G4S has started a process to improve its supply chain visibility and measure vendors more effectively ©Bloomberg/Getty Images
G4S has started a process to improve its supply chain visibility and measure vendors more effectively ©Bloomberg/Getty Images

G4S: environmental box-ticking will lose business

The next challenge for procurement teams is to move past environmental box ticking

Organisations are coming under increasing scrutiny from investors and consumers who demand more than just “adequate” when it comes to compliance, delegates were told at the CIPS Business Briefing on Strategic Sourcing in London.

Instead of traditional supplier audits buyers should be moving towards a performance rating system, which can highlight suppliers that are going beyond compliance and innovating.

Robert Copeland, group procurement director at international facilities management firm G4S, said: “Organisations are coming under greater scrutiny from customers, governments and investors for transparency in environmental, social and governance (ESG) through supply chains.

“Adequate is no longer good enough because it will lose us business and damage our brand – we can no longer tick a box.” 

G4S started its process towards improved supply chain visibility in 2018 through a plan focusing on master data, modern slavery and health and safety. 

With a spend of approximately £2bn and an extensive supply chain of around 40,000 global suppliers, G4S needed to measure the standards of its vendors and ensure they shared the same values, Copeland said. 

He said outsourcing to solution providers was ideal for companies with fewer resources: “The key thing is, how can I get hold of upfront data from our supply chain without flooding requests and clogging up limited procurement resources?” 

Easy access to information such as payment terms, supplier diversity, tax compliance and sustainability reports is vital, and organisations have found value in using services with tools for gathering data and building networks. 

But Copeland warned against “shallow, rudimentary tools where 90% of the work effort still sits with the procurement team”. 

Leadership support and strong, proactive procurement is equally as important as the tools used to implement ESG in supply chains. 

Procurement also needs “robust buy-in from the business, senior leadership support, clear policies, with consequences for non-compliance, and the right reporting to empower senior leadership to do something about it”, said Copeland.

Pierre-François Thaler, co-founder and co-CEO of sustainability procurement platform EcoVadis, said compliance audits were failing to drive progress because companies needed to be pushed beyond “ticking a box” and show evidence of how sustainability and ethical requirements are met. 

He said companies should move from audits to a performance rating system. As well as measuring risk this can highlight suppliers who are going beyond compliance and investing in innovative areas. “A numerical score can help embed sustainability in more procurement processes,” he added.

During a discussion of risk mitigation, Rob Alexander, CPO of EMEA at commercial real estate services firm JLL, said: “You should review your supply chain strategies regularly – understand what is happening economically, politically, environmentally and the risks associated.” 

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