Measuring the Economic Impact of Sustainable Procurement

This report published by HEC Paris, EcoVadis, SNCF and AT Kearney explains (in Chapter 2) how one can measure the economic value of sustainable procurement programmes. While doing so, the report outlines various case examples of companies, such as BMW, Adidas, Sainsbury and Lego to make the case.

The authors categorised the financial values of sustainable procurement programmes as follows:

  1. Increasing return on investment through reduced cost of ownership.
    • For example, by helping the supplier to reduce its energy consumption.
  2. Reducing cost of capital through avoiding financial risks.
    • For example, by avoiding supply chain disruptions.
  3. Increasing revenue.
    • For example, through an additional price premium differentiation.

A more detailed explanation and 15 great case examples can be found on the pages 20-29. If you have not so much time to read the 10 pages, then simply jump to the Tables 1, 2 and 3 to see the case examples. They really helped me to understand how I can align sustainability targets in procurement with financial targets. Please be aware that this report is from 2013. However, Chapter 2 is still relevant and full of valuable insights.

As Sue Garrard, former EVP Sustainable Business at Unilever, stated: “Always combine the moral case and the business case” when promoting sustainability within the own organisation. This report can be really helpful to achieve that.

Click on this link to learn more. And in case you’d like to know more about Sue Garrard’s pieces of advice for promoting sustainabiliy click on this link.

(Picture by Micheile Henderson, Unplash)

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Responses

    1. Dear Robert, thank you for your comment. I know the report is quite old, but if you focus on the chapter I refer to, you will find content that is still valid and helpful to understand how sustainable procurement drives economic value. I have used the case examples of this report to explain in my organisation how sustainability can improve the economic performance of suppliers and the own organisation. Best wishes, Marco