Pierre-Francois Thaler, Co-Founder and Co-CEO of Ecovadis spoke about how we are at a tipping point where we now can, and need, to accelerate our ESG efforts: “Every decision we take will have an impact, we can’t wait and only make big commitments in the next ten years, what matters are all those incremental changes that add up”.
As Katharina Stenholm, Chair of the Board of Directors of the Ecosystem Fund at Danone, also said: “During the first lockdowns food security became top of mind for consumers, we reconnected with food to understand where it comes from and how it’s produced. For every dollar we spend on food there are two dollars of unpaid costs in the production chain, this is unsustainable“.
With heightened ESG expectations knocking on the door, many organisations have taken the opportunity to use last year’s supply chain disruptions to re-design their supply chains for the better. With more insights than I can share in this article, three themes stood out:
Focus on value creation
Social and environmental sustainability are no longer viewed as a risk to manage but also as a strong case for strategic value add. Pierre-Francois Thaler talked about how through the increased pressure from the top, procurement can use sustainability to drive their own agenda. Sustainability can change the organisation’s perception of the procurement function, shifting the focus from only cost savings to additional strategic value add, becoming more attractive to future talent.
For Mourad Tamoud, CSCO at Schneider Electric, investing in digitalisation has benefited ESG activities around employee health & safety in their factories and distribution centres. Through the introduction of ‘smart factories and distribution centres’, they were able to use data insights to keep their on-site workers safe and healthy during the global pandemic.
Colin Sharp, SVP EMEA at C2FO, added to the value creation debate by explaining how small suppliers can be impactful drivers of innovation for mature organisations, as long as we take a collaborative approach.
Approach suppliers with empathy and care
Collaborating with suppliers from a position of trust and having their best interest at heart significantly improves ESG performance for both the main organisation as well as their suppliers. “Previously procurement and supply chain professionals would jump into action, this time around it’s different. We begin with awareness, empathy and understanding that then is built up to advocacy and action. The approach has become more robust”.
Mary Long, Lecturer and Managing Director of the Supply Chain Forum, described how the recent approach to diversity & inclusion in supply chains has critically changed for the better: “Previously procurement and supply chain professionals would jump into action, this time around it’s different. We begin with awareness, empathy and understanding that then is built up to advocacy and action. The approach has become more robust”. Amplifying visibility and transparency to drive social and environmental sustainability efforts.
Marco Baren, Head of Operational Excellence, Supplier Development and Sustainability at Philips, also shared how they follow the ‘lend a hand’ principle, offering to help suppliers improve their ESG practices and evaluating performance based on their growth journey rather than a static ESG performance level. A successful approach with suppliers showing improvements of around 40% in the first year. One supplier even shared their gratefulness for this new approach directly with Marco, explaining how they didn’t need sustainability policing, but sustainability doctors.
Turn ESG into a collective effort
“Sustainability is something we have to do together”, said Soren Busk, VP & Head of Global Purchasing at Velux A/S. A notion that came up in almost every session and surpassing the belief sustainable supply chains only revolve around close partnerships with suppliers.
As Katharina Stenholm rightly pointed out, “if we don’t work collaboratively, we won’t get there on time”. To significantly alter climate change, we need to operate in an ecosystem-like supply chain where everyone from suppliers to consumers to governments and NGOs are involved.
Andrea Sordi, Clinical professor Supply Chain Management said during the panel discussion with his colleagues of the Department of Supply Chain Management at the University of Tennessee: “No matter what role procurement will take on in sustainability activities in the future, we will always have an obligation and a responsibility to the organisation on how we come across to society”.
Whether we champion, lead, or follow, procurement and supply chain functions are involved in most key decisions that affect ESG performance. Let’s make sure we execute any role with social and environmental well-being at heart.
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