & Resorts, and Melissa Goncalves Ferreira, Global Head of Sustainability at Experian.

They discussed :

  • The role of procurement in corporate sustainability
  • How to educate and engage business leaders and managers on sustainability agendas
  • What’s needed from suppliers
  • Best practice supplier engagement
  • Communicating and compliance

If you weren’t able to join the webinar live, you can watch the recording below.  Or read on, for key takeouts and valuable practical ideas and actions.

The new mandate of transparency

‘It’s a great thing’ says Pauline Potter from EVRi.   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.  At EVRi, 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.

Experian has also 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. Pauline questioned if it should sit within a central reporting function, the ESG team, or a bit of both.  She stressed the importance of clarity and accountability around this.

Challenges and Opportunities

Melissa Goncalves Ferreira explained that – by having conversations around sustainable procurement with one of Experian’s largest suppliers, they uncovered ways to work together that meant win wins for both Experian itself and the supplier.   So 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.

She echoed the challenges of time constraints and ensuring teams are properly skilled.  She added a further challenge, based on Experian’s rich, but vast supply chain.  Taking into account the different sectors, locations and type of services provided – and how exposed each supplier is to regulation -creates a challenge around navigating all these nuances from a sustainability perspective. Melissa’s solution is collaboration and support, whilst also achieving their own goals as a business.

Leading in Sustainability Procurement

James Harvey described how he moved to the UK in 2020 because it was a leader in ethical procurement, largely driven by the regulations being put into place by the public sector.  These actions have driven the private sector to uncover and discover what is happening within their companies, and report on their supply chains.  He advises private companies to not only be compliant within legal regulations, but also move that values system to within an intrinsic business strategy for achieving sustainability goals.  Creating business cases and uncovering those win win situations for reaching these goals.

Where to start?

Pauline Potter joined EVRi three years ago because there was a strategic commitment at the very top level signalling that sustainability mattered to the business.  Yet, at that point, it still wasn’t part of the day to day conversation.  She looked at the overall business objectives of EVRi, and how the various topics around sustainability fitted into them.  Then examined the role procurement could play in delivering them as an enabling function, helping the business to achieve its objectives.

Pauline sited clear consistent messaging as important to embedding actions within a wider team.  Then, finding easily accessible resources within such a large topic.  Pauline broke sustainability down into bite sized chunks for the team, with specific, practical actions for their individual areas, using resources that weren’t too general, but which provided 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.  She stresses that you don’t need to be an expert.  You need to know to ask the questions.

Taking sustainability out of silo

Experian has separate procurement and sustainability teams.  But they 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.

Melissa stressed it was important to bear in mind that sustainability functions are dealing with procurement colleagues who already have an established role with its own challenges, pressures and objectives.  Sustainability actions add to procurement’s existing work load.  She talks about allowing for ‘digestion time’ ; the space and the time to digest sustainability concepts and connect them with the existing procurement scope of work.  So 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

 When James Harvey first joined IHG he did a stakeholder mapping exercise within global procurement, with awareness that buy in needed to come from across the business, and not just procurement itself. He coupled this with work to discover who has the power and urgency to unlock the activities and outcomes they were looking for.

His ‘why’ came from a needs analysis.  Exploring who are the under-represented groups within the UK economy that they needed to target for their supplier diversity goals.  He looked at not only their needs, but also capabilities that could be unlocked through sourcing from them.  It means that he brings both a qualitative and quantitative story with him when engaging with business functions.  It gives reasoning behind targeting specific under-representative groups, and also the opportunities whilst doing so.

James’ ‘how’ was templating out decks for each function, to put in front of business leaders and category managers.  Each was customised to speak to their individual priorities as a team.  He engaged with them frequently, to support their needs and check in on their outcomes.

With that came background processes, to make onboarding and awarding contract to diverse suppliers as seamless and easy as possible.  Namely, 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.  He also updated procurement guidance, payment terms, insurance payment caps and any other possible barriers to onboarding diverse suppliers and small businesses.

Communicating with stakeholders

‘Early engagement’ was the thing stressed by Pauline Potter.  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, which Pauline sees as a challenge sustainability and procurement functions need to rise to.  It helps if incremental investments can be demonstrated as 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.

Melissa from Experian agreed that there isn’t a perfect recipe and there’s a lot to take into consideration.  She stresses Experian’s early decision to make sustainability relevant to its business.  This meant leadership support and buy in, which 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 beneficial, 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 internal communications.  Pauline explained that ‘if my team knows to ask about it, suppliers start knowing they needs answers for it’.  Sustainability has become a formal part of quarterly reviews for some of EVRi’s biggest suppliers.   Also helping suppliers to narrow down on what’s important to EVRi and what it wants to hear about from them.  EVRi also has launch events with its top 150 suppliers, demonstrating what they are doing at EVRi, what are the priorities, and what EVRi expects of them, either now, or at some point in the future – all tailored to supplier size and category within the business.  EVRi also provides suppliers with plenty of inspiration and resources to support them.  Melissa stressed how – engaging with Experian’s larger suppliers – conversations had to remain open, candid and very positive.   Acknowledging that Experian was also just at the start with sustainability, and they wanted to learn from each other.  This allowed suppliers to open up about the challenges they had and Experian working with them to find solutions and support them.

IHG is looking at ways category managers can engage with diverse suppliers.  So they can describe what they are looking for and what are the requirements specific to IHG and joining its supply chain.  Also advising on how suppliers are able to stand out against the rest.  James wants to ensure that IHG demonstrates how committed it is to diversity goals, and working with smaller, lesser known suppliers within untapped and under-represented communities.   

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

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