February 17, 2023 | Procurement Strategy
How many businesses are today actively pursuing sustainability goals?
There is no clear answer.
Because the data may not present the true picture, given that many organizations are merely paying lip service and failing to implement their sustainability plans.
There is little doubt that the term sustainability is widely used today in business operations. In fact, some businesses believe they are well on the way to becoming sustainable. They have a plan in place with well-defined goals and timelines.
However, for many others, sustainability continues to be a distant dream. How can these businesses move the needle?
Creating a sustainable business operations plan is a critical first step in achieving greater impact through sustainable business operations. The plan should be comprehensive and include a detailed analysis of the company’s current operations and potential opportunities for improvement. It should also consider the company’s overall objectives and strategies and ensure that they are in alignment with its sustainability goals.
Begin by assessing the company’s current environmental, social and economic impact. This should include an analysis of its energy consumption, emissions, water usage and waste management practices. Identify specific ways of reducing energy consumption across different business units.
Explore the possibility of investing in renewable energy sources. Consider the potential long-term impact of the measures you are putting in place. For example, if your plan includes switching to renewable energy sources, it is important to consider the long-term costs and benefits of such a switch. Also consider the impact of the measures on local environment, as well as the company’s bottom line.
Another key component of a sustainable business operations plan is setting measurable goals and objectives. This will help to evaluate performance and track progress toward the desired outcomes. The goals should include both short-term and long-term objectives. Additionally, it is important to set benchmarks and track progress towards these goals.
Finally, a sustainable business operations plan should include an assessment of potential risks and opportunities. It should identify any risks that may arise from the implementation of the plan and how these risks can be mitigated.
When the plan is ready, communicate it to all staff and stakeholders to ensure that everyone is onboard with the plan.
In most organizations, supply chain and procurement teams are in the best position to drive sustainability initiatives. They can leverage their influence over purchase spend and suppliers to implement sustainable business operations.
“Supply chains are responsible for 80-90% of emissions and environmental impact. It is also the channel for organizations to drive social impact across their first, second and third tier supply base,” says Von Ying Lee, consulting expert at GEP.
One of the ways procurement can kickstart this process is by embedding sustainability goals into existing processes. For example, procurement can incorporate sustainability-related clauses in supplier contracts. They can also embed sustainability criteria in RFx evaluations.
Identifying hotspots in the supply chain is another useful strategy. This can help procurement evaluate the supplier base and determine which suppliers to target for maximum impact.
To achieve the desired outcomes, procurement must work closely with suppliers, educate them about specific steps they can take, and track progress over a period. It can also offer incentives and reward suppliers for improvement.
It is vital to periodically assess the impact of sustainable business operations and track progress toward the set goals.
Understand how new initiatives are contributing to the company’s overall sustainability goals. For example, you can measure the impact of sustainable business operations by analyzing data such as energy and water usage, emissions, and resource efficiency.
You can also conduct staff and customer surveys, or interviews with stakeholders. If you are measuring the impact of your sustainable business operations through surveys, it is important to ensure that the surveys are sent to the right people.
Consider any external factors that may have an impact on the performance of the initiatives. These can include changes in customer preferences, new technologies and changes in the regulatory environment.
The data related to performance of the new initiatives must be used in an effective way. Measuring the impact of your sustainable business operations can be useful only if the data is used for informed decision-making and implementation of sustainable business strategies.
Finally, it is important to track the financial performance of any new initiatives. This should include an analysis of the costs associated with the initiatives as well as potential savings or revenue generated. This will help to ensure that any new initiatives are financially viable and are providing a sound return on investment.