Since the first report 10 years ago, the HEC Sustainable Procurement Benchmark attempts to measure the evolution of practices of global procurement organizations (Part I). Realizing that quantifying the benefits associated to Sustainable Procurement remains a critical challenge, Part II will propose a framework for better Sustainable Procurement value measurement. The 2013 edition, which surveyed practices of 133 large multinational companies across 24 countries, identified the following trends:\r
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Sustainable Procurement now solidly entrenched in Procurement priorities. \r
For 93% of respondents, Sustainable Procurement is considered a critical or important objective for their companies and stands in their Top 4 priorities. The Sustainable Procurement initiative is driven by 3 different sets of factors: risk and compliance, external demands (i.e. clients and investors) and value creation drivers. The importance of these factors varies depending on geographic areas considered. \r
Same goal, different drivers. \r
For instance, in North America Sustainable Procurement is more driven by 'compliance' (potentially linked to recent regulations on conflict minerals, corruption, human rights) and 'cost reduction'. Contrariwise, in Europe, 'risk management' and 'client requirements' are the leading drivers. \r
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Companies are looking beyond supplier risk management...\r
Risk management remains a critical driver with 80% of companies implementing a 'Code of Conduct' and 58% focusing only on high risk suppliers. However, more and more companies realize that Sustainable Procurement is also about monitoring performance, integrating CSR into their RFP processes (79%) or Supplier Relationship Management (SRM) processes for strategic suppliers (72%) ... with a heavier weight given to CSR criteria.\r
Companies formally integrating CSR in supplier selection processes are increasing (91%, as compared to 76% in 2009) even though only 1/3 of companies have defined a minimum weight for CSR (in average 10%).\r
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Even though challenges remain...\r
The main challenge is related to conflict between short-term savings and long-term CSR objectives (80% of companies). Including individual CSR performance objectives in buyers' appraisals is now a more widespread practice (40% of companies), however advanced tools such as Total Cost Models integrating sustainable development criteria are still fairly uncommon (20%)\r
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....measuring benefits is on the top of the CPOs agendas.\r
55% of the surveyed companies measure some type of Sustainable Procurement benefit, mainly cost reduction (48%), minimized risk (41%) and environmental benefits (35%). However only 7% of companies are able to fully translate benefits in financial terms. The study identified a framework and a number of cases with clear financial impact still the challenges remain to develop a holistic approach to quantify benefits of Sustainable Procurement.
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