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1、1CSR and procurement:the duo in the front line of climate strategies Carbon Maps x Roland BergerCSR and procurement2Introduction Sustainability is no longer just nice-to-have but plays a central role for the successful execution of business.Amidst rising pressure from regulators,investors and consum
2、ers,along with climate-related material shortages and adverse revelations in the supply chain,sustainability during procurement requires special attention.Responsible or sustainable procurement is a powerful lever for companies in the transition to having a better ESG impact over the entire food val
3、ue chain.Through a series of interviews with food manufacturers,food retailers,food brands and food service providers,we summarized the key challenges that procurement is facing today in ESG,and the main solutions to implement sustainable procurement.3Contents 1/Starting with some facts about Agrifo
4、od value chain emissions.Page 42/Sustainability efforts have to be carried out by food companies along the value chain Page 73/Procurement is in the driver seat of ESG as it exerts an influence at all points along the value chain Page 104/Top-5 challenges that procurement departments are facing toda
5、y with regard to ESG Page 125/Top-6 solutions enabling traditional procurement to successfully shift towards sustainable procurement Page 17CSR and procurement41/Starting with some facts about Agrifood value chain emissionsConventional ways of producing food have taken a huge toll on our planet;cult
6、ivation of arable land harms biodiversity and accelerates deforestation,overfishing endangers our seas,and the climate crisis affects food security in many countries.Our natural resources water,forests,minerals,species-are depleting.Extreme weather events and the prevalence of pests and diseases wil
7、l additionally burden food security.The F&B value chain is responsible for a third of global emissions,where upstream activities contribute most.Adapting the food systems to more sustainable practices is therefore key in addressing the global climate and biodiversity challenge.A5A Global GHG emissio
8、ns account for 50 Gt CO2e Therein,the food&beverage system accounts for c.36%out of which Wholesale and Retail contribute 4%32%Land use change9%Food purchase/preparation5%Food waste18%Energy use in buildings3%Other emissions7%Fugitive fuel emissions11%Energy use in Industrialization7%Industrial proc
9、esses15%Transport4%Wholesale/Retail3%Food processing5%Transport3%Packaging&Distribution3%WasteFood and beverage value chain:c.17.9 Gt CO2e equaling 36%of global emissions are contributed by the food and beverage systemGlobal GHG emissions1:c.50 Gt CO2e(2015)39%Agricultural productionNote:A breakdown
10、 of global GHG emissions of the food and beverage value chain are based on different sources matched to one another1GHG emissions:Greenhouse Gas emissionsSource:IPCC,IEA,EDGAR,Roland BergerCSR and procurement6From a consumer perspective,increasingly focusing on emission reduction strengthens brand e
11、quity.Consumers sustainability demands are increasing,and sustainability is shifting from being nice-to-have to being a baseline requirement for purchase.Across all age groups,consumers pay attention to CO2 emissions when shopping,with especially high attention in the food category.Amongst younger c
12、onsumers(age 16-25),food items are the product category which is checked most carefully when shopping,followed by cosmetic products and clothing.BB Consumer demand for climate action%When you are shopping do you look for information on CO2 emissions for the products?Always Mostly Rarely NeverSource:
13、Climate Partner,Roland Berger Age 45-658%40%13%Age 25-4510%44%9%Age 16-259%39%17%Across all age groups c.50%of consumers look for information on CO2 emissions when shopping39%37%35%7C EU Regulations in the food and beverage value chainCrop and live-stock producersLand use changeAgricultural producti
14、onPrimary proces-sorsand tradersFood processingTransportProductmanufacturersPackagingDistributionWholesalers/RetailersFood processingWholesale/RetailEnd consumersFood purchase/preparationFood waste Direct impact Indirect impactSource:European Commission,FAO,Roland BergerFarm-to-Fork strategy(part of
15、 the EU green deal)Farm-to-Fork strategy(part of the EU green deal)Packaging&packaging waste directiveRoad transport decarbo-nizationFarm-to-Fork strategyPackaging&packaging waste directiveFarm-to-Fork strategy(part of the EU green deal)2/Sustainability efforts have to be carried out by food compani
16、es along the value chain Companies should prepare now and double down on their sustainability efforts,not only due to a consumer push but also a regulatory push.Various regulations and frameworks regarding climate action are impacting companies along the food value chain.For example,the EUs Farm-to-
