Tag Archives: challenge

Define your sustainable procurement strategy with the SDGs


Cliff and blue seaSince their adoption, there is an ongoing discussion how SDGs can be integrated and used by businesses; indeed, the SDGs explicitly name companies as contributors to a solution for sustainable development challenges. This article describes how the SDGs can be used as a framework for sustainable procurement strategy.

Sustainable procurement means turning risks into opportunities

Many risks companies face today are located in the supply chain and refer to reputation (corporate image) and strategy. First, deficits in the supply chain can damage a company’s reputation severely. This refers both to social and environmental issues; a widely known example is BP whose reputation was damaged due to the company’s handling of the Deepwater Horizon catastrophe. While every supply chain issue can cause direct financial cost for a company, reputation damage is something which can last for a very long time and which can hit a company in multiple ways. Despite lower sales, a reputation damage can for example also discourage talented people from applying for a job at the company.

Secondly, it can also be a strategic risk for a company not to manage its supply chain properly. If future scarcities of resources which are essential for a company’s operations are not properly accounted for in the strategy, and if a company is therefore not prepared to future price rises, it endangers its economic viability in the long term.

To tackle such risks, companies can implement sustainable procurement. It means that they can set standards that their suppliers need to follow. It consists of integrating sustainability criteria into the supply chain. On the one hand, risks are reduced. Indeed, if the supplier environmental system is solid, accidents and crisis should be solved quicker, reducing operational risks. If there is sound social dialogue and decent working conditions, there are less risks of strikes and of related production disruption. If human rights are respected, the reputation risk is managed. In the other hand, companies can benefit from various opportunities: more collaboration, more trust, innovation and new products, customer satisfaction, …

How can now the SDGs help companies to address and structure supply chain management?

You can tune your sustainable procurement strategy with the SDGs

The SDGs essentially represent a framework which addresses the full scope of sustainability topics and actors. The strength of this framework lies in its global acceptance and popularity; thus, using this framework for CSR communications means lowering the threshold of stakeholders to understand and back a company’s CSR strategy, including the sustainable procurement strategy.

The SDG Compass, issued by the Global Reporting Initiative gives an overview, how companies can link these targets to their business. By means of a high-level mapping of their value chain, companies can first identify topics where impacts are likely to occur. In the end, it should be clear whether core competencies, technologies and product portfolio of a company have rather positive or rather negative influence. This mapping process includes external stakeholder participation which adds additional aspects and points of view to the process. It is highly important to interact with the suppliers to understand what the impacts are, and where they occur. Indeed, in some cases such impacts are located only in the supply chain. For example, any retailer will avoid the potential risks linked to manufacturing, like occupational health and safety linked to machine use and high resource consumption. To do so, companies can ask suppliers about such risks during business reviews, make a quick analysis of their website or resort to risk databases.

After the mapping, a company should set measurable and time-bound goals to reflect the priorities and adopt related indicators. Such indicators express the relation between the company’s activities and the impact on stakeholders, and data for these indicators should be collected. Depending on the magnitude, severity and likelihood of current and potential negative impacts, a company then prioritizes indicators. Indicators linked to the supply chain need to reflect actual actions: share of suppliers considered at risk, share of suppliers audits, share of suppliers completing corrective action plan, share of successful re-audits, number of products including new sustainable features thanks to supplier collaboration, …

These preconditions met, a company is ready to integrate sustainability into its sourcing practices. In the case of supply chain, active leadership by the procurement management is key to implement the company’s requirements. A shared understanding of how value is created by becoming more sustainable help to anchor the set sustainable procurement strategy. In this sense, the company needs to communicate such requirements to the procurement department, who then interacts with the suppliers. Another best practice is the integration of sustainability goals into supplier performance reviews.

Finally, progress has to be constantly reported in order to demonstrate credibility. Results should be communicated to both suppliers and buyers. To ensure transparency throughout the supply chain, it is important to communicate such results publically. Indeed, clients of the company might also want to want to know what happens in the upstream supply chain. In this sense, the use internationally recognized reporting standards such as GRI, CDP or others is recommended in order to achieve comparability between companies.

For more information, contact us at info@dfge.de or visit our page on Sustainability Management.

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World Economic Forum: the future is in your hands!    


 

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Why is the World Economic Forum important?

The 2016 World Economic Forum annual meeting took place in Davos, Switzerland, from the 20th to the 23rd of January and gathered decision-makers from all over the world. It enables to raise awareness among the most influential people of the world: indeed, it provides an opportunity to gain momentum and concretize current projects like the Paris Agreement from COP21 or the Sustainable Development Goals.

A new era: the fourth revolution

One of the key focus was the Fourth Industrial Revolution, a concept developed by Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, stating that this revolution is characterized by new technologies fusing the physical, digital and biological world. Technology can thus be a way to address current challenges.

Current challenges are deeply intertwined with sustainability agendas

  • Food security. By 2050, the world must feed 9 billion people.
  • Inclusive growth. Our current social, political and economic systems are exacerbating inequalities, rather than reducing them, which can lead to anger and xenophobic attitude
  • International Labor Organization estimates that more than 61 million jobs have been lost since the start of the global economic crisis in 2008.
  • Climate change. 2015 was the Earth’s warmest year in recorded history.
  • Gender equality. The gender gap has reduced, however some efforts still need to be done, including in remuneration.
  • The number of inhabits is rise to 9.7 billion in 2050 with 2 billion aged over 60.
  • 200 million SMEs don’t have access to formal financial services.
  • Focus in long-term projects will be beneficial.

How can your company contribute?

Any organization can contribute to address these global challenges, especially

  • Climate change. Organizations can assess their carbon footprint to identify the sources of emissions, set reduction targets accordingly, and implement actions to reduce them like switching to energy-efficient equipment, fostering car-sharing and public transportation among employees, among others
  • Gender equality. To tackle gender equality, companies can issue non-discrimination rules, raise awareness among the decision-makers, and provide the same compensation and benefits on the basis of past experiences and skills, or implement a whistle-blowing system to report such cases and deal with them
  • Inclusive growth/employment. Companies play a key role in employing people. A solution for inclusive growth can be to implement shared value initiatives by launching a new product meeting social needs, or redefining productivity the value chain while focusing on the social and environmental constrains in the supply chain, or create a local competitive cluster
  • Healthcare. Companies can help foster employees’ health and well-being by focusing on ergonomics in the workplace, preventing stress, preventing occupational diseases.

If you are an organization aiming at improving sustainability and planning to participate in sustainability reporting, or looking for support when calculating your carbon footprint – contact us to learn more about our services via info@dfge.de

For more information about the forum: http://www.weforum.org/about/world-economic-forum and the world challenges: http://www.weforum.org/agenda/2016/01/what-are-the-10-biggest-global-challenges

The DFGE– Institute for Energy, Ecology and Economy provides consulting and auditing services to realize a Green Vision integrated in corporate business processes. Strategic advice on topics like technology, energy and emissions is expanded to business related and socio-economic aspects. Services range from consultancy in developing and managing customized analysis for testified Carbon footprint to validation of analysis methods and results for sustainable accuracy. As independent Institute DFGE’s work is based on advanced scientific and research methods and institutionalized standards. More at  http://www.dfge.de

Image credit: World Economic Forum, under the Creative Commons licence (BY-SA 3.0)