A lack of digital maturity and a focus on supplier cost and quality are also limiting green practices
16th July 2020, London – Research from Ivalua, a leading provider of spend management cloud solutions, has shown that six-in-ten (60%) UK businesses have decreased their investment in sustainability initiatives due to the COVID-19 pandemic. According to the study, almost all (95%) UK businesses have plans in place to address environmental concerns in the supply chain over the next 12 months; however, given the impact of COVID-19 on business operations and budgets, many of these could be impacted.
The research, conducted by Vanson Bourne on behalf of Ivalua, surveyed 200 UK-based procurement, supply chain and finance professionals about managing sustainability initiatives and environmental concerns in the supply chain. The results show businesses face several hurdles when implementing sustainability initiatives, with 93% claiming it is challenging to gain visibility into suppliers to track the environmental impact of their supply chain. When it comes to working with suppliers, quality (38%) and cost (31%) are the most important factors businesses consider, with sustainability far behind (15%). Despite few placing sustainability as a top priority when working with suppliers, 87% of UK businesses believe making their supply chain greener can be a key competitive advantage.
“COVID-19 has forced many companies to change their priorities to focus on ‘business as usual’ and ensuring their survival, creating further barriers when it comes to implementing sustainability initiatives,” explains Alex Saric, smart procurement expert at Ivalua. “However, in the coming months and years, businesses must return their focus to improving sustainability and contributing to global efforts to reduce our impact on the environment. Whilst it is a barrier today, COVID-19 is also pushing leaders to rethink their approach to supply chains. In this respect, COVID-19 could be a tipping point for a sustainability revolution, and businesses that don’t take action to tackle environmental concerns could risk losing market share to greener competitors.”
Lack of visibility slowing plans to tackle environmental concerns
The report found that a lack of digital maturity is an issue when gaining visibility into the supply chain, with three-in-ten (30%) UK businesses reporting a lack of visibility into supplier risk. A further 28% said they had a lack of visibility into tier 2/3 suppliers, while 20% struggle to gain visibility into tier 1 suppliers. Businesses also face challenges identifying and mitigating against environmental concerns in the supply chain, where the biggest barriers are poor data quality (39%), prioritisation of cost (38%) and difficulty collaborating with suppliers (38%).
As a result of this lack of visibility, most UK businesses are unprepared to address environmental concerns, with 81% claiming they do not have comprehensive and fully developed plans to overcome air pollution, and almost three-quarters (74%) claiming the same for carbon emissions. Less than a quarter of UK businesses (24%) had no plans at all to address water pollution.
“Businesses need to address supplier visibility issues and make sure they are putting the right tools in place to drive environmental change internally and beyond, empowering suppliers to do the same”, concluded Alex Saric. “This means taking a smarter approach to procurement that gives UK businesses a 360-degree view of their suppliers, including information on sustainability practices. This will make sure businesses can see exactly who their suppliers work with, assess environmental impact and identify opportunities to collaborate on sustainability projects in real time, ensuring sustainability remains a top priority in a post-COVID-19 world.”
To download the full report, “Gaining the green view – how smart procurement can kick-start sustainability initiatives”, please visit: info.ivalua.com/uk/report-sustainability