A disconnect between CPOs and the C-suite is hindering the function’s ability to act on sustainability, a report has found.
A survey found half of CPOs (49%) said a “lack of board-level buy-in” and not enough understanding of the role of procurement was their biggest hindrance to achieving ESG goals, the report by procurement consultancy Efficio said.
CPOs also reported a limited remit to operate was further hindering ESG targets (41%), as well as a lack of trust from across their organisations (38%).
The report said “sustainability is clearly not seen as a procurement priority”, as only 36% of C-suite leaders said ensuring environmental sustainability supply chains was part of procurement’s function, and only two in five (41%) said guaranteeing social sustainability of the supply chain was procurement’s responsibility.
The report was based on two surveys of 529 C-suite leaders and 536 procurement professionals across the US, UK, Germany, Italy, UAE, Saudi Arabia, and Nordic countries.
The report said: “We have seen in the data that C-suite objectives and expectations do not necessarily correlate with those lower down the chain of command. The C-suite’s understanding of procurement’s remit differs from the way those working in the function see their role and the value they can add to the business.
“For procurement professionals, the traditional procurement tasks such as delivering cost savings, stand out as the top priority. On the other hand, those in the C-suite are more likely to see procurement’s remit as spread out across a range of different responsibilities.”
Procurement is not viewed as a strategic function by the C-suite, with only 29% of C-suite leaders saying “shaping organisation-wide strategy” falls within its remit, said the report.
“Those in the C-Suite are unlikely to think that allocating more resources to procurement will support the sustainability agenda or make an impact on the success of the business as a whole,” the report said. “When senior visions are not aligned throughout an organisation by being operationalised, resourced, and supported through reinforcing techniques, then objectives will be late, diminished, or fail.”
Paul Ekins, professor of energy and environment policy at University College London, commenting on the findings, said: “Without the support of the CEO or equivalent, sustainability does not happen. The CEO has to give encouragement to employees and key business functions to think about these issues. Even better if it is built into promotion rounds and remuneration. It is a question of driving the culture, so that employees also adopt those values and mindset.”
Rachel Dolan, head of procurement and supplier relationship management at retail bank TSB, who took part in the research, said to achieve greater support from the C-suite procurement needs to better communicate and sell its role to the wider business.
“Leadership teams and stakeholders are now recognising the value-add of procurement,” she said. “As a result, we are seeing the procurement function increasingly involved in the key strategic initiatives of the business. The function is no longer perceived as a purely administrative, process-oriented function.
“To get board-level buy-in you must go beyond delivering against your targets and communicate your story and wider purpose within the business. In our case, it was through a cost optimisation journey that laid the foundations for a cost-conscious culture in our organisation.”
The report further found only half (50%) of C-suite leaders considered negotiating and executing external contracts and delivering cost savings to be as part of procurement’s role, compared to 72% of CPOs.
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