As ESG factors have gained a significant increase in attention across industries over recent years, and as the organizations within them become more concerned with making ethical purchasing decisions by embracing responsible sourcing and ethical business practices, we’ve been watching the rise in ESG functionality applied to the tech that supports them. This of course extends to procurement solutions, whether for ‘green’ sourcing, tracking supplier environmental impact, deep-tier supply chain management, compliance with social and ethical standards, reducing risk, increasing D&I or just to comply with regulatory standards.
Whichever outcome we select, at the core seems to be data and analytics, not just for getting a better handle on direct spend analysis but for enabling businesses to collect and analyse data related to their sustainability, social impact, and governance initiatives, to monitor progress, identify areas for improvement, and demonstrate their commitment to stakeholders.
We are seeing a raft of solution providers going down the ESG route: whether that be existing suite vendors partnering and acquiring to add that ESG layer to their platform, or specialists building out their own modules for better ESG functionality. (Think Ariba, Coupa, Ivalua and Jaggaer adding CO2 and GHG capabilities, Sphera acquiring riskmethods, apexanalytix and ESG Enterprise, niche players like Certa building out their own modules for ESG, and specialists like Carbmee, Circularise and Circulor, to name but some.) Even consulting firms are adding ESG capability, BCG’s CO2 solution, Deloitte with its ESG reporting tools and KPMG partnering with Context Labs on climate measurement and reporting.
Learn how IT buyers can adopt sustainable procurement strategies in Sustainable Procurement: Four Ways IT Buyers Can Embrace a More Eco-Friendly Approach.
In talking to a number of end-user, provider and consulting representatives from the market, we aimed to discover whether that ESG element is really an ask of CPOs, whether there’s been a real shift in their tech focus requirements, or whether they just care about the end result, regardless of whether AL, ML etc is involved.
Ian Nethercot, head of supply chain at IT marketplace and advisory service Probrand, offers:
“It’s definitely an ask that’s becoming a lot more frequent. We are seeing more and more demand for sustainability requirements in IT selections. In fact, we see it very often in tenders. Scoring is being done against sustainability within a tender or within a service contract for example, so it’s definitely affecting buying decisions.
“One example is a large legal organization we work with; sustainability is right at the top of their agenda. They have hired a sustainability manager whose objective essentially is to ensure that everything they procure is done in a sustainable way. The physical products themselves must be considered for their composition, like the use of recycled plastics etc.
“And we're seeing a large growth in the market for refurbished and recycled goods, like laptops. In fact, we have set up a partnership with a refurb PC vendor to live up to that demand. This not only caters for the sustainable mindset of companies, but for budget constraints, and as an alternative for schools too, rather than paying to put the latest equipment in the hands of young children. And because recycled goods often come with very good warranties now, many corporates are going down the refurb route with significant cost savings.
“We’re also seeing more vendors coming to market with specific ‘sustainable’ products, for example, laptop bags made from recycled plastic bottles, and reused plastic in laptop chassis. The recycle message is being pushed a lot from the IT vendors, but that’s because there is customer demand for it.
“And the shift in focus is not just on the product side. We are seeing more and more focus on the logistics side, for example, more demand for consolidated shipments, less trucks on the road, less packaging, and so on. And then there is demand for ‘white glove IT services,’ which do sustainable and certified packaging disposal on delivery to site and sustainably and economically dispose of old equipment — so there’s a more common shift towards a whole lifecycle mentality.”
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First published on www.spendmatters.com
"Explore ways to achieve ESG goals while managing costs in SBM's Guide to Getting More from Your IT Budget.