PROCUREMENT ORGANIZATIONS
OF THE FUTURE:

A HUMAN-CENTERED APPROACH TO ESG
GOALS

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An inclusive procurement strategy leverages marketplace opportunities to build strong, forward-thinking, dynamic teams that are diverse, inclusive, and put people on par with profits. By paying attention to ESG responsibilities, equity can make procurement organizations more adaptable and forward-looking–an important advantage in shifting supply chain environments.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CRITERIA AND GOALS

Environmental, Social, and Governance (ESG) issues have been front-and-center across corporate America over the last few years. Companies of all stripes have pushed increasingly ambitious goals and ESG1 visions in order to satisfy their consumers, get ahead of regulations, or placate banks and investors. Those efforts have often paid off, with top ESG performers “enjoying faster growth and higher valuations than other players in their sector.”2

ESG

Environmental

  • Climate Change
  • Energy and Fuel
  • Environmental Compliance
  • Greenhouse Gas Emissions
  • Pollution Control
  • Resource Scarcity
  • Waste and Recycling
  • Water Use

Social

  • Diversity and Equality
  • Employee Relations
  • Environmental Justice
  • Health and Safety
  • Human Rights
  • Non-Discrimination
  • Security
  • Training and Education

Governance

  • Board Diversity
  • Bribery and Corruption
  • Ethics
  • Executive Compensation
  • Political Lobbying
  • Procurement Practices
  • Resilience
  • Risk Management

The CPO, and by extension the procurement organization, plays a key role in meeting those ESG roles. Procurement can heavily influence an organization’s ESG footprint, through purchasing decisions, by influencing product design, and by encouraging equity and creating happy engaged teams within their own workforce. These criteria apply as much internally, as they do externally and by taking a leadership role, the CPO and the purchasing organization can create a ripple effect across every other department.

HOW TO SELECT AND ACHIEVE ESG GOALS

  1. Assess Current State
    The first step is to create a baseline of where the organization is right now. It’s important to conduct an honest assessment and accurately reflect current metrics and opportunities for development, critical activities in the process of becoming a procurement organization of the future.
  2. Align on Key Metrics
    Picking some key metrics ahead of time will allow you to use data to track progress and implement any course corrections needed. Key metrics should be personalized to your procurement organization. Some examples that can be used as starting off points include: diversity, equity, and inclusion (DEI) hiring and retention numbers; carbon footprint reduction across your supply chain; and establishment and adherence to a code of ethical conduct.
  3. Create Actionable Goals for Those Key Metrics
    The SMART principle is of paramount importance. Make sure the goals you pick are Specific, Measurable, Achievable, Relevant, and Time-Bound. Be ambitious and make sure to create these goals as a team to ensure buy-in and accountability.
  4. Make a Plan
    What do the next 3-5 years look like to meet these ESG goals? When will a check-in be most effective to course correct (if necessary)?
  5. Shout it Out
    This is not a one-and-done project that can be wrapped up and revisited later. ESG goals need to become part of the DNA of your procurement organization. Make sure the CPO or the leader of your organization clearly states, “This is important to me, and I want it to be important to each and every one of you.” In that way you can ensure the push has legitimacy and the necessary impulse to keep moving forward.

INDUSTRY ASSOCIATIONS

Industry associations can be strong partners in achieving ESG goals and providing change management support. Some industry associations host conferences and events where procurement professionals can learn and grow. Others create connections between industry leaders to introduce suppliers, purchasing organizations, and strategic partners to create lasting partnerships that benefit all parties. Still others look to affect change at the individual level, providing scholarships for higher education or mentorship programs that can develop leaders of the future. Find the industries and activities that work with your organization and participate in these industry activities. Consider being a financial sponsor to these organizations as well; many of the educational sponsorships for underrepresented communities to study supply chain rely on the generosity of individuals and companies. In this way you can affect change far beyond just the walls of your organization.

Company Articulated Targets
Awesome
(Achieving women’s excellence in supply chain operations, management, and Education)
Seeks to bring together senior women leaders in supply chain for connecting, learning, collaboration, recognition, and inspiration; Provides events for leaders to engage in learning activities and provides scholarships for underrepresented women to major in supply chain
NMSDC Creates connections between minority business enterprises (MBEs) and corporations, MBEs and the public sector, and MBEs and other MBEs, to help them benefit from each other, stoking entrepreneurship and growing wealth for these systemically excluded communities.
Global Women Procurement Professionals GWPP is focused on attracting, retaining, & growing women in their careers within procurement, sourcing, & supply chain.
Sustainable Purchasing Leadership Council SPLC seeks to share expertise and insights on highest-impact strategies, emerging market trends and dependable best practices for sustainable purchasing impact

 

1 Achieving sustainable procurement | McKinsey
2 ESG framework | McKinsey

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