Four steps to ESG-focused procurement operations
1. Build transparency into your supply chain
- Implement tools such as Coupa's Business Spend Management suite to report consistently and transparently to clients, investors, regulators, and non-governmental organizations
- Create a supplier code of conduct and establish baseline supplier performance measures
- Eliminate blind spots using assessments, auditing, and monitoring. For example, at Genpact, we screen all of our suppliers based on several factors, including social and environmental criteria. Our digitized onboarding process and remote monitoring of suppliers ensures better compliance with our code of conduct
2. Tap into new data sources
Tie your spend to environmental impact data sources. At Genpact, we automate data collection and analysis and use predictive analytics to make sure we're on target to meet our sustainability goals. EcoVadis, one of the world's largest providers of business sustainability ratings, rated Genpact in the top 3% of organizations in its 2021 report.
3. Prioritize sustainable suppliers – and track compliance
Make sustainability a key assessment and one of your main selection criteria alongside cost and quality in the buying process. When you do, you'll need to come up with an action plan for suppliers who are slipping on the sustainability front. Options include severing ties, transitioning spend away from the supplier, and offering support to help them meet your standards. Communicating the value of what you're trying to accomplish will help get them on board.
4. Measure impact with digital and analytics
How do you monitor tens of thousands of suppliers across a wide range of ESG criteria in a cost-effective way? You need digital tools and platforms that ensure you have rich metrics to support your goals. Collecting sufficient data points can also help eliminate difficulties with monitoring and enforcing standards. CPOs can boost sustainability by using predictive analytics in a variety of ways, including maximizing transportation efficiency.
Companies can face rising costs when introducing ESG policies in under-regulated areas or when policing suppliers. Analytics can help with that, too. For example, CPOs can focus efforts on suppliers where procurement can drive bigger improvements. This means investing time and effort where you have greater spend leverage rather than on a higher-risk supplier where there is little influence.