The adoption of sustainable procurement practices has seen an uptick in recent years, driven mostly by environmental compliance requirements, corporate governance demands, and growing awareness from consumers and employees.
The Sustainable Procurement Barometer shows that 51% of companies had a sustainable procurement policy in 2021, up from 38% in 2019. It also indicates that 60% of buyers and 70% of suppliers feel sustainability helped them manage the COVID-19 crisis.
Indeed, sustainable procurement enables companies to increase the resilience of their supply chains as well as consolidate their brand reputation.
In this blog, we take a look at the different dimensions of sustainable procurement, some practical implementation strategies, and how companies that embrace sustainable procurement can develop a strategic advantage.
The hidden cost of non-sustainability
Previously, studies had suggested that higher costs are an obstacle to the adoption of sustainable supply chain practices. But the cost of implementing such policies is undoubtedly lower than the cost of non-sustainable, inefficient supply chains.
According to a recent report by the UN’s Food and Agriculture Organization (the FAO), agrifood systems have a ‘hidden’ cost, that refers to greenhouse gas and nitrogen emissions, water use, land use, unhealthy dietary patterns, and poverty – all of which get often overlooked.
These hidden costs were estimated at $12.7 trillion, or 10% of global GDP, in 2020 alone, with nitrogen emissions and unhealthy dietary patterns holding the highest share.
When considering the financial impact of integrating sustainable supply chain practices, companies must also consider the cost savings they can generate by ensuring regulatory compliance, consolidating their brand reputation, and utilizing resources more efficiently.
The environmental impact of sustainable procurement
The impact of sustainable procurement on the environment (for example the utilization of natural resources such as water and soil) is maybe the easiest to track and measure.
A sustainable food procurement policy should minimize the impact of food production processes on natural resources, reduce pollution and carbon emissions, and protect biodiversity (for example by preventing deforestation for agricultural use).
Food supply chains often rely on ingredients and raw materials sourced everywhere around the world, which means that implementing a sustainable procurement policy can help address social issues concerning human rights, ethical labor, or social equality.
A socially responsible procurement policy goes beyond metrics of cost and efficiency, and prioritizes safe working conditions, fair wages, and equal opportunity in the local communities where materials are sourced.
How to implement sustainable procurement practices
There are many strategies companies in the food and beverage sector can adopt in order to build more sustainable procurement practices.
Here are a few of them.
1. Ensure supplier compliance
Certainly, the longer a supply chain is, the more difficult it becomes to enforce accountability.
Supplier codes of conduct, supplier audits, and transparent communication are key in ensuring that suppliers and partners uphold the desired ethics and quality standards. According to the Sustainable Procurement Barometer, 71% of companies had a supplier code of conduct in 2021 as opposed to 64% in 2019.
Confectionery manufacturer Fazer provides a good example of how they ensure their cocoa comes exclusively from suppliers that meet responsible production standards.
2. Work with local suppliers
Food companies can easily reduce their carbon footprint by sourcing ingredients and raw materials directly from farms or producers close to their production facilities.
This not only helps reduce the environmental impact associated with shipping, but also contributes to local community development.
3. Partner with certified organizations
ISO standards and widely recognized certifications such as Fair Trade, FSC (Forest Stewardship Council), Organic, and many others can help food brands select reliable partners that meet high environmental, social, and ethical standards.
4. Regulatory compliance
This shows growing interest for sustainable and ethical business practices from regulators and governments as well as consumers. Adhering to these evolving requirements can help food companies protect consumers from potential health hazards and safeguard their reputation.
5. Supply chain traceability
Food traceability is critical in ensuring food products are sustainable sourced, manufactured, packaged, and distributed. Supply chain traceability solutions can help provide these guarantees to consumers and ensure transparency between the supply chain actors.
With Enismaro, food and beverage companies can track their product journey from source to shelf, increasing product trust and maintaining high quality and ethical production standards.
Enismaro’s supply chain traceability platform also enables cost savings through better planning, waste reduction in the supply chain, and more efficient resource utilization.
Beyond the medium-term benefits of operational savings and supply chain resilience, sustainable procurement also provides a clear path to strategic advantage in a crowded food industry.
With consumer preferences driven more and more by ethical and environmental considerations, only organizations that put sustainability at the core of their mission can stand out in a competitive landscape.