Leading Sustainable Organizations
Your CEO just made a major announcement: From now on, your company will purchase only goods and services from sustainable suppliers. The announcement was not a surprise. The CEO recently signed the company’s first sustainable procurement policy, modeled in part on the guidance from the new ISO 20400 standard. Support for the policy is high throughout the company. But, as the chief sustainability officer, you know there’s a problem: None of your suppliers are sustainable.
Some of your suppliers are deeply committed to protecting the environment. Others provide an excellent working environment for their employees. Still others offer low prices. However, none of them meet all of the minimum economic, environmental, and social performance requirements your organization has carefully developed. Of course, your business needs to purchase from someone; your CEO isn’t about to shut it down.
Overall, your CEO has the right idea: Sustainability requires thinking and action that go beyond your own company. But building a base of sustainable suppliers will take time: Sustainability requires a long-term strategy with strong, sustained senior-level commitment. This was made clear in the recent report “Corporate Sustainability at a Crossroads.” Good intentions are commendable, but they’re not enough.
There are, however, ways you can prepare to engage more sustainable suppliers and assess your current ones.
Accept the need for trade-offs. Real-world sustainable procurement initiatives must begin by acknowledging your company’s current situation. Sustainability is often framed in “win-win” terms. For example, your company believes it can lower costs while reducing its environmental impact and improving its working environment. That’s certainly the goal and it is possible. But, in practice, there are often conflicts between economic, environmental, and social objectives. You may need to compromise in one area to obtain benefits in another. This is particularly true in the short term.
Like all established companies, you will have supplier relationships you cannot simply discard. In some cases, alternatives may not even exist. There may be no sustainable options. Clearly, your company wants to get to the point where trade-offs between economic, environmental, and social objectives are less pronounced and, ultimately, eliminated. Unfortunately, this is not easy.
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Develop a trade-off hierarchy. If you accept that trade-offs can occur, you must decide how to systematically identify and assess them. This will force you to articulate what you value most.