No company can avoid the topic of sustainability any longer, E3 Magazine reports. With new legislations mounting, companies are under growing pressure to take environmental, social, and employee concerns into account, to respect human rights and to support the fight against corruption.
Examples include the EU’s CSR (Corporate Social Responsibility) Directive, which requires large publicly traded companies to regularly submit sustainability reports, and the European Green Deal, which commits companies in the EU to climate-neutral operations by 2050.
In addition, a commitment to sustainability pays off in cash for the companies themselves. Numerous studies have shown that a focus on sustainability can increase innovative strength as well as productivity and generate competitive advantages. Consumers are now more conscious of sustainability as well. The main argument for buying a product has long since ceased to be cheap prices. This is similarly evident in the B2B world, specifically in business relationships between companies. Sustainability is now a fixed indicator in the evaluation of financial markets.
With numerous interfaces to internal and external partners, procurement is a central component to the sustainable design of a company’s supply chain. In order to fulfill this role, procurement must require its suppliers to comply with defined standards for environmental protection, business ethics, working conditions, and human rights.
Back in 2014, fourteen of the world’s largest automotive groups recognized this need and committed their suppliers to a charter for greater sustainability. Increasing global warming and mounting economic scandals have since brought the issue to a head. Nevertheless, many companies have still failed to integrate a clearly defined sustainability strategy into their business network and their sourcing and supplier management.
Therefore, top management should take the initiative without delay and provide clear orientation.