Value of sustainable procurement practices

PwC and EcoVadis in collaboration with the INSEAD Social Innovation Center have launched in December 2010 a study on the value of sustainable procurement practices. This is a quantitative analysis associated with sustainable procurement practices. Sustainable procurement is a new dimension for Chief Procurement Officers (CPOs) who until recently based their decisions primarily on price, quality and time. Sustainability was mainly taken into account on a risk-based approach in line with the global movement towards low cost country sourcing.

The aim of this study is to help senior procurement managers face this challenge by providing strong arguments to build a business case with top management and the CEO on the value of sustainable procurement. The quantitative model was created by the analysis of three main drivers (cost reduction, risk reduction and revenue growth) and their respective impact on the company’s annual procurement spend, market cap and revenue. Their impact was then compared to the implementation cost of a sustainable procurement programme. It appears that the cost reduction impact of sustainable procurement (on those categories where cost savings and sustainability benefits are aligned) outweighs the implementation costs in almost all of the cases studied.

More detailed results of the study can be found by downloading the study at http://www.pwc.fr/value-of-sustainable-procurement-practices.html