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The Wisdom of Sustainable Procurement

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The French company Rougier Sylvaco Panneaux imports and markets a wide range of lumber, plywood and products for multiple uses: building, interior and exterior, carpentry, industry and transport. Engaged in an eco-responsible approach, the company says that more than half of its offerings are certified as sustainable. (Photo courtesy Rougier)

By Sunny Lewis

PARIS, France, March 7, 2017 (Maximpact.com News) – Sustainable procurement programs are more integral and widespread than ever before, but face a critical juncture as they scale to reach the next level of maturity, according to the results of the new EcoVadis/HEC Sustainable Procurement Barometer .

The 2017 Sustainable Procurement Barometer was conducted by EcoVadis, based in Paris, with offices in the United States, United Kingdom, Mauritius and Hong Kong, in cooperation with HEC Paris, or école des Hautes Etudes Commerciales de Paris, a business school specializing in education and research in management.

The new Barometer shows that 50 percent of sustainable procurement leaders experienced increased revenue from sustainability initiatives, a 33 percent increase over non-leaders, according to EcoVadis calculations.

Pierre-François Thaler, co-founder and co-CEO of EcoVadis (Photo courtesy Pierre-François Thaler via LinkedIn)

Pierre-François Thaler, co-founder and co-CEO of EcoVadis (Photo courtesy Pierre-François Thaler via LinkedIn)

Sustainable procurement is no longer a nice-to-have. It’s an integral business function responsible for protecting and improving brand reputation, driving revenue and mitigating business risk,” said Pierre-François Thaler, co-founder and co-CEO of EcoVadis, a platform for environmental, social and ethical performance ratings for global supply chains.

In order to scale up, the mature programs are investing in embedding sustainability into processes across their procurement organizations,” said Thaler from the New York office of EcoVadis.

One key outcome of this benchmark study is to help inform and inspire all organizations to accelerate their progress toward leadership, and realize the rewards and return on investment,” he explained.

EcoVadis is the first collaborative platform to provide sustainability ratings and performance improvement tools for global supply chains.

Socially responsible corporations can use EcoVadis’ CSR scorecards to help monitor their suppliers’ environmental, ethical, and social practices across 150 purchasing categories and 110 countries.

Over 150 companies such as Nestlé, GSK, Heineken, Michelin, Johnson & Johnson, Schneider Electric, L’Oréal, BASF, and Subway, and more than 30,000 of their trading partners use EcoVadis to reduce risk and drive sustainability and innovation.

First conducted more than 10 years ago, the Sustainable Procurement Barometer monitors the evolution of sustainable procurement practices in global procurement organizations.

It aims to provide an understanding of the landscape, including sector and geographical differences, industry strengths, improvement areas, new frontiers for innovation, and the potential levers for success in the future.

The EcoVadis/HEC research was compiled through a survey of 120 supply chain professionals around the world.

The Barometer shows that 97 percent of all the organizations surveyed place a high level of importance on sustainable procurement.

Thaler says this reflects continuation of the “upward trajectory” of previous years, illustrating how established the field has become in less than 10 years.

Forty-five percent of the responding organizations said their sustainable procurement program covers 75 percent or more of their spend volume today. Thaler calls that figure “a significant jump” from the 27 percent that reported on their sustainable procurement coverage in 2013.

Yet while supplier coverage has increased, the depth of visibility into corporate social responsibility supply chains remains “elusive,” Thaler observes.

Only 15 percent of organizations said they have complete supply chain visibility into the CSR and sustainability performance of both tier one and tier two suppliers.

And only six percent of responding companies reported full visibility into tier three suppliers and beyond.

This is the number one challenge today for sustainable procurement teams, Thaler says, commenting that, “It is often further down in supply chains where the most significant risks lie, and the need to scale up programs to increase the depth of program visibility to the ‘long tail’ of global supply chains has never been more urgent.

The EcoVadis/HEC study also found that organizations collecting sustainability data are actively using this intelligence to guide sourcing decisions.

