The sustainable procurement shift: three steps for SMEs to survive and thrive

As consumers and investors pressure companies to take real action on climate change, many large publicly traded corporations have set ambitious targets to implement sustainable procurement practices as part of their efforts to reduce greenhouse gas emissions. This creates significant opportunities for suppliers that are proactively reducing their impact on people and the planet.

According to a recent survey by Gartner, 93% of respondents indicated that investing in responsible sourcing is a priority in the next 18 months. Between 2020 and 2021 the number of companies committing to rigorous sustainability targets tripled, according to McKinsey and Co. And as sustainability guru Bob Willard, who has long advocated for sustainable procurement, points out in his recent blog: “The lowest cost tonne of carbon that any organization can remove is in their supply chains.”

As large corporates start imposing change on their tier-one suppliers, it has impacts down the chain. According to a CDP report, as higher-tier suppliers begin to take sustainability action, they too are starting to cascade sustainable procurement requirements downwards through their own supply chains.

This creates new challenges and opportunities for smaller companies that fall within the supply chains of large multinationals. SMEs can have a competitive advantage when they are nimble and adapt to the shifting markets by integrating sustainability into their business. But companies that do not adapt risk not surviving. A survey conducted by Standard Chartered in 2021 found that 78% of multinational corporations interviewed planned to remove slow-to-transition suppliers by 2025.

Here are three steps you can take today to adapt to these shifts in the market:

1 - Understand your own ESG impacts

Measure your greenhouse gas emissions, water use, and waste. There are some free tools that can make this easier to get started.

2- Understand your customers’ climate commitments

Publicly traded companies describe their procurement-related climate commitments in their annual reports or annual sustainability reports. Spend some time reading these commitments and check for Scope 3 greenhouse gas reduction commitments. (The old CTRL-F to search for supplier and supply chain can help speed this up.)

3- Commit and act

Set bold, Science-Based targets to reduce your GHG emissions by 50% by 2030, and by 100% by 2050. Include action plans to align with your customer’s supply chain commitments. And act on these plans since you’ll have to report transparently to your customers.

By acting now, you’ll be taking concrete steps to improve your business' sustainability – from both environmental and commercial perspectives.

At Cardinalis, we help you understand the environmental and social issues that matter most to those who have the greatest influence on your business success. We equip you with clear reportable metrics that you can use to authentically and accurately tell your brand story. And, we help you continue to have a positive impact on people and the planet as you grow your business. Contact us today to see how we can help.