17、Fork strategy holistically covers all steps.CEU SELECTIONCSR and procurement8The GHG protocol standard allows for a transparent way to monitor GHG emissions along three categories:Scope 1,2 and 3.Scope 1 are direct emissions of a company.Scope 2 includes indirect emissions from purchased energy,and
18、Scope 3 encompasses all other indirect upstream and downstream emissions.In food and consumer staples,the reduction of scope 3 emissions is a key priority for companies and procurement departments due to their high share of total emissions.DD Relevance of scope 3 emissions,as share of all emission s
19、copes,by industry sector%Scope 3 upstream Scope 2 Scope 1 Scope 3 downstreamSource:Thomson Reuters,Net-zero tracker,Roland BergerConsumer StaplesFinancialsHealthcareReal EstateInformation TechnologyComm.ServicesConsumer DiscretionaryUtilitiesMaterialsEnergyIndustrials9Non-compliance with climate cri
20、teria results in loss of market performance and loss of competitive advantage from a consumer,customer/supplier and investor perspective.E To mitigate risks arising from loss of sales and increasing financing costs for unsustainable businesses,companies need to generate transparency and act proactiv
21、ely on ESG(Environment,Social,Governance)performance.E Potential business impact if climate risks are neglectedBecoming more aware of the climate crisis,consumers favor climate conscious brands and products Fighting climate change has become a large movement supported by e.g.Fridays For Future Non-c
22、ompliance with climate criteria results in loss of salesNumerous large corporations have announced the inclusion of climate-related criteria in the assessment of suppliers Walmart is one example of a company requiring its suppliers to cut CO2 emissionsNon-compliance with climate criteria results in
23、loss of salesInvestors are putting more emphasis on sustainability and some are even announcing divestments in companies with sustainability risks e.g.BlackRock is an example of a company that has announced divestmentsNon-compliance with climate criteria results in higher cost of capitalSource:Compa
24、ny reports,BlackRock,Desk research,Roland BergerCSR and procurement10G Sustainable procurement is more than just complying with laws or industry standards Design procurement strategyDesign organization&core processesManage employeesCategory managementSource to contract(S2C)Purchase-to-pay(P2P)Manage
25、 project portfolioManage supplierManage supplierriskManage contracts&cataloguesManage performanceManage systems&toolsPriority:Low Medium HighSource:Roland Berger3/Procurement is in the driver seat of ESG as it exerts an influence at all points along the value chainBeing highly cross-functional,procu
26、rement is predestined to embed sustainability along all three ESG dimensions throughout an entire company,thereby exerting an influence at all points along the value chain.FEnd-to-end sustainable procurement holds considerable potential as it can act on all sustainability goals,delivering greater su
27、pply security through more resilient supply chains and generating further cost reductions.Sustainable procurement is much more than complying with regulations.GBut today,procurement departments are facing various challenges when it comes to incorporating ESG practices.11F Procurements key action fie
28、lds along ESG (cross-industry)Reduce scope 3 emissions in adherence with science-based targetsAvoid pollution with adverse ecological effectsEmbrace Circular Economy by leveraging secondary and renewable materials and driving cooperation along the entire value chainProtect human rights across own an
29、d supplier operationsEmpower societies building robust relationships with supplier communitiesIncrease supply chain transparency Environmental Social Corporate governance Source:Roland BergerEmployee treatmentHuman rightsStructure&oversightEmissionsCompensation policyPollution/wasteSupply chain gove
30、rnanceNatural resourcesCompliance&business ethicsEnergy efficiencyTransparencyInnovation/environmental opportunitiesProduct liabilitySociety&communityDiversity&opportunities123456123456CSR and procurement124/Top-5 challenges that procurement departments are facing today with regard to ESG1.Data coll
31、ection from suppliers The data collection challenge was resounding across all interviews.Data collection itself is a pain point for both food retailers/manufacturers and suppliers:the former struggle to gather the data needed to establish their baseline,while the latter are overwhelmed by reporting
32、requests and share the challenge of collecting data from further upstream.In addition,there is the issue of quality once data has been collected.Some are of poor quality or are unverifiable,which adds another layer of complexity to the procurement and CSR collaboration process.Sarah Kerlan,Pernod Ri
33、card Chief Procurement Officer“Most suppliers are struggling to provide reliable data quality regarding sustainability.The main challenge for them is to capture their Scope 3 data properly.”Lucile Gerardin,LidlCSR Purchasing Project Manager“Our suppliers face the same problem as we do:most of them a
