You may have heard of the “three P’s” or you may have heard of the Triple Bottom Line? Or not. So, what is it and why is it important?
The “Triple Bottom Line” framework, which emphasizes environmental, social, and economic factors, has emerged as a guiding principle for sustainable procurement.
The triple bottom line is a business concept that states organizations should commit to measuring not only their financial performance and profit but also on their environmental impact. This is a little bit more than just focusing on green energy and recycling.
The triple bottom line can be broken down into “three P’s”: profit, people, and the planet.
It can even sound a bit idealistic, at first, nevertheless this will be involving all the aspects of the business operations—including supply chains, business partners, and renewable energy usage—to positively impact society and the environment in addition to turning a profit. More and more big brands and innovative companies have proved that it’s possible to do well by doing good.
What is sustainable procurement and why is it important for us procurement professionals?
Procurement leaders have a responsibility to drive positive change. Improving data accuracy and spend visibility enable sustainable efforts. Within procurement and supply chain, sustainability can be defined as the process of making decisions that benefit not only the organization but society as a whole, while minimizing its impact on the environment. This means considering social and environmental factors alongside purely financial and economic ones. Those moment when the best price or even total cost of acquisition is not enough to see the complete picture and cost.
How can we, the procurement responsible, support the needs of the business while supporting the “three P’s”? Companies need to fulfill changing customer preferences, comply with tightening regulations, and satisfy stakeholders. Leading global organizations recognize that sustainable supply chains can offer competitive advantages like improved efficiency, innovation, and market differentiation. Research shows that “Strong ESG credentials drive down costs by 5 to 10 percent, as these companies focus on operational efficiency and waste reduction.” Are we actually seeing this in the marketplaces?
We know sustainable supply chain management is complex. It requires a holistic view of all the partners, processes, logistics, and raw materials involved in manufacturing and delivering your products to customers, plus the ability to track, collect, and connect data at each step. It also involves use of procurement influence to shift suppliers in sustainable directions.
Sustainable procurement isn’t just about risks and challenges. It also presents historic opportunities to make and distribute more appealing, durable, valuable, and differentiated products, invent (or reinvent) new products, reduce costs, protect the environment, and elevate your organization’s brand.
Is it enough to recycle, and use returnable packaging? Or what else can we actually do? Sustainable procurement opportunities include:
- Purchasing or using renewable energy (PPAs, etc.)
- Procuring energy efficiency technology and services
- Sourcing a greater percentage of recycled and upcycled raw materials for products and packaging
- Sourcing materials and raw materials local and in region where possible, closest to the actual usage of them
- Partnering with your strategic suppliers to implement sustainability improvements in high value parts of your value chain
When working with suppliers on sustainability initiatives, it’s important to be clear, consistent, and understanding with your sustainable procurement approach.
Once you’ve established one or more sustainable supply chain programs, work with your suppliers to implement best practices.
Achieving sustainable procurement excellence does require internal capacity, resources, and investment. But, done correctly, it can boost everything from your firm’s brand and reputation to employee morale and retention, operating financials, and risk management efforts.
Source: Learn Procurement