Does Procurement have ownership of the Sustainability challenge?
In July, 1st Executive explored the hugely topical subject of Sustainability as part of our monthly market insight series.
António Guterres, the UN secretary general, stated "The era of global warming has ended and the era of global boiling has arrived”, after scientists confirmed that July was on track to be the world's hottest month on record. “Climate change is here. It is terrifying. And it is just the beginning”, Guterres said.
It's clear from Deloitte’s Global Chief Procurement Officer Survey 2023 that Sustainability and & ESG is now firmly on the corporate agenda. This year, it leapt right up the priority list, from seventh place to second!
1st Executive canvassed input and opinion from our clients in both the public and private sectors, as well as those in our international portfolio across Europe and the US, identifying key objectives, trends and the associated skills required by Procurement in order to address the Sustainability challenge.
"The Sustainability agenda could be a big factor in how CPO’s get a seat at the table’……given in most cases ‘Procurement are responsible for the travel programme, real estate, and supplier relationships, therefore there is no reason why the CPO cannot be considered as leading the way….. 100's of decisions need to be made in an aligned way especially when sustainable options are often more expensive options. Businesses need to approach Sustainability less as a programme and more as a change initiative" CPO, Global Financial Services, New York, US
Do Procurement Leaders own the Sustainability Challenge?
1st Executive canvassed insight from 98 Procurement Leaders in the UK, EU and North America. Of those surveyed, 37% said that Procurement owned the Sustainability and Net Zero agenda whilst the majority (63%) said that they're function played a role in delivering support to an agenda that was owned elsewhere in the organisation, from centralised ESG functions through to Marketing.
Top 3 Sustainability Objectives?
Across the survey 1st Executive identified the most common themes and associated objectives that Procurement functions are striving to influence:
Net Zero & Scope 3 Emissions
What is the biggest Sustainability Challenge to the organisation?
Our conversations indicated that key challenges vary based on the maturity of the Sustainability & ESG journey the organisation are on, however the common themes were:
Cost, additional challenge of inflation and cost of living crisis
Complexity, lack of data and transparency across the value chain
Competing priorities – both within the business and from a regulatory landscape perspective (emerald standard already becoming out of date)
"The changing nature of regulatory Landscape; the government and scientific authorities keep changing the goal posts – emerald standard which was created a year ago is already becoming out of date so needs constant work to keep it relevant" Senior Procurement Manager Sustainability, Retail Banking, UK
What skill-sets do you require to meet your Sustainability objectives?
For the 37% of Procurement leaders who own the sustainability challenge, getting the right blend of commercial and sustainability skills was identified as the biggest challenge when hiring:
Procurement managers often don't have sustainability experience - you'll often find experienced procurement or sustainability managers, not someone with the combined knowledge which is why organisations have relied on consultancy expertise (i.e. EY).
Given the rapidly changing legislative and technical landscape in sustainability, Procurement leaders are looking to upskill their teams with knowledge divided into niche areas. This requires constant evolution and training as well as investment.
Storytelling, empathy, commercial acumen, creativity, problem solving and analytics are the core fundamentals when it comes to influencing internal and external (supplier) stakeholders on the sustainability agenda
"As there is no clear picture yet, the main goal is to find flexible, smart and motivated people. Thinking outside the box, as well as switching from detail to birds-eye perspective" CPO, Biosciences, Europe
If you're in need of any specific MI or benchmarking in support of your Sustainability hiring strategy, please don't hesitate to reach out to firstname.lastname@example.org or email@example.com