Sustainability is more than just a fad now. With the global focus on climate change intensifying, the decision-makers and leaders in the procurement industry are taking charge of making changes. Sustainable sourcing, especially in procurement, has become a crucial instrument for businesses looking to bolster resilient and reliable supply chains. Opting for these strategies will help these organizations prioritize not just environmental and social responsibility but also economic sustainability. Adopting sustainable procurement methods is essential as businesses struggle with decarbonization, technology, and industry issues.
According to WWF, sustainable sourcing is a method of acquiring goods by highlighting the significance of three key factors—profit, society, and the environment. Putting these factors into consideration can transform supply chains into catalysts with meaningful impact.
Sustainable sourcing can help in decreasing procurement’s carbon emissions. Government procurement contributes to 15% of the global greenhouse gas emissions, according to a World Bank article. By cutting carbon footprints, sustainable sourcing practices in corporate operations preserve natural resources, combat pollution, and promote biodiversity.
Opting for sustainable sourcing is beneficial and can bring about positive changes not just to the world, but also to the company. According to a Harvard Business article, sharing the green responsibility with the employees makes sustainability easier to attain. Since most are very concerned with the daily impacts of climate change, including and involving the whole team makes them contribute to the social transformation of the organization. Also, sustainable sourcing makes sure that there are fair salaries and safe working conditions by promoting ethical labor practices, advancing social justice, and improving entire communities.
Through this method, a company’s environmental, social, and governance (ESG) scores can also be improved. In relation to ESG elements, high ESG scores show efficient risk and opportunity management. This increases the company’s appeal to investors who are looking for sustainable, long-term growth, thereby expanding its access to funding.
In 2015, the Indonesia Sustainable Finance Initiative was introduced by the Financial Services Authority in partnership with WWF-Indonesia and 13 national banks that accounted for 60% of the country’s banking portfolio. This program encourages the financial industry and other sectors to embrace socially and ecologically responsible practices by fostering knowledge exchange and supporting sustainable finance initiatives.
Indonesia was no stranger to the impacts of climate change. In the year before that, 2014, it was reported by the country’s National Disaster Mitigation Agency that 566 people died from natural calamities, brought on by landslides, floods, and tornadoes, among others. These disasters caused $1.6 billion in economic losses for the country.
Consumers are also becoming more conscious of what they are spending on. Knowing that they are buying something sustainably made and sourced makes them secure that they are doing their part in reducing their carbon footprint. Since this is an increasing demand, sustainable sourcing can help build brands’ and businesses’ profitability while reducing waste and eliminating unethical ways. Providing transparency to consumers will help improve their trust and confidence in the brand and can help increase sales and retention.
Sustainable sourcing can also help in building and bolstering the relationship of the business to the local community. Recruiting and sourcing raw materials locally can help lessen transportation and shipping emissions, saving time and money for the companies, as well.
Businesses looking to stay resilient and competitive in the face of climate change must now prioritize sustainable sourcing in procurement. Using technology, working with suppliers, and tackling industry issues, procurement professionals can create significant change and profit at the same time.
By adopting these tactics, businesses can lower their carbon footprint, encourage cooperation from suppliers, and stimulate supply chain innovation. For the sake of society, the environment, and long-term corporate prosperity, now is the moment to take action.