The Key to Sustainable Sourcing and Procurement: Focus

Authors

• Tara Norton

  Former Managing Director, BSR

Across industries, BSR is seeing an evolution from a broad-based sustainable sourcing approach toward efforts that are focused on achieving sustainability for specific categories.

It’s common practice for companies to have sustainability requirements that apply to all of their suppliers across all procurement categories, often in the form of supplier codes of conduct and related assessment requirements and audit protocols. This approach helps manage social and environmental risk, but there is more to sustainable sourcing than risk management.

Core business value can come when companies focus significant resources on the categories and commodities that are most important to them and their customers—notably where they have leverage to influence sourcing market practices, either on their own or by joining with other companies.

For example, the UK-based home-improvement and garden retailer B&Q identified early on that timber, which is present in 16,000 of its products, is a critical commodity, and since 2011, B&Q has been able to claim that 100 percent of its timber is sustainably sourced.

In the food sector, McDonald’s—one of the world’s biggest buyers of beef—recently announced that it will source only sustainable beef beginning in 2016.

In the luxury sector, Kering has set a target that, by 2016, 100 percent of the precious skins and furs in its products will come from verified captive breeding operations or from wild, sustainably managed populations.

This focus on specific categories and commodities brings numerous benefits. First, businesses are able to focus their teams on big, exciting goals. Focus also helps companies use their influence to change the market—demanding that suppliers deliver sustainability for value. Smaller companies can gain this leverage by joining others and engaging in existing commodity-focused initiatives. And finally, focused companies can have better conversations with their customers about sustainability.

How to Focus

There are several tools and examples to help companies to find focus.

The most common, the materiality process, takes internal and external stakeholder views of sustainability priorities to identify the most important areas of focus for the business. This approach can be applied to sourcing and procurement: Look at the categories, geographies, and sustainability issues, and engage with stakeholders who have supply chain knowledge to identify the biggest concerns or opportunities. BSR is working with companies on this challenge via our Center for Sustainable Procurement.

Where possible, companies can join existing efforts to improve the sustainability of commodities and identify relevant focus areas. Reviewing the commodity-specific initiatives outlined in the UN Global Compact’s recent Guide to Traceability is a good place to start.

Some companies choose to use consumer views to identify the most important categories to tackle. That’s likely why McDonald’s has chosen to focus on beef and why Unilever’s Lipton brand has aimed to have all of its tea Rainforest Alliance Certified by 2015.

For other brands, the category may not be as readily accessible, but there are opportunities to create stories for consumers about procurement categories. IKEA’s recent commercial declaring that it will sell only energy-efficient LED light bulbs by 2016 is an example of how a company that has been working long term to improve the sustainability credentials of one product category can now reap the rewards.

Defining ‘Sustainable’

Selecting a focus area is one thing, but what does it mean to be fully sustainable?

Once the purchasing category is chosen, the complexity begins. There are multiple facets of sustainability to be considered: everything from labor rights, to water, to land rights, to economic viability, and more can impact whether something is truly “sustainable.”

Commodity-focused initiatives generally have stakeholder-vetted definitions of what it means for that commodity to be sustainable. For example, the Forest Stewardship Council (FSC) has developed a set of 10 principles that apply to FSC-certified forests, which covers the key aspects of sustainability applicable to the category.

The pressure on companies to engage in sustainable sourcing and procurement continues. Taking a focused approach channels the pressure toward real change.