“By making CSR data a key factor in the sourcing process, organizations are incentivizing suppliers to be more sustainable and act more responsibly across the board,” said Thaler. “The more procurement teams push to integrate sustainability in their daily roles and decisions, the greater – and faster – the trickle-down effect will be on a global scale.

In the previous survey conducted in 2013, the number one cited obstacle to more effective engagement and commitment to supply chain and procurement sustainability was a lack of executive and board support.

In 2017, that challenge doesn’t make it into the top three obstacles. “The C-suite appears to be finally on board with sustainable procurement initiatives,” said Thaler.

However, when you dive deeper into the data, an interesting picture starts to appear,” he said. “While executives are finally on board, procurement teams still report that a lack of internal resources holds them back.

In 2017, the two largest obstacles for sustainable procurement programs are a lack of internal resources and difficulty tracking supplier sustainability performance, according to companies surveyed for the Sustainable Procurement Barometer.

Supplier commitment, on the other hand, was not cited as a primary challenge. In fact, only 14 percent of suppliers reported that they were not incentivized by buyers to be sustainable and socially responsible.

With the right tools, executive support and supplier engagement, an organization can launch a sustainable procurement program and put a basic program in place, but it’s not enough,” Thaler explained. “To drive to full return on investment and value creation requires much higher coverage, and this means getting the rest of the organization to adopt sustainable procurement in their daily jobs – in procurement, supply chain, risk management and environmental health and safety.

This is an internal change management challenge,” Thaler said, “and it takes time.

For a complete look at sustainable procurement today – including analysis on business drivers, implementation challenges, program maturity and the supplier perspective, download the full 2017 Ecovadis/HEC Sustainable Procurement Barometer Report, “Scaling Up Sustainable Procurement: A New Phase of Expansion Must Begin.


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Tropical Forests Thrive on Radical Transparency

ForestIndonesia

The Ulu Masen forest ecosystem in the northern part of Indonesia’s Aceh province forms part of the largest single forested area in Southeast Asia. (Photo by Abbie Trayler-Smith / DFID) Creative Commons license via Flickr

By Sunny Lewis

STOCKHOLM, Sweden, February 15, 2017 (Maximpact.com News) – Commodity production drives two-thirds of tropical deforestation worldwide, asserts Trase, a new online information and decision-support platform aimed at improving the transparency, clarity and accessibility of information on the commodity supply chains that drive tropical deforestation.

Formally known as Transparency for Sustainable Economies, Trase is led by the Stockholm Environment Institute and the Global Canopy Programme.

Trase draws on deep untapped sets of data tracking the flows of globally-traded commodities, such as palm oil, soy, beef and timber, responsible for tropical deforestation.

Trase responds to the urgent need for a breakthrough in assessing and monitoring sustainability triggered by the ambitious commitments made by government leaders to achieve deforestation-free supply chains by 2020.

In Morocco last November, a Trase-led side event at the 22nd Conference of the Parties to the UN Framework Convention on Climate Change (COP22), attracted experts in environmental policy, data analysis and commodity supply chains who strategized on upgrading supply-chain transparency to achieve trade that is free of deforestation.

The side event was hosted by the EU REDD Facility, which supports partner countries in improving land use governance as part of their effort to slow, halt and reverse deforestation.

REDD stands for “reducing emissions from deforestation and degradation,” a mechanism that has been under negotiation by the UNFCCC since 2005. The goal is to mitigate climate change by protecting forests, which absorb the greenhouse gas carbon dioxide from the atmosphere.

Participants discussed how to bring about step changes in the capacity of supply-chain actors to meet zero deforestation and sustainability commitments. They examined incentives for encouraging governments in consumer and producer countries to cooperate.

Tools such as the platforms launched by Trase to collect and analyze data and information can help purchasers to develop better sourcing strategies and governments to develop policies in the forestry sector and commodity trade.

The international trade in commodities such as soy, palm oil and beef is valued at billions of dollars. These commodities trade along complex supply chains that often have adverse social and environmental impacts, especially in developing countries.

