Sustainability Reveals Big Opportunities for Procurement

Kerrie Kennedy

April 6, 2022

Watch the webinar Sourcing & Sustainability - Gearing Up for Scope 3 Emissions on-demand here

The supply chain and procurement community have no time to lose in the battle to reduce Greenhouse Gas emissions, cautions John Muncey in Keelvar’s Buyer's Book, 'How To Enact Sustainable Sourcing Today To Reduce Scope 3 Emissions'. 

It’s a warning from the sustainable logistics expert that also echoed throughout our December 2021 webinar, which featured Mr. Muncey and Keelvar CEO, Alan Holland engaging in a discussion about Scope 3 – those indirect, value chain emissions coming from your suppliers – and the implications for procurement and sourcing should sustainability not become front and center in the supply chain agenda.

Hosted by Sourcing Industry Group (SIG), the virtual event provided ample insights and tips on how sourcing and procurement professionals can make improvements to their own organization’s sustainability by tracking carbon emissions accurately, and even uncover new opportunities for their business in the process.

Here are three benefits of incorporating more sustainability into your sourcing processes as discussed by our expert speakers during the webinar, Sourcing & Sustainability - Gearing Up for Scope 3 Emissions:

  1. Sourcing Sustainably Puts You Ahead of the Competition 

You may have a clear picture of your sustainability strategy when it comes to the greenhouse gas emissions created within the walls of your own operations. But by not tracking the Scope 3 emissions created upstream of your suppliers and downstream in the distribution of your products or services, you could be missing opportunities to make substantial improvements to your business’s sustainability targets.

The speakers explained that relatively few companies are actively tracking and publicly committing to targets around Scope 1 (direct) and Scope 2 (purchased power) reductions, and substantially fewer are tracking Scope 3 (indirect, supplier-related) emissions that makeup 65-95% of a company’s broader carbon impact:

“If you're only looking at the sustainability aspects you control within your own walls, you're missing that bigger opportunity to improve your sustainability,” Mr. Muncey said. 

“So why aren't companies looking to track Scope 3? The bottom line is that it's not easy because they're not yours, they are your suppliers. But [tracking them] is an opportunity for you to take a leading market position.”

Mr. Holland explained that there is competition emerging between organizations to be seen as more sustainable, and many are winning business on the back of being more environmentally friendly. 

“Smart companies are investing in technologies that allow them to operate efficiently but sustainably because they recognize that not being sustainable is an existential threat to the survivability of the business,” he noted.

  1. Appeal to More Customers Who Prioritize Sustainability

The speakers referenced Keelvar’s 2021 Voices of Sourcing survey, where findings show that despite ongoing disruptions, sustainability received top billing (73%) as the supplier attribute respondents felt most likely would increase in importance over the next five years:

“That's indicative of the realization that this is a nettle that needs to be grasped,” explained Mr. Holland. “A lot of companies have realized that sustainability does need to be addressed as a priority – particularly in making sure key suppliers are still in business for them tomorrow.”

But there a degree of hesitancy, he added, as for many in procurement, priorities have always been centered around managing costs, speed, and deliveries and quality of goods and services.

“Some feel that if sustainability is yet another requirement, costs could go up,” explained Mr. Holland, referencing the survey finding that 65% see justifying potential costs as a barrier to sustainability. 

“Yes, there are spend categories where cost may increase, and you have to manage that as effectively as you can. But there are other areas where you could actually see opportunities arise because driving sustainability may lead to cost decreases if done well.

Mr. Muncey suggested that while sourcing sustainably might be more expensive to start with, there are “wonderful opportunities” for generating cost reductions and increasing demand for business by appealing to the growing consumer awareness around the need for more sustainability.

“There’s a clear trend amongst younger consumers in particular to prioritize brands that are aligned with the sustainability agenda,” added Mr. Holland. “Many forward-thinking companies that tackle sustainability successfully are seeing this as an opportunity for more business.”

  1. Forge Stronger Partnerships With Suppliers 

In Mr. Muncey’s view, targeting reductions in Scope 3 emissions is an opportunity for businesses with supply chains to think differently, and for procurement to redefine the supplier relationship as a true partnership.

“As Scope 3 is your suppliers’ emissions, you're almost forced to work far more closely together so people are working hand-in-hand to improve and rethink the way that things are done,” he said.

Mr. Muncey added that some suppliers – particularly in developing countries – may not be aware of the opportunities that exist for them to cut carbon within their own operations today. 

“I think by embedding targets and working with suppliers to start focusing on Scope 3, only then we start moving the needle towards net-zero carbon emissions.”

But, he added: “It's not just about gathering the data, it's about actioning results that change how you do your business and who you do business with. So collaboration is key. It will redefine relationships and it will cause people to work together – buyers, suppliers, and customers.”

Watch the webinar Sourcing & Sustainability - Gearing Up for Scope 3 Emissions in full on-demand here

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