By polluting the oceans, not mitigating CO2 emissions and destroying our biodiversity, we are killing our planet. Let us face it, there is no planet B.
Emmanuel Macron, President of France
Many people will be familiar with the quote. And in the light of extreme weather, such as the unprecedented heatwave in North America, or the catastrophic floods across Northern Europe and also in China, few will profoundly disagree. What were previously classified as once-in-a-century events now barely make the news. There’s no doubt that climate change is happening, and the effects are being felt right now.
So if we accept there is no planet B, what exactly is the plan? How do we address the challenge of sustainability? These are questions for everyone. But in particular for businesses and governments – organizations that, for good or bad, have a major impact on our environment.
In our experience, most clients are waking up to their responsibility, and they understand that they have to take action. In the past two or three years, we have seen the growing presence and prominence of sustainability teams within larger enterprises. Their influence is steadily growing beyond the silos of the traditional CSR, and becoming part of the core corporate agenda.
Yet in most organizations, sustainability is still not tackled in a truly structured way. Typically, we observe the ‘big number’ approach – whereby a bold statement of ambition is announced from the top down, but not always based on relevant data, or accompanied with detailed plan required to achieve change. For example, the UK Government aims to legally enshrine its commitment to reducing carbon emissions by 78%, by 2035, on a journey towards net zero emissions by 2050. And while eye-catching announcements like this are certainly made with genuine intent, they cannot disguise the yawning gap that exists between strategy and execution. In simple terms, how will organizations bridge the divide to deliver on their promises?
The first thing is to accept the complexity of the sustainability challenge; It’s not simply about the environment. And it goes beyond the baseline concept of reducing the carbon footprint. It also takes in social aspects, spans the entire value chain, and it has implications for the organization’s whole operating model.
At BearingPoint we have a deep understanding of the issues, based on over 10 years’ involvement in clients’ sustainability projects and initiatives. As a result, we have developed a unique ‘ground-up’ approach based on granular analysis of the reality of the situation, and all the contributory factors. The approach acknowledges the importance of Strategy, KPIs, and roles and responsibilities – what are we aiming to achieve, how will we know if we’re making a difference, and how will it happen?
And once we know what’s really going on, we compare this information with business practicalities to define the challenges, opportunities and what really matters. By looking at the whole picture, we are able to develop a meaningful vision, and align all of the business functions towards achieving the same big target. In reality, the data will often highlight a number of quick wins, while alongside we can develop the ‘true north’ sustainability strategy.
There’s no reason why B2B procurement can’t begin to mirror the consumer world, where shoppers increasingly make choices based on product sustainability.
But where will we find the big wins? Or to use a climate-related analogy, what are the icebergs – the functions in which environmental and social impact (and on the flip side, the potential for positive change) lie hidden from view? In a typical manufacturing business, up to 70 % of emissions are related to purchased goods. And when transportation and logistics are factored in, we calculate that up to 80% of a company’s indirect emissions are attributable to procurement. So, even where firms use apparently science-based environmental ratings as evidence of the direct impact of their operations, in many cases this may significantly underestimate the true figures. Similarly, where a business ensures minimum or living wage standards within its direct workforce, what about elsewhere in the supply chain? Are employee practices in supplier businesses equally sustainable?
By failing to account for, or take ownership of these issues, firms expose themselves to the threat of significant brand or reputational damage. And as the law begins to develop (for example in Germany, with the Supply Chain Act, which will likely become the template for EU legislation), the risks become even greater. Some of the very biggest global companies are now preparing to take on the challenge, with headline commitments and targets rooted in science. And we’re also beginning to see joint ventures within specific industries, where different businesses combine strengths in order to drive change. But even with external ESG supplier scores and benchmark-driven emission calculations, purely top-down approaches lack the necessary detail and evidence to bring the supplier portfolio and related purchased goods into the equation. Moving down a level, looking at smaller enterprise business, and SMEs – they simply don’t have the necessary resources and/or knowledge to tackle sustainability in a holistic way.
BearingPoint is able to support organizations of all sizes in bridging the gap between strategy and execution. Uniquely, we can offer expert consultancy and advice, together with IP designed to inform and empower smarter strategies, better decision making, and targeted, evidenced actions. And crucially, we also provide knowledge transfer – the ‘what and how to’ that means organizations can successfully run their own programs.
The challenge is great. And there are no easy answers. But as a key influencer within b2b markets, procurement will have a central role to play in future solutions – by unlocking cross-functional knowledge, ensuring that total carbon footprint is a key factor in sourcing decisions, embedding sustainability into tools and processes, and leading the way to encourage the all-in commitment necessary to turn vision and aspiration into lasting change.