34、re facing difficulties in collecting data from their own suppliers.”Scamark-Leclerc Purchasing Manager“We need an external certifier to validate that the data is correct.”132.Supplier engagement and contractualization Supplier engagement goes beyond data collection.Another challenge that was highlig
35、hted in the interviews revolves around managing supplier relationships and aligning objectives,particularly in the context of long-term contracts.While questionnaires are a good start,theres a need to maintain a level of engagement to allow for more qualitative discussions.Sarah Kerlan,Pernod Ricard
36、 Chief Procurement Officer“Theres a need for long-term commitments from suppliers,but then theres also a need for us to ensure that they keep these commitments.”Stphanie Guillonneau,SYSTEME U Director of U Product Purchasing,Design and Production“Setting targets for suppliers requires asking the rig
37、ht questions.While we inquire about CSRD,SBTi,and similar frameworks,we struggle to go further because were unsure of the specific questions to ask.”CSR and procurement143.Role ambiguity and knowledge gapsMore and more,buyers are introducing sustainability considerations into discussions but lack th
38、e expertise to effectively integrate and evaluate these factors,such as modeling the price of carbon emissions.There is also a lack of clarity and consistency in the roles and responsibilities between Procurement,CSR,and sometimes,Quality teams concerning the decarbonization of procurement.Nathanal
39、Jacquet,Groupe Louis DelhaizePrivate Label Director Today,the division of roles between procurement and ESG in terms of decarbonizing purchases is unclear and depends on the organizations involved.In the future,buyers will have a role to play in integrating environmental requirements into tenders,un
40、der the guidance of multi-category CSR managers.”Nicolas Clerget,Heineken Global Director Net Zero Strategy“Procurement teams are starting to bring sustainability into the discussions,but thats where it stops because they dont know how to model the price of carbon.Tomorrow,they will have to take cha
41、rge of these issues.”Marie Caroline Binot,Episaveurs Group Purchasing Manager for sweets and beverages“Sustainability is more of a procurement issue.Quality department applies grids and standards,but they never make procurement decisions.They mainly support us or alert us.”154.Balancing sustainabili
42、ty goals with traditional procurement priorities While sustainability is increasingly discussed in supplier meetings,it is not yet a primary criterion for product selection or supplier listing.Customer satisfaction and other traditional factors such as price and taste still take precedence.Scamark-L
43、eclercPurchasing Manager“It makes sense that carbon footprint is one of the selection criteria,but price and taste will always remain priority.”Scamark-LeclercPurchasing Manager,Fresh&Frozen Foods“At some point,the sustainability aspect is going to clash with the buyers main concern,which is buying
44、as cheaply as possible.Implementing the carbon footprint will be complicated and the buyer will need help.”Francesca Ponassi,CarrefourPrivate Label Buyer“During our 2024 tariff negotiations,some suppliers attributed part of their price increases to the costs of their CSR projects.However,I wouldnt s
45、ay that this practice is widespread.”CSR and procurement165.Lack of integrated tools and resources constraints Multiple tools and systems are currently used for different aspects of procurement,such as Excel for tracking and specialized software for procurement and billing.However,none of these are
46、equipped to manage the complexities of translating environmental indicators or tracking sustainability initiatives.This fragmentation makes it difficult to systematically evaluate and reward suppliers based on their sustainability efforts.Additionally,teams often lack the human resources needed to e
47、ffectively track and manage sustainability commitments and data.Francesca Ponassi,CarrefourPrivate Label Buyer“I have files and Excel sheets,software for referencing quality,and software purely for procurement/billing.Top marks are given annually to suppliers who have CSR strategies but theres no de
48、dicated tool for accomplishing this.”Nathanal Jacquet,Groupe Louis DelhaizePrivate Label Director“The problem is that there is no platform allowing suppliers to share their commitment.Suppliers are being questioned one by one.There should be a common platform,similar to the one that exists for socia
49、l audits.”Marie Caroline Binot,Episaveurs Group Purchasing Manager for sweets and beverages“We dont have a tool today for defining our objectives.Between a product made in Europe and a product imported from the other side of the planet,its hard to tell which has a higher environmental impact.”175/To
