What is Sustainable Procurement in Logistics and Why Does It Matter?
How many suppliers do you rely on to keep your business moving? And how many of them track the emissions related to the movement of your goods? In a world where supply chains are increasingly under scrutiny, knowing how to tackle your emissions — particularly from those indirect sources in your supply chain — is more than just good business sense; it's becoming a necessity. So, where do you start? The answer lies in sustainable procurement.
What is Sustainable Procurement?
Sustainable procurement refers to the process of integrating environmental considerations into purchasing decisions. It ensures that the goods and services acquired by a business come from suppliers who operate sustainably and responsibly. In essence, it’s about making informed decisions that go beyond just cost and quality to include the wider impact on the environment. For your business’s logistics supply chain, this means factoring in the environmental impact of supply chain operations when choosing suppliers, negotiating contracts and making purchasing decisions.
At its core, sustainable procurement aims to reduce the carbon footprint of a company's supply chain. This is especially important when we consider Scope 3 emissions — the indirect emissions that occur outside of a business's immediate operations but are still part of its value chain. In logistics, these emissions often stem from transport, manufacturing and the raw materials used by suppliers.
The Importance of Sustainable Procurement for Businesses
1. Tackling Scope 3 Emissions Head-On
When it comes to carbon accounting, most businesses are well-versed in measuring their Scope 1 and Scope 2 emissions, which relate to direct emissions from owned operations and indirect emissions from purchased energy. But Scope 3 emissions often represent the largest source of a company’s carbon footprint.
For businesses with complex supply chains, Scope 3 emissions can account for between 65% and 95% of their total emissions. These emissions stem from a variety of sources, such as supplier activities, transportation and even the end-use of products. Without a sustainable procurement strategy, managing and reducing these emissions can be almost impossible.
By embedding sustainability into procurement processes, businesses can make significant strides in reducing Scope 3 emissions. This involves choosing suppliers that prioritise using renewable energy, sustainable materials and efficient transportation modes. In doing so, businesses will not only mitigate their environmental impact but also reduce risks associated with non-compliance as regulations surrounding Scope 3 emissions continue to tighten.
2. Navigating Regulatory Pressures
Legislation relating to climate disclosures is evolving at a rapid pace, and companies are increasingly required to report and reduce their carbon emissions — including those from their supply chain. In the UK, the Streamlined Energy and Carbon Reporting (SECR) regulations already require large businesses to disclose their carbon emissions, including data related to transport and supply chain activities. Meanwhile, in the European Union, the Corporate Sustainability Reporting Directive (CSRD) has taken things further, making Scope 3 reporting a legal requirement for a much wider range of companies by 2025.
For businesses that rely on extensive supply chains, this represents a seismic shift. Failing to comply could mean they face not only financial penalties but also reputational damage. Investors, customers and stakeholders are increasingly expecting companies to demonstrate transparency and accountability in their sustainability practices.
3. Meeting Customer Expectations for Sustainability
It’s not just regulators who are turning up the heat on sustainability. Customers are also becoming more discerning about where they spend their money. According to a recent study by NielsenIQ and McKinsey, 78% of consumers (based on a US study) say that a sustainable lifestyle is important to them. For companies with large logistics carbon footprints, this means that sustainable procurement is no longer just an operational concern — it’s a powerful selling point.
Customers expect the businesses they support through the purchases they make to take responsibility for the environmental impact of their products and services. They want to know that the companies they buy from are committed to reducing carbon emissions across the entire supply chain, from raw materials to final delivery. By adopting sustainable procurement practices, businesses can build trust with environmentally conscious customers, strengthen their brand reputation and even open new market opportunities.
4. Reducing Supply Chain Risks and Enhancing Resilience
In the face of climate change, supply chain disruptions are becoming more frequent and severe. From extreme weather events to resource scarcity, businesses that depend on unsustainable suppliers may find themselves increasingly vulnerable to operational risks.
Sustainable procurement helps businesses build more resilient supply chains by working with suppliers who are better equipped to navigate these challenges. For example, suppliers that invest in renewable energy, energy-efficient technologies and sustainable materials are less likely to be impacted by future carbon taxes and resource shortages, and will be better positioned to react to regulatory changes.
In addition, sustainable procurement often leads to better supplier relationships and greater transparency. This enables businesses to identify potential risks early and work collaboratively with suppliers to address them, ensuring smoother operations and greater long-term stability.
Real-World Examples of Sustainable Procurement in Action
To better understand the tangible benefits of sustainable procurement, let’s explore a few real-world examples of companies that have successfully implemented these practices:
Unilever: This global consumer goods company has committed to having net zero emissions across its value chain by 2039. Working closely with suppliers to ensure that sustainability is embedded across its entire supply chain, the business plans to reduce its Scope 3 emissions, enhance supply chain resilience and meet growing customer demand for sustainable products.
IKEA: The furniture giant has made significant strides in sustainable procurement by working with its suppliers to make sure its total value chain run on renewable energy by 2030. By prioritising sustainable procurement, IKEA has not only reduced its carbon footprint but also cut costs by sourcing more efficient materials and energy solutions.
Coca-Cola: Coca-Cola has set ambitious targets to reduce its overall carbon footprint by 25% (using 2015 as a baseline) by 2030, with a focus on sustainable procurement and in line with the Science-Based Targets initiative (SBTi). By working with suppliers who use low-carbon logistics solutions and renewable energy, the company has already started to reduce its carbon footprint while driving innovation in its supply chain.
These examples demonstrate that sustainable procurement is not just an aspirational goal but a practical strategy for businesses to reduce emissions, comply with regulations and strengthen their market position.
How Pledge Can Help You Implement Sustainable Procurement
Sustainable procurement may seem like a daunting task, especially when dealing with complex supply chains. That’s where Pledge comes in. We offer carbon accounting services that make it easy for businesses to measure, manage and report their Scope 3 emissions.
Through our Shipper Beta Program, we provide tools that simplify the process of collecting emissions data from suppliers, enabling you to track your supply chain’s carbon footprint in real-time. Our platform also helps you identify areas for improvement, make data-driven decisions and ensure that your procurement practices align with your sustainability goals.
By joining Pledge’s Shipper Beta Program, you’ll gain access to features designed to streamline your sustainable procurement journey. This includes automated emissions tracking, supplier benchmarking and comprehensive reporting tools that make compliance with emerging regulations easier than ever.
Ready to take the first step towards a sustainable supply chain? Sign up for our Shipper Beta Program today and start accurately measuring and managing your Scope 3 emissions.