Any organization can use Net-Zero Procurement (NZP) with speed and scale to help win the GHG reduction trifecta:
The definition of Sustainable Procurement is obtaining best value for money by purchasing the most sustainable goods and services from the most sustainable suppliers, in support of the buyer’s purpose, policies, and strategic sustainability goals. “Best value” has always considered product quality, supplier quality, and short- and long-term cash flow implications of purchasing decisions, as well as price. It is synonymous with “best deal” – highest quality for the money. In the 21st century, companies are mutually accountable for the impacts of suppliers and their products on people and planet. That’s why organizations now recognize that supplier and product sustainability-related attributes also contribute to their quality.
Most executives learned about Michael Porter’s famous 5 Forces Model in business school. It is widely regarded as the standard reference for strategic planning. It’s good, but it is dangerously out of date. We need a 21st Century 5+3 Forces Model.
(Note: Some content is based on the Multi-stakeholder Purpose section of my “The 21st Century Sustainable Enterprise Force Field” white paper.)
I was recently asked why the score on Governance was factored into other scores in the Basic Sustainability Assessment Tool (BSAT). That question prompted my adding an appropriate explanation to BSAT and tweaking the degree to which the Governance score consistently impacts scores on other sustainability issues, scores on the Sustainable Development Goals (SDGs), and scores on the three non-financial capitals (natural, human, and social capitals). Fundamentally, the importance of governance is based on the adage, “Purpose drives governance; governance drives everything.” Purpose provides the why; governance provides the how. It’s a ripple effect. Let’s explore that symbiotic relationship, starting with purpose.
(This blogs builds on several other of my blogs about Net-Zero Procurement in the last couple of years.)
Another year, more opportunities. I just posted my 2023 Annual Integrated Report to my website. It includes both a look back and a strategic look forward. Pulling it together prompted me to recommit to this resolution for 2024.
In 2024, I will help develop and test an SME-friendly online questionnaire that scores any supplier on their commitment to science-based targets (SBTs) for greenhouse gas (GHG) reductions.
Why? It’s the missing link in a net-zero procurement system, which is our last, best hope of addressing the climate crisis, in time.
(This is an updated version of the Sept. 21, 2022 blog, to reflect new features of the subscription.)
In March, UN Secretary-General António Guterres made these blunt comments about the latest Intergovernmental Panel on Climate Change (IPCC) report: “Humanity is on thin ice and that ice is melting fast. This report is a clarion call to massively fast track climate efforts by every country, by every sector, and on every time frame. In short, our world needs climate action on all fronts – everything, everywhere, all at once.” There are seven ways the Master Slide Decks accelerate action on climate change and other hot sustainability issues.
Occasionally, you may find yourself in confusing, even confrontational, conversations about various incarnations of sustainable procurement. Advocates for Sustainable Procurement, Social Procurement, Green Procurement, Net-Zero Procurement and Circular Procurement sometimes appear to be competing with each other. That’s not helpful. We need all of them. To promote collaboration rather than contention, we need to decode Sustainable Procurement and its four starter subsets, and show how they complement each other.
My previous blog explored four ways to calculate a product’s carbon footprint / embodied carbon. Let’s suppose we do that. That is, we figure out the total product-related greenhouse gases (GHGs) emitted by all tiers of suppliers and transportation providers in the product’s cradle-to-gate supply chain. Let’s also suppose that buyers want to purchase products that have the lowest carbon footprint / embodied carbon. That is, they want their suppliers to reduce their GHG emissions that contribute to the product’s carbon footprint. There are four drivers of supplier GHG reductions that buyers can orchestrate to cause suppliers to reduce their GHG emissions, resulting in their products having lower carbon footprints.
In its 2020 Global Supply Chain Report, CDP famously found that greenhouse gas (GHG) emissions from a company’s supply are 11.4 times larger than GHG emissions from its operations. Some companies misinterpreted the startling 11.4 ratio as a signal that they should prioritize taking action on their indirect upstream supply chain-related emissions, even before taking action on their own direct operational emissions. Also, since carbon footprints of purchased products are added to the buyer’s GHG inventories in the year they are bought, buyers want the carbon footprints of purchased products to be as low as possible. So, it makes sense to prioritize buying products with the lowest carbon footprints … unless it delays and distracts from taking action on operational emissions. Ironically, carbon footprint calculations are at risk of being more of a decelerator than an accelerator of reducing GHG emissions to net-zero.
Best-available climate science warns that we must reduce our annual greenhouse gas (GHG) emissions by 50% by 2030, and by 100% by 2050. Organizations that sign-up for these net-zero targets track their annual direct and indirect GHG emissions. Annual indirect GHG totals include the carbon footprints of products that were bought by the organization that year – that is, the GHGs that were generated throughout the supply chain during the production of those products. We need carbon footprints to be as low as possible. Ideally, they should be net-zero. That sounds like mission impossible. Maybe not. Happily, there are five circularity solutions to achieving net-zero carbon footprints in a given year.
