Procurement plays essential part in decarbonization ambitions

11 October 2023 Consultancy.eu 3 min. read

Up to 90% of a company’s carbon footprint can be traced back to its supply chain, underlining procurement’s pivotal role in sustainability. That is according to a new study from Sourcing Champions and Valuedesk.

Amidst a slew of global challenges in recent years, the climate crisis stands out as a particularly pressing threat. With countries around the world committed to curbing global warming, businesses play a vital role, with growing pressure from consumers and regulators to prioritize sustainability and take comprehensive action.

The study revealed that 93% of procurement professionals believed sustainability is a top priority. It appears as though companies tend to recognize the significance of reducing their carbon footprint and some have certainly taken initial steps to address it. Despite that, the study also reveals that only 50% of the companies had explicitly established a net-zero target that included Scope 3 emissions.

Net-zero target adoption by company sizes in terms of revenue. We see that the share of companies who have a target tends to be greater for bigger companies

“There is an inclination among large companies to adopt a net-zero target. This trend might be attributed to higher influence of regulatory requirements (e.g. Due Diligence Acts), heightened stakeholder expectations, or increased market demand,” said Sabrina Hueren, Consultant at Sourcing Champions.

Larger companies are also more likely to employ a variety of different methods and tools in finding their carbon baselines and ultimately establishing targets. This difference in strategies can be attributed to larger companies’ greater access to resources, expertise, and personnel.

Only just over 5% of companies said they prioritize sustainability when choosing suppliers above other concerns like price and innovation capacity.

“Most companies are prioritizing price and delivery reliability as the key criteria when selecting a supplier. Sustainability comes next in line after these criteria. Notably, larger companies have taken measures in recent times, and when looking at their priorities, the importance of price decreases – although it remains a top concern,” said Hueren.

Many organizations, especially within procurement teams, aim for net-zero goals. However, the focus on costs and the impact of external factors are hindering successful net-zero efforts.

“Companies find themselves in a difficult spot. Market conditions are demanding, and while the drive to be competitive persists, the urgency of sustainability efforts cannot be overlooked. Thus, it becomes critical for companies to adopt a holistic approach on net-zero strategies and sustainable procurement. This will help companies to make informed decisions,” said Hueren.

Previous research has shown that companies may not be totally forthcoming about their emissions targets and the data they use to make them. A separate report from earlier this year showed that only 11% of companies make their supply chain emissions targets public.