Sustainability: Moving from a vertical to a horizontal
Sustainability continues to cement itself within the heart of corporate business strategy. More progressive organizations are recognizing that sustainability is a value lever and that treating it as a business vertical no longer works. Traditional sustainability teams, however adaptable, cannot possess the breadth of skills, resources, or network of influence that will allow their organizations to adapt for success, with the speed required. And so leading organizations are increasingly adopting Sustainability as a business horizontal in response to the need for it to permeate across all functions: from Finance grappling with the updated reporting requirements of new regulations like the Corporate Sustainability Reporting Directive (CSRD), to Marketing seeking the “green premium”, to Procurement playing a central role in delivering against these upstream ambitions. Sustainability is no longer a concern confined to a specific part of an organization – it is a business-wide one.
We need fundamental supply chain change
Sustainability is moving faster than ever today. Companies are preparing to comply with the CSRD from 2025, Carbon Border Adjustment Mechanism (CBAM) reporting is underway ahead of a full launch with carbon credits in 2026, and IFRS regulations will bring many of these components into mainstream accounting. At the time of writing (July 2024), 5,695 businesses have approved science-based targets (SBTs), a 35% boost from 4,205 at the end of 2023.
Amid ongoing macroeconomic and geopolitical uncertainty – from war to trade tensions to political instability – rigorous procurement and supply chain management are more important than ever. Accepting incumbent products, suppliers, and supply chain structures as the status quo is unlikely to build a strong business. We need more data, more transparency, and more change.
“Supply chain emissions typically make up 40-80% of an organization’s total carbon emissions, even reaching over 90%” – while this is often quoted, it’s not just a glib statement: near-term 2030 global commitments, let alone net zero targets, cannot be met without fundamental supply chain change, activated by procurement teams.
Until now, the sustainability demands on procurement teams and their supply chains have often been implicit. Now, they are being actively voiced. Procurement teams are either waking up to this fact or, if we take a more positive perspective on this, are being empowered with funding and commitment to meet their full potential.
Sustainable procurement is therefore becoming more than a buzzword; it speaks to a real need to deliver measurable ESG outcomes through the supply chain. Without this change, organizations cannot be compliant or competitive.
Yet, for many organizations, there is no clear roadmap for what this means, and there is a lot of work to be done – work, however, that presents a strong opportunity for market differentiation for early movers.