Staying Power

To sustain. To continue. To keep going. For those having enjoyed 2021’s summer of sport, it will be a familiar pundits’ question: can they sustain this run of form? Can she sustain this pace? If yes, success. If no, loss, failure, an end to continued participation.

The meaning of a word

Until now, sustainability was used within business parlance in two distinct ways: one that addressed the first meaning: the ability of the business to continue its growth and development without set-back, without stalling. Let’s call this Performance Sustainability. And the other refers to an appreciation of a business’s green or environmental credentials: ESG Sustainability.

These meanings have now converged.

It is now time to view Performance Sustainability as synonymous with ESG Sustainability. A growing, successful business must be one with environmental, social, and financial performance goals at its heart.

Questions are being asked of procurement, and soon they will become demands. So, what do we do?

Complete the form below to read the article and learn how to translate your sustainability plan into a value proposition.

The Triple Bottom Line

Efficio starts with an interpretation of the Triple Bottom Line. A concept developed by John Elkington in 1994, it values performance against three parameters: not just Profit as convention tells us, but also Planet and People (to neatly give us a memorable alliteration). Triple Bottom Line theory holds that if a firm looks at profit only – ignoring people and the planet – it cannot account for the full cost of doing business.

From this we draw several conclusions:

1. Sustainability is not (or does not need to be) selfless: The 3 Ps are not mutually exclusive, and the bond between better supporting your people and the environment around us is getting more inextricably linked with profitable and stable business performance
2. Sustainability is broad: it doesn’t mean the same to everyone and we must prioritize
3. Sustainability requires a mental shift and a repurposing of our tools, skills, and measures

As we shall see, when thought through well, the Triple Bottom Line can quickly become a commercial plan, a prioritized plan, and an operational plan.

No time like the present

The rate of new sustainability legislation is accelerating. Each year, we face a matrix of requirements by governing bodies (local, national, and international) impact type (carbon, plastic, water usage, ethical labor, diversity). Many of these requirements – for example, net zero commitment – have long lead-times, and for good reason. This is not to allow a grace period, followed by a period of business planning, ending in a last-minute sprint for the line, but because this is hard. Really hard. Much of the science tells us we are already behind, and, for most organizations, they haven’t even started yet. Other demands can come quickly – especially at a local or national level, such as for packaging.

The takeaway here is that there is first mover advantage in planning and acting early:

1. There is strong customer and brand value from leading in sustainability 
2. You avoid being at the back of the queue when the new markets form that will be needed to develop and support more sustainable practices 
3. You allow your organization time to adjust and adopt new skills and mindsets that will inevitably be needed 

Valuing sustainability

We talked about sustainability being commercially the right thing to do and, as procurement, we need to value improvements. Here too we’d benefit from thinking about value more broadly. Cost Reduction remains the easiest and most quantifiable method, but there are others, including: Product & Margin Development, Brand Value & Customer Requirement, and Financing.

Your first steps

The sustainability landscape is still wide open, so knowing where to start can be difficult. While sustainable procurement now has a standard in ISO20400, it stands as guidance notes and not an accreditation. The UN has 17 sustainable development goals but, again, they are not tailored to procurement and it can be difficult to draw from them the practical, value-adding steps that procurement can and should take.

To provide a sensible structure that allows organizations to start on the sustainability (and sustainable procurement) path, Efficio recommends a 6-step structure.

1. Sustainability Business Plan: define what sustainability means to your business

Organizations can’t do everything at once, so look to understand the key elements of sustainability that mean the most in your geography, to your customers, or to your leadership. Further weight them into prioritised approaches:

2. Translate in Value

Understand what your organization values and will recognize. If cost reduction (or cost maintenance) is still key, rather than some of the value levers mentioned above, look for the win-wins that arise through demand challenge or effective total cost approaches. Innovation is also key here, and empowering procurement teams to think differently and act differently is paramount.

Furthermore, build a procurement pipeline of activity that supports a ‘save to invest’ approach. Drive cost reduction hard, where you can, to off-set areas that maximize sustainability value.