How Can Procurement Navigate Consumer Sustainability Trends?
Consumer habits have long influenced initiatives set by global organisations. This is definitely true of measures that focus on sustainable and ethical sourcing.
While over 70% of organisations have defined sustainability commitments—largely to meet government regulations and reduce risk—new trends in consumer demands have required businesses to shift focus and consider how their procurement practices keep up with customer values.
As consumer trends place a greater emphasis on sustainable and ethical sourcing, global procurement teams stand a strong chance to improve brand reputation and drive profits.
Consumers are Demanding Better from Global Brands—Procurement Can Answer The Call
The disastrous results of climate change and increasingly-apparent issues of unethical labour practices have the average citizen examining how they can contribute to a better tomorrow.
The result? They want to engage with brands that have strong sustainable and ethical sourcing practices in place. A recent PwC survey shows consumers not only want to prioritise buying from companies with these policies in place, but 70% of surveyed consumers admit they’re willing to pay more for products they know, for certain, are ethically sourced.
Unfortunately, executing and demonstrating sustainable and ethical sourcing efforts has proved a challenge for many procurement functions and even lead to government involvement due to poor practices.
“Greenwashing” is a Big Problem
As consumers’ focus on sustainable and ethical sourcing ramps up, a lot of organisations have begun publishing more claims of their efforts to meet these demands. However, consumers and legislators alike have caught onto a huge issue here: too many companies have been misleading about their sustainability efforts.
This has led to two big trends as a response. Consumers, especially Gen Z and Millennials, are not tolerating the lies, and government agencies are stepping in to hold businesses accountable.
A reported 77% of consumers say they would stop buying products from a company that had been found guilty of greenwashing. For some, the trust in brands that greenwash will never be restored.
Many countries—The U.K., The Netherlands, Germany, the U.S., Australia, and more—have also enacted legislation that requires supply chain transparency to demonstrate how organisations are making active efforts to source sustainably and combat unethical labour practices.
So how can Procurement work to align with consumer trends while simultaneously complying with regulations and driving profits?
Procurement Must Take Measures to Ensure Transparent Sustainability Practices
Sourcing professionals have a prime opportunity to demonstrate unreserved efforts that align with their consumers’ values. It’s just going to take a bit of pivoting from current practices.
Increase Visibility into Supply Chains
Procurement teams can’t report on what they don’t know. Unfortunately, nearly half of surveyed supply chain leaders reported either having no visibility into their upstream supply chain or that they can see only as far as their Tier-1 suppliers. In additional research conducted by Procurious, 75% of respondents lack the capability to refresh their procurement data daily or in real time.
This puts organisations at a much greater risk of working with suppliers—directly or indirectly—that don’t meet their standards for sustainable or ethical practices.
To remedy this, procurement teams must reexamine their current processes of supplier sourcing and data management to develop improved systems that better capture supplier data and increase visibility into Tier-2 and Tier-3 suppliers.
In some cases, this may require a shift from traditional processes and legacy systems to digital systems that deliver more efficiency and accuracy.
Partner with Other Departments to Communicate Efforts
Many consumers actively search for information about a company’s ESG initiatives online or on product packaging. But many brands seem to have dropped the ball here—only 20% of customers feel brands communicate supply chain changes effectively.
If businesses want to reap the full benefits of sourcing more sustainably and ethically, they need to build a plan to convey those efforts more effectively to consumers.
It’s worth the extra step for Procurement to partner with internal teams, such as marketing departments, to proactively strategised ways to give customers the information they’re already looking for.
Whether it’s more robust website pages, quarterly ESG reports, or otherwise, clearly delivering this data can have a positive impact on your customer’s willingness to engage with your brand.
As consumers actively work to make strides surrounding sustainability and ethical consumption, organisations worldwide have the chance to transform their procurement functions to not only appeal to these demands but improve their own processes and drive profits as well.
Have you implemented sustainability-focused measures that have reaped rewards? Tell us about them in the comments.