50、p-6 solutions enabling traditional procurement to successfully shift towards sustainable procurement1.Simplify data collection for suppliersIt is essential to provide teams with a tool that facilitates scalable data collection,streamlining communication and data sharing.Such a tool would reduce the
51、need for repetitive tasks like filling out questionnaires,thereby minimizing time and cost burdens on suppliers.Leading French grocery retailerDirector of Food Purchasing“There needs to be a common platform to share information between suppliers and distributors.”Nathanal Jacquet,Groupe Louis Delhai
52、zePrivate Label Director“I also dont want it to take too much time on the suppliers side.If they have to fill out a questionnaire every time they are asked,it means a high hourly cost.”Scamark-LeclercPurchasing Manager,Fresh&Frozen Foods“With our manufacturers,we first send them a questionnaire and
53、then schedule a meeting to exchange ideas.This process is essential to make them aware of our approach.”2.Prioritize a focus area instead of tackling all levers at the same timeThere is a need to focus on the most consequential product types&engaging long-standing partners.It is also worth rememberi
54、ng that questionnaires are good,but discussions are even better.Lucile Gerardin,LidlESG Purchasing Project Manager“Were concentrating mainly on improving the level of maturity on sustainability of our long-standing suppliers rather than singling out suppliers on the basis of ESG criteria in tenders.
55、”Stphanie Guillonneau,SYSTEME U Director of U Product Purchasing,Design and Production“We already have working groups focused on dairy and meat,with our suppliers and cooperatives supporting farmers in identifying key reduction levers.”CSR and procurement183.Establish long-term,structured partnershi
56、ps and support mechanisms between customers and suppliersThere is a need for emphasis on structured,long-term contracts with clear commitments and support systems to promote sustainability and resilience in the supply chain.Examples cited in the interviews include multi-year contracts with fixed com
57、mitments,inclusion of exit clauses dependent on performance and financial support for initiatives like carbon accounting.Marie Caroline Binot,Episaveurs Group Purchasing Manager for sweets and beverages“For example,to ensure the resilience of our apple sector in France,we signed 2 three-party suppli
58、er/farmer contracts that commit us to fixed volumes over 3 years to give them visibility and fair remuneration.”Sarah Kerlan,Pernod Ricard Chief Procurement Officer“In the case of glass,we have contracted supplier commitments with exit clauses to ensure that their 2030 targets are met.”Leading Frenc
59、h grocery retailerDirector of Food Purchasing“We finance the carbon accounting of the 2,000 farms we work with every year to facilitate data collection.”194.Provide comprehensive training and tools for procurement teamsBased on the interviews,procurement teams can benefit greatly from thorough train
60、ing and operationally user-friendly tools for incorporating environmental criteria into their decisions and actions.Having both supports making procurement decisions and strategies that align with an organizations overall sustainability objectives.Leading grocery retailer in FranceDirector of Food P
61、urchasingWeve provided our procurement teams with training on environmental topics.Its important to ensure that teams have a clear understanding of the subject before expecting results.Lucile Gerardin,Lidl ESG Purchasing Project Manager“We need a tool that can simulate the impact of a change in agri
62、cultural and livestock practices on the carbon emissions and sequestration of our key raw materials.”Nathanal Jacquet,Groupe Louis DelhaizePrivate Label Director“We need a tool that strikes the right balance between something technical and something operational enough for a buyer who may not have th
63、e ESG inclination or the necessary expertise.”Scamark-LeclercPurchasing Manager,Fresh&Frozen Foods“We need a tool that can integrate environmental data in tenders.”CSR and procurement205.Emphasize the link between sustainability practices and financial performanceEmphasizing this link ensures that s
64、ustainability is integrated into a companys overall business strategy,rather than being seen as a separate or secondary concern.From the perspective of procurement,strategies that support this are highlighting ESG as a competitive advantage,linking financial metrics to sustainability goals,and manag
65、ing risk through sustainable sourcing.Marie Caroline Binot,Episaveurs Group Purchasing Manager for sweets and beverages“The Sustainability argument is a commercial strength.In invitations to tenders for schools,hospitals,retirement homes,etc.,our customers ask us to talk about the eco-design of our
66、products.The EGAlim law is pushing us to offer labeled,local and organic products.”Leading French grocery retailerDirector of