Be sustainable now to ensure the development of future generations. This is the biggest challenge for all of us: businesses, government and society.

The world is behind schedule to fulfill the 2030 agenda, proposed by the Global Compact (UN) in 2015, with 17 Sustainable Development Goals, including: conscious consumption and production, less inequalities and action against global climate change.

Now is the time to act. As a major holder of economic power, as well as driver of innovations and technologies, the private sector plays a key role in this process.

In addition to a host of challenges, organizations’ commitment to sustainability and how businesses will handle environmental, social and governance (ESG) aspects favor not only innovation capacity, but also new business opportunities and higher competitiveness.

Sustainability as a factor of appreciation and competitiveness

In 2021, a global survey by EY, with 325 investors, revealed that 79% of them consider ESG risks and opportunities as an important factor in their investment decisions, while 49% are likely to divest, if the performance of businesses with environmental, social and governance aspects is below the expected level.

In 2020, the Corporate Sustainability Index (ISE), by B3, had an appreciation increase by 325%. The ISE has the purpose of supporting investors in making responsible investment decisions. To compose such index, businesses must show initiatives based on several topics: economic efficiency, environmental balance, social justice and corporate governance.

More than ever, businesses’ attention is no longer restricted to financial performance and operational excellence. In fact, now there are concerns related to ethical, environmental and health issues, violation of human rights, safety and well-being of employees.

The involvement of consumers, employees, investors and communities is growing too; and people are prone to be more and more engaged in the sustainability agenda. All of them stemming from this new process which, despite its extreme importance, still raises doubts in the corporate world.

Sustainability as an innovation strategy

In order to survive, businesses must have an innovative approach, regardless of the industry in which they operate – and this is fully related to sustainability. But it’s worth remembering that being sustainable today goes beyond the environmental concept: it’s related to how businesses respond to changes in society.

There’s a major challenge in adapting the business to a more complex environment, particularly for leaders. The path can be less arduous when there is commitment from the whole organization. And, of course, the procurement area has a great responsibility in this sense.

To achieve a sustainable potential, we must consider strategies beyond managing supplier-related risks. Sustainability shall be incorporated as a true business strategy, to face this topic as a driver of innovations.

In other words, it’s all about finding, in society’s problems, what can be turned into a business opportunity, and can create not only a positive impact for people, but also a movement that can leverage business growth.

What are the first steps towards a sustainable procurement?

Nowadays, the commitment to sustainability and the aspects of ESG – acronym for Environmental, Social and Governance – are integral part of the agenda of those organizations that have invested in strategies focused on people, processes and technology.

The first step is to effectively regard problems as a responsibility of the company. And then start to discuss the impacts that the organization causes on society and the environment, particularly those that aren’t managed yet.

In this process, it’s important to define the material topics – a sustainability concept that charts the main impacts of an organization’s activities when comes to these issues.

From the identification of material topics, we can address sustainable initiatives to the most relevant aspects – such as, for instance: waste management, gas emissions, anti-corruption practices, and customer health and safety, among other ones.

To meet society’s demands, establishing partnerships and promoting education through actions can’t be postponed.

In our days, choosing partners based solely on price is a practice that no longer belongs to the strategy of companies that want to boost their conscious performance. The sustainability agenda is linked to risk, efficiency, and the creation of value and innovation.

For this reason, it’s important to expand awareness, regarding the impacts of the organization’s activities and products, to study the interference that the business has on people’s lives and on the environment.

Responsible sourcing and supplier engagement

With regard to suppliers and third parties, different sustainability criteria must be taken into account, in order to minimize risks related to the supply chain and their impact on the business.

The maturity level of supplier management can evolve gradually. To get started, the partners must meet legal and technical requirements imposed by internal regulations and standards.

After such requirements show a desirable result, it will be time to challenge suppliers with regard to innovation, and invite them to participate in the product transformation process, because new solutions aren’t only within organizations.

Let’s give a practical example: when looking for a new packaging, “supplying company A” has a more competitive cost than “supplying company B”, but the latter has a research laboratory and collaborative processes. The chance to innovate is then greater with “supplying company B”, which can increase the business’ profit and competitiveness.

Today, investing in an innovation journey and having suppliers as part of the strategy is a matter of survival. And technology is a great ally in this journey of the procurement area, mainly because there’s a complexity in the information level of the partners, which must be managed continuously, always in a transparent and integrated way.

Supplier management solution

Supplier management is really challenging for businesses. In addition to issues involving price, quality and delivery, other concerns must be integral part of the business strategy – such as brand image, ESG, shortages, and risks of fiscal and labor co-responsibility.

To manage all these variables, organizations must rely on technology. Five practices are involved in supplier management: registration, certification, evaluation, inspection and third-party management.

With Mercado Eletrônico’s Supplier Relationship Management solution, your procurement area can adopt a collaborative, transparent and effective supplier management. See the key benefits below:

  • Management and control of all suppliers and outsourced services;
  • Savings, agility and compliance in the management of suppliers and third parties;
  • Building of sustainable and reliable partnerships;
  • Collaboration between business partnering companies;
  • Check of supplier compliance;
  • Evaluation of partners throughout the supply process;
  • Decrease of risks related to suppliers and third parties.

Talk to one of our supplier management solution experts. Just click here.

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