SUSTAINABILITY
SUSTAINABILITY
Missed opportunities to support sustainability with SRM
Collaboration Are companies working together to improve sustainability? 47%of organisations do very little or no joint work with suppliers tomanage sustainability Fig. 24. To what extent do you collaborate with critical / strategic suppliers to identify and reduce sustainability risks?
•
Governance
Resources
Is sustainability part of good governance?
Do companies have the resources and skills?
37% Very little
30% Moderately
11% Widely
11% Don’t know
10% Not at all
60%of followers do not identify and manage supply chain sustainability risks Fig. 22. Do you specifically identify and manage supply chain sustainability risk?
Leaders understand the resource implications for managing sustainability 5 Fig. 23. Does your organisation have the necessary resources and skills to work with critical suppliers to reduce sustainability risk?
Organisations are missing a huge opportunity to work more closely with their key suppliers to identify and reduce sustainability risk. Only just over 40% of company’s report that they collaborate with their suppliers, a figure largely made up of the leaders and fast followers.
Leader
Fast follower
Follower
Leader
Fast follower
Follower
Drivers
Yes
No
We don’t have any training
Yes
No
We don’t have any training
What’s driving procurement's focus on sustainability?
100%
100%
0%
0%
0%
0%
Reputational risk factors ensure sustainability plays a role in procurement Fig. 25. What are the main drivers for procurement managing sustainability?
12%
7%
14%
27%
79%
62%
25%
60%
15%
29%
53%
27%
66% Reputational risk
58% Regulatory risk & compliance
51% It makes good business sense
50% It’s the right thing to do
18% Customer pressure
8% Competitors are doing it
5% Pressure from NGO’s or other third parties
Having a management model in place to ensure compliance with minimum standards is not the same as risk management. Sustainability risk management needs to be far more dynamic and consider the constantly changing risk profile of supply chains. All of the leader group report that they manage sustainability risk, as do 80% of fast followers. However, 60% of followers report they do not – and they make up three-quarters of our sample.
All of the leaders in sustainability report having the necessary internal resource such as central sustainability risk management capability or technical expertise to work with critical suppliers to reduce sustainability risk, well ahead of fast followers at 62%. Only 29% of followers, the majority of firms, have the resources and skills they need to manage supply chain sustainability.
motivated to include sustainability in the management of supplier relationships because it is the right thing to do. Even fewer, 18%, link sustainability to customer pressure – it is likely this result underestimates the influence of customers.
Risk dominates the rationale for procurement’s focus on sustainability. Reputational risk and regulatory compliance are placed the top three reasons by 66% and 58% of organisations, respectively. Only half of companies are
5 *Leaders, fast followers and followers in this context refer to companies whose practices have been evaluated against supply chain sustainability management good practice.
58 STATE OF FLUX
2018 GLOBAL SRM RESEARCH REPORT
59
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