Want to learn more about sustainable procurement?
Contact me and I’ll gladly tell you more…
Jenny Vårlid, Head of Business Development
Strategy for Sustainable Procurement
A strategy for sustainable procurement integrates environmental, social, and governance (ESG) aspects into the procurement process to minimize negative impacts and promote positive outcomes.
EFFSO’s methodology for developing a sustainable procurement strategy goes beyond creating the strategy itself. It identifies needs for technology, processes, organization and competence development, as well as details the needs for analytics and KPIs.
As most procurement transformation journeys, we start by evaluating the current situation to identify areas for improvement, often through a procurement structure analysis. This analysis typically covers the entire source-to-pay process with particular focus on the supply chain and supplier network to ensure the organization can meet regulations and legal requirements, as well as supplier selection and evaluation, lifecycle impact, ethical practices, and opportunities for innovation and collaboration with suppliers.
Driving change can be challenging, and it is crucial to keep long-term value creationin focus. EFFSO has a proven track record of successful procurement transformation and brings a wealth of change management and transformation best practices to the strategy process.
Due Diligence and Risk Management
CO2 Footprint Analysis
A CO2 Footprint or Supply Chain Emmissions Analysis enhances the traditional spend analysis by adding environmental indicators to visualize the CO2 footprint within the supply chain at the category and supplier levels. This provides procurement with insights and opportunities to influence sustainability efforts within the organization.
While many organizations have a handle on their internal emissions, few have addressed supply chain emissions. By adding environmental indicators to existing spend analysis, it visualizes the organizations supply chain emission, which can act as a map for prioritizing improvement efforts from a category perspective. Learn more about our CO2 Footpring Analysis.
Analyzing and understanding the organizations CO2 footprint is crucial for companies affected by the EU’s new directive on carbon-intensive products: CBAM. CBAM, the EU’s Carbon Border Adjustment Mechanism, impacts companies importing carbon-intensive goods produced outside the EU. It involves a certificate that prices goods produced outside the EU similarly to those produced within the EU. CBAM came into effect in the EU on June 13, 2023, and extends the current emissions trading system. To understand potential costs, a CBAM analysis can be conducted, focusing on spending in categories covered by CBAM (currently iron and steel, cement, fertilizers, aluminum, electricity, and hydrogen).
Category Projects with sustainability focus
By implementing a strategy for sustainable procurement within category management and category projects, companies and organizations can contribute to improved ESG (Environment, Social responsibility, and long-term ethical Governance). Usually this lowers supply chain risks and a strengthens the organizations brand.
Organizations that have implemented a category management approach are well-positioned to address ESG issues in the supply chain. Category Management is cross-functional and takes a broad perspective on how the supplier base can best deliver value to the organization.
One key activity for sustainable procurement is to develop supplier selection criteria that consider not only cost and quality but also environmental and social impact. By evaluating potential suppliers with these criteria in the sourcing process, procurement ensures that suppliers meet and adhere to the company’s sustainability goals. Another aspect to consider is the product’s lifecycle, from raw materials to reuse and waste management.
Sustainable procurement through category management enables the selection of products with lower environmental impact and longer lifecycles, encouraging suppliers to adopt circular economy principles. This creates opportunities for procurement to benefit from potential innovation in the supply chain and strengthens potential collaboration with the supplier base.
EFFSO has developed methods for category management that include sustainability activities and criteria for sustainability in the sourcing process. With over fifteen years of experience in category management and category projects, we have built a comprehensive knowledge base in both indirect and direct materials that we can leverage for successful sustainability-focused sourcing.
Sustainable procurement creates value in multiple dimensions
Cost Savings and Increased Efficiency
Sustainable procurement often focuses on reducing waste, optimizing resource use, and improving supply chain transparency. Emphasizing these areas typically leads to cost savings through smoother and more efficient processes, reduced energy consumption, and better resource management.
Choosing suppliers with more sustainable operations and processes can also reduce the risk of price volatility in relevant categories, lower the risk of potential fines due to regulatory violations, and decrease other costs related to sustainability.
Reduced risks and a more robust supply chain
Focusing on sustainability in the procurement process enhances an organization’s ability to identify and manage risks related to delivery reliability, regulatory compliance, social sustainability, and brand damage. Emphasizing sustainable procurement can create a more robust supply chain, crucial during periods of geopolitical uncertainty, natural disasters due to climate change, financial instability, or other unforeseen supply chain disruptions.
By ensuring suppliers adhere to ethical and environmental standards, organizations can better handle unexpected challenges. Overall, focusing on sustainable procurement establishes conditions for a more robust and secure supply chain.
Strong brand and meaningful engagement
Organizations that prioritize sustainable procurement enhance their brand and create stronger, more meaningful relationships with customers, investors, employees, and society at large. Consumers are increasingly aware of sustainability, environmental, and social issues and often choose to support companies that act responsibly.
Achieving sustainability goals allows organizations to increase their market share by being an attractive choice for sustainability-conscious consumers, investors seeking responsible investments, and employees who value ethical workplaces.
A selection of customers by industry
Automotive
BorgWarner
CEVT
Kongsberg Automotive
Toyota MH
Energy, Real Estate & Construction
Bravida
NCC
Vattenfall
IT & Telecoms
Arelion
Axis Communications
Eltel Networks
Mycronic
Retail & Food
Ahlsell
Coop Sverige
ICA Gruppen
Menigo
Public Sector
City of Gothenburg
City of Mölndal
Swedavia
Systembolaget
Processing & Manufacturing
Boliden
Envirotainer
Lesjöfors
Services
High Chaparral
ISS
Kunskapsskolan
Samhall
Other
Bankgirot
MTR
OneMed
Stena Line
Are you looking for help with procurement?
Call us directly on +46 8 440 39 30 or use the contact form to the right and we will get back to you as soon as possible.