The sourcing and procurement community here in Aotearoa New Zealand punches well above its weight and is right up there among the world’s best. For many years, we have been proudly working with our clients’ procurement leaders and teams as they have evolved to deliver greater value to their organisations. Is supply chain sustainability the next big procurement evolution?
Today, procurement leaders and teams are facing complexity on all fronts - from navigating global supply chains, growing geopolitical tensions and mastering digital transformation, through to regulatory, investor, employee and customer demands for sustainability. Utilising strategic sourcing and procurement to drive sustainability through the supply chain is an area we are increasingly being asked about by our clients. It is an opportunity where procurement leaders and teams can have a significant impact on strategy implementation, risk mitigation and value creation. We see the opportunities arising from grappling with the following three questions:
- How do we decarbonise our supply chain?
- How do we humanise our supply chain?
- How do we circularise our supply chain?
Supply chain decarbonisation
If climate change is “the greatest challenge of our time”, then decarbonising supply chains must be the greatest procurement challenge of our time. With the recent signing of the Zero Carbon Bill into law, the legal opinion clarifying Directors’ duties relating to climate risks, and the growing movement towards (potentially mandatory) climate-related financial disclosures, pressure has never been higher for companies to transition to a low-carbon economy. Through the Climate Leaders Coalition, 122 Chief Executives (whose organisations contribute more that 60% of New Zealand's gross emissions) have committed to taking voluntary action on climate change, including working with suppliers to reduce their emissions. Procurement leaders and teams are playing an increasing role in their organisation’s decarbonisation efforts and their impact can be significant – research conducted by the Carbon Disclosure Project (CPD) found that supply chains account for between 50% and 70% of total corporate emissions.
Supply chain humanisation
Inequality is a significant and growing issue in New Zealand and the potential for human rights violations in supply chains is a growing concern for organisations, particularly those that have global and complex supply chains. Some organisations are attempting to contribute to tackling inequality by gaining living wage accreditation that extends beyond their organisational boundary and to parts of their supply chains. The Aotearoa Circle’s recent Sustainable Finance Forum report highlighted that no country is free from labour exploitation, modern slavery and human trafficking and recommended “using influence through contracts” as a key stream of action. Procurement leaders and teams have a unique ability to ensure their organisation upholds human rights throughout their supply chain.
Supply chain circularisation
A circular economy goes beyond the pursuit of waste prevention and reduction to inspire technological, organisational and social innovation across and within value chains. This requires a transition from a linear model based on production - consumption - disposal to a circular model, in which the waste, if waste is produced, becomes raw materials. In response to the ‘Rethinking Plastics in Aotearoa New Zealand’ report, Prime Minister Jacinda Ardern has recently committed to phasing out more single-use plastics. However, the report goes much further than this and recommends that we implement a ‘National Plastics Action Plan’ to guide New Zealand’s transition to a circular economy for plastics. Moving to a circular economy will require supply chain visibility that extends beyond suppliers to the producers of components and raw materials, and even back into the hands of consumers.
Can we help?
If you have found yourself asking these same questions or would like to know more about decarbonising, humanising and circularising your supply chain, please get in touch – we would love to help. We can support you to reimagine your supply chains/networks, product lifecycles and internal operations by addressing diverse issues such as supplier engagement and extended producer strategy, sourcing and procurement, packaging, closed loop recycling, supply chain transparency, and upholding international human and labour rights.