Over the past 10 years, participants acknowledged, agricultural expansion has caused two-thirds of tropical deforestation, which in turn has accelerated climate change and threatened the rights and livelihoods of indigenous peoples and communities that depend on forests.

Participants agreed that consumers and markets around the world are demanding greater sustainability in producing and trading agricultural commodities.

Nowhere is this demand greater than in the European Union, which has set a goal of halting global forest cover loss by 2030 at the latest, and reducing gross tropical deforestation by at least 50 percent by 2020.

The EU and several EU Member States have endorsed the 2014 New York Declaration on Forests .

In 2015, several EU Member States signed the Amsterdam Declaration , which recognizes the need to eliminate deforestation related to trade in agricultural commodities and supports private and public sector initiatives to halt deforestation no later than 2020.

The EU is also conducting a feasibility study for a EU Action Plan on deforestation.

Some of the most interesting deforestation transparency work is being done in Brazil.

Pedro Moura Costa, founder and CEO, BVRio Environmental Exchange, says his organization and Trase are piloting a program to bring more transparency to Brazilian timber supply chains, to assess the causes of illegally harvested timber and to find solutions to minimize risks.

Through the partnership, BVRio will upload data to the platform on the legal status of forest operations in Brazil. This will enable Trase to track legally and illegally harvested timber from sources to buyers at the end of supply chains.

On the banks of the Tapajós River, in Brazil’s Pará state, is a community forestry project that works with sustainable timber extraction in the Amazon.

Since 2003, Cooperativa Mista da Flona Tapajós (Coomflona) has been operating in the region and today employs 150 managers, as workers in this sector are known. The yearly production is around 42,000 cubic meters of timber, which Costa says could be fully commercialized if not for the competition with illegal timber products.

The issue of legality in supply chains is rarely considered in transparency initiatives, but is vitally important, Costa points out.

Legality is at the core of the EU Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan issued in 2003. The Action Plan sets forth a range of measures available to the EU and its member states to tackle illegal logging in the world’s forests by engaging with national governments on illegal logging.

BVRio Environmental Exchange in 2016 launched a Responsible Timber Exchange, a trading platform to assist traders and buyers of timber in sourcing legal or certified products from all over the world.

The platform is integrated with BVRio’s Due Diligence and Risk Assessment tools, designed to assist traders and buyers of tropical timber in verifying the legality status of the products purchased and their supply chains. The system is based on big data analysis and conducts more than two billion crosschecks of data daily.

Since their release in 2015, the tools have been used by traders and environmental agencies worldwide to screen thousands of timber shipments.

Costa says, “Compliance with local legislation is an essential requirement of any initiative to promote good land-use governance and, ultimately, to achieve zero deforestation supply chains.

Companies too are engaged.

Trase can help us move away from the blame game, to start a practical discussion around issues and solutions,” says Lucas Urbano, project management officer for climate strategy with the Danone, based in Paris, one of the world’s largest dairy and packaged food companies.

Danone has committed to eliminating deforestation from its supply chains by 2020. The company is a signatory of the New York Declaration on Forests as well as a member of the Consumer Goods Forum.

For a company like Danone, transparency and better information about the impacts and conditions in jurisdictions where its supplies originate from are hugely important, Urbano recognizes.

Transparency is the first major step in eliminating deforestation from Danone’s value chains, because supply-chain complexity and opacity are barriers to action, he says.

Transparency initiatives such as Trase help Danone to understand who to convene and engage with in strategic supply chains. At the same time,” Urbano says, “transparency will make it impossible for companies to hide behind the complexity and opacity of supply chains.

Trase is made possible through the financial support of the European Union, the Nature Conservancy, the Gordon and Betty Moore Foundation, the Swedish Research Council FORMAS and the UK Department for International Development.


Featured Image: In Brazil, forest managers with the Cooperativa Mista da Flona Tapajós mark a tree for legal logging. (Photo courtesy BVRio Environmental Exchange) posted for media use

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