Sustainable procurement: The ugly truths and success factors

kp is an integral contributor to a game-changing guide that aims to accelerate sustainable procurement practices.

Global supply chains are at the heart of modern business. They directly impact and shape our lives and work. They can be volatile and are impacted by economic activity. But by collaborating across sectors, procurement professionals can shape robust supply chains founded on transparency, ethics and trust.

Supply chain sustainability refers to a company’s efforts to consider the environmental and human impacts of their products and services, throughout the entire value chain. The overall goal is to:

Prioritise human rights, fair labour policies and anti-corruption.
Minimise environmental impact, by looking at energy use, water consumption, waste production, where we source raw materials from all the way through to production, storage, and delivery.
Balance the above with revenue and profit.

For most companies, their supply chain is responsible for a significant part of their environmental impact. To truly embed sustainability, which can aid investor relations, improve corporate culture, and increase compliance, we must embed sustainability into the mindsets and ways of working of professionals in procurement departments. But how do we do that?

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Tackling a tough challenge

I’ve worked in procurement for 33 years and believe now more than ever we need to share knowledge to create a vibrant community of professionals committed to embedding sustainable procurement practices.

I think everyone working in procurement has a role to play here. Those of us who’ve already started this journey need to share what we wish we’d known at the start (including some of the push backs we’ve had to face!). If we keep the conversation going and are transparent about what has worked, and what hasn’t, others can get to where we are, faster.

As such, I’m delighted kp recently played a part in creating a practical tool that will shape the future of sustainable procurement. Launched on the 25th of October 2023, The Guide is a toolkit of ideas and case studies to help fellow procurement professionals learn from best practices.

The first iteration of The Guide, by the Sustainable Procurement Pledge (SPP), provides:

A reality check of the ‘ugly truths’ that procurement leaders face in the journey to embed sustainability across an organisation.
A review of key success factors that are critical to making real progress and lasting change in procurement practices.
Practical, real stories (including successes and challenges) from a group of organisations engaged in the SSP Champions programme.

The Guide is a great tool to help procurement teams sense check thinking, plans and progress. Right now it is a snapshot of current best practices and challenges, but the intention is for it to evolve. The vision is that it will become a knowledge hub packed full of case studies, with The Guide serving to help procurement professionals navigate their approach to sustainable procurement.

“The Guide will be such a useful tool for procurement teams. It will help them approach problems they may encounter, and it highlights current best practices as we all strive to help our companies become more sustainable.”

Richard Harradine

Group Director Procurement

The Sustainable Procurement Pledge

kp signed the SPP last year. Based on the United Nations Global Compact and the Sustainable Development Goals, the SPP shows we’re committed to driving awareness and knowledge on responsible sourcing practices and empowering people in procurement.

The ambition of the SPP is to get 1 million procurement professionals to sign up to the Pledge, and by using all to tools, guide included, empower their procurement teams to take action. By signing, you become part of an active community. There are events, meetings and webinars and there are local geographic and industry sector chapters you can engage with.

Only when we all take small steps will we deliver impact and ensure a better future for all.

Sustainable procurement at kp

kp offers more than 8,000 customers an extensive portfolio of high-quality plastic packaging and related solutions. Our experts create innovative films and trays that protect medication and medical devices, keep products safe, help avoid food waste and preserve the integrity of countless durable products. As a global packaging manufacturer, our value chain is integral to our business and includes retailers, waste contractors, consumers, manufacturers, suppliers, trade bodies and governments.

I love working in such an innovative organisation, and I’m proud our commitment to sustainable procurement is outlined in our sustainability strategy – Investing in Better. Everyone working here can see how we focus our time and energy on closing the loop, whilst working smarter and acting responsibly.

How kp’s procurement team is driving change

Supplier engagement is key to decarbonising our value chain and is critical to achieving our science-based targets. For kp, 90% of our emissions are in our value chain (Scope 3) while 10% come from our own operations (Scopes 1 and 2). Our data shows 78% of Scope 3 GHG emissions are coming from our purchased goods and services, from which the main contributors are our raw material suppliers.

In 2022, we initiated a supplier engagement programme by engaging with our top 24 suppliers to assess the largest contributors to our carbon footprint.
Following that, we extended the engagement with our top 50 suppliers, which were selected based on their overall Scope 3 contribution, in order to collect primary data.
Through this engagement, we also educated and supported our suppliers and provided training materials to accelerate progress in relation to GHG emission reductions.

In 2022, we continued to use less energy; we recorded an 11% reduction (80,297 MWh) in absolute energy consumption since 2019. In addition to being lean, we’re also invested in green energy from renewables. By the end of 2022, 52% of our electricity was generated from renewable sources (2021: 28%).

Another key element of sustainable procurement is due diligence. We engage with suppliers and stakeholders on sustainability topics to ensure they meet our expectations to drive improvements. To date, 53% of our total spend is assessed for sustainability risk:

We have implemented Supplier Business Principles that refer to our Sustainable Procurement Policy and Supplier Code of Conduct, which are available on our website and listed in each Purchase Order. We have added these Supplier Business Principles to our standard framework contract agreements. Thirteen per cent of our strategic suppliers are working under the new types of contract, with negotiations ongoing with a further 17%.
We encourage suppliers to acquire a rating by EcoVadis (an evidence-based comprehensive assessment) or similar. At least 40% of our strategic suppliers are certified by EcoVadis (Bronze rating or above), which covered 66% of our spend with strategic suppliers in 2022.
We conduct a risk assessment to identify and mitigate additional sustainability risks in our supply chain. In 2021, we assessed several suppliers’ exposure to 28 risks, covering environmental protection, human rights, child labour, occupational health and safety, modern slavery, anti-discrimination and political risk. In 2022, we expanded and included all suppliers. As a result, we asked certain suppliers in high-risk countries to complete a self-assessment questionnaire; the majority of these suppliers passed the assessment without any advisories. However, we now have in place a Standard Operating Procedure covering corrective actions and the deselection of suppliers for non-compliance.

I’m happy with what we’ve achieved but appreciate there is still a way to go. However, with support from our leadership team, and a commitment to act more sustainability from colleagues across the globe, we are making progress.

“At kp we constantly collaborate closely with our entire value chain to improve practices. One week the focus might be on decarbonisation, and the next we’re addressing modern slavery. But underpinning these efforts is kp’s unwavering commitment to responsible, sustainable procurement.”

Richard Harradine

Group Director Procurement

Collaborating to drive impact

Richard Harradine

Along with partners at the SPP, I really do believe impact starts with I. I urge any procurement professionals reading this article to sign the SPP and look at The Guide. It is designed for you and will help you learn and build an understanding of what might work for your organisation. And I ask those of you further along in your journey to share your actionable, real-world case studies – you can do this here.

To reach ambitious sustainability goals, we must come together and learn from each other. We will not achieve our targets by going at it alone. We all need to think a bit differently, and we must continue to share our learnings and our failures, so we can build on this and move from an ambitious group of procurement professionals to an impactful one.

If you think I can provide insights to your procurement team, feel free to contact me on LinkedIn. We’re all in this together!

Richard Harradine
Group Director Procurement
Klöckner Pentaplast

Leauge of Champions