Responsible purchasing programs are proving to be key drivers of financial
value. According to Nielsen, products created with sustainability attributes
are outpacing overall sales
growth.
And with environmental, social and governance (ESG) indicators now
considered material
financial
risk,
investors and business partners want to see proactive sustainability strategies
from organizations — especially within the supply chain.
As corporate responsibility attracts more attention, companies are not only
making individual commitments to driving supply chain sustainability
improvements — such as BMW’s recent pledge to stop purchasing Congo
cobalt
— they’re also working with peers and competitors in their respective industries
to accomplish sustainability-related goals.
Collaboration goes mainstream
Over the past year, we’ve seen significant growth in sector initiatives, in
which participating companies within the same industry leverage sustainability
performance management tools together to share information and best practices.
Collaborative groups in pharma, consumer packaged goods, beauty and chemical are
expanding rapidly as the need for sustainable action becomes clear:
-
In January, GlaxoSmithKline, Teva and Takeda launched the
Responsible Health
Initiative, a consortium designed to fortify ethical business practices and drive shared value across the pharmaceutical, healthcare and biotechnology fields.
-
The Responsible Beauty Initiative,
launched
in 2017, added two new
participants —with LVMH
Cosmetics and Cosnova Beauty joining founding members Clarins,
Coty, L’Oréal and
Groupe Rocher.
-
Together for Sustainability, a collaborative
initiative in the chemical industry, added 2 new members in 2018, and its
23rd — Wanhua Chemical Group — in February of 2019. They find that over
80 percent of suppliers maintain or
improve
their score upon re-assessment.
-
In transportation,
Railsponsible
added four new buy-side companies, including CAF (Construcciones y
Auxiliar de Ferrocarriles), ÖBB (Österreichische Bundesbahnen),
SNCB (Société Nationale des Chemins de Fer Belge) and Wabtec.
The group boosted supplier scorecard sharing within their collective pool of
more than 859 assessed companies, and have an average score of 53.3, more
than 10 points above the EcoVadis global average.
-
Seven companies in the EcoVadis buy-side network are now members of
AIM-Progress
— a sector initiative of over 40 food, beverage and consumer goods
companies.
The global business community’s growing interest in working together on
sustainability
improvements
is noteworthy. It means companies are realizing that acting through supply chain
activities is a tangible way to drive better outcomes and lasting value. It
means more companies are ready to fight for sustainability — and it means
organizations understand that how they operate their business can have a
tremendous impact on both the bottom line and the world.
Reaching sustainable maturity: Benefits of industry collaboration
When you consider that 50-70 percent of the impact companies have on society and
the environment comes from the supply
chain, the challenge in front of
organizations is clear, but so is the power. By working together on supply chain
initiatives and sharing tools for assessing and improving supplier CSR
performance, progress in sustainable outcomes happens exponentially faster and
influences behavioral changes across all participants in the value chain.
This is because of the obvious time and money savings generated by combining
efforts, but also because this level of harmonization creates newfound
transparency on supplier performance. Getting the industry on a common supplier
assessment platform positions companies to go beyond simply meeting minimum
compliance standards to address root supplier performance
issues
and clearly identify new ways to create shared value.
The more that companies within a sector work together, the better the results —
and the more suppliers are engaged. Suppliers are more motivated to work with
buying organizations on sustainability improvements when at the request of
several of their key customers. And with a common platform, suppliers only need
to submit one evaluation that gets shared across the board, rather than
conducting several different surveys unique to each buying organization. This
reduces survey fatigue, and frees up both buyers and suppliers to focus on the
actual content of their sustainability initiatives and drive real business
impact — including lower brand risk and operational efficiencies, and building
innovative sustainability product categories that set the strategic direction of
the company and more.
Collaboration may feel counterintuitive — especially considering sustainability
can be a competitive
differentiator
for a business, and therefore something you’d think should be kept close to the
chest. In reality, sector initiatives enable entire industries to work better
together, and multiply social and business impact — which doesn’t just aid one
company, but the entire community.
Wondering where you stand — and where to start — on sustainable procurement?
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Published Jun 25, 2019 2pm EDT / 11am PDT / 7pm BST / 8pm CEST