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Is sustainability a procurement paranoia?

Let’s be honest about the current image of sustainability in procurement: it’s not that hot a topic. In our recent Q4 executive research, CPO Strategy 2011: From Depth to Breadth, the top three priorities remained unchanged from last year’s study: Cost Reduction, Category Strategy Development and Risk Management - hello again! Green procurement (or sustainability), however, came at the other end of the spectrum, one ranking up on last year, but still in a lowly position - 13 out of 15.

 

A similar story is being told by Forrester Research in its Q4 research, which reflects the opinions of some 2,600 corporate decision makers. When asked to identify the top business priorities, revenue growth came first, customer retention second and cost cutting third. Corporate sustainability, however, came tenth.

 

Now compare these findings to some recent developments in the industry. The Telegraph last month reported that the world’s green economy is already worth £3,000 billion a year. It is predicted to grow by a quarter over the next five years, outpacing overall growth. Furthermore, accountancy firm Ernst & Young, as reported by The Independentyesterday, unveiled that global investment in green energy has increased by 30% to an unprecedented £151 billion in 2010.

 

Arguably, this growth is geographically inconsistent as some economies and industries are quicker to adopt green business models and technology than others. Would you be surprised to find out that while China is booming, confirming a 64% growth in deployed wind capacity last year, the US saw only 5.1 gigawatts of wind power installed during the same time period?

 

We are in a phase of procrastination, deferral or even denial of the idea of sustainability or green procurement. To make matters worse, we are seeing the first consequences. If China has a better handle on producing green wind power than the US, which is supposedly the second-largest provider of renewable energy, we risk being sold green goods instead of selling green ourselves.

 

Interestingly, Forrester Research predicts that the global market for sustainability consulting services, which stood at US$2.7 billion in 2010, will grow by more than 40%, reaching US$3.8 billion this year. If we are to believe Forrester, this will raise the question ’so sustainability matters after all?’

 

There is likely a two-fold sustainability paranoia going on at present. Buying organisations underestimate the importance of sustainability and delay dealing with the problem on their own. Yet, at the same time they are willing to at least consider the idea of bringing in a third-party consulting service to deal with the issue in a round-about way (no expenses incurred here at all, of course).

 

Recognising that there are few DIY instructions on the market to tell companies how to embrace sustainability, my colleagues and I at the PIU are currently working on developing a model that we believe will help companies kick-start their sustainability efforts themselves.

Maggie Slowik
Posted by Maggie Slowik