It is not easy being green
Kermit the Frog got there fifty years before the sustainability industry. It is not easy being green. Especially with 80% of emissions hidden in your supply chain.
Almost every executive I meet wants their company to be more sustainable. Meanwhile almost every company’s emissions performance suggests that wanting is not the constraint.
So why is it so hard to be green? The short answer is you need to cut the 80% of emissions hidden in your supply chain. Three reasons follow, then the eight things that fix it.
Because the impact is not where the effort is
For most companies, around 80% of sustainability impact sits in the supply chain. It lives in the goods and services you buy, not the operations you run.
Nevertheless, the effort concentrates where control feels easy. The office energy contract. The fleet. The recycling programme. The report.
The result follows predictably. First, a decade of diligent activity on the 20%. Meanwhile the other 80% sits with procurement. However, procurement never received sustainability as a real objective, with real trade off authority.
Because the disconnect is structural
In most organisations, the sustainability team, the business and the supply team barely share a language. They certainly do not share a decision process.
Sustainability sets targets it cannot execute. Meanwhile procurement executes decisions it did not shape. Furthermore, the business makes the actual buying choices, close to the activity, optimising for cost and speed. After all, that is what it is measured on.
Moreover, in practice we are procuring a service, so commercial and service level (SLA) performance discussions come first. That leaves little time to be green.
Therefore, being green stays hard, because nobody designed the operating model to make it easy. Ultimately, good intentions do not survive contact with a misaligned incentive.
Because measurement is hard, and we made it harder
Scope 3 data arrives from suppliers late, estimated and inconsistent. Often it does not arrive at all.
However, we never fixed the data problem at its source in supplier management. Instead, we built a parallel reporting industry on top. Questionnaires nobody actions. Ratings that measure disclosure quality, not performance.
Consequently, a company today can hold excellent ESG paperwork and a worsening footprint. I return to that in Blog 11 on twenty years of ESG reporting, with numbers.
What actually works
The pattern I have seen work is unglamorous. Put sustainability inside supplier management as business as usual. Do not park it beside supplier management as reporting.
In practice that means 8 things:
- Defining mandatory sustainability standards for suppliers
- Publishing your net zero target to your supply chain
- Including sustainability criteria in sourcing decisions, with real weighting
- Negotiating contract clauses with measurable commitments
- Agreeing action plans to enhance supplier sustainability
- Measuring performance on expectations in action plans, contractual commitments and Net Zero targets
- Reviewing sustainability performance alongside cost and service, with the same people, in the same meeting
- Addressing performance outside of expectations
In short, when being green becomes part of how you buy, the 80% finally gets managed. Later in the series, Blog 12 asks what procurement does now the 1.5°C target is gone.
Are your sustainability effort and your supply chain running on separate tracks? That is fixable, and the fix usually pays for itself. Book a virtual coffee with me: pdigweed@spvalue.com.au.
This is The Hollywood Procurement Blogs S1 E10. Material created by Paul Digweed with support by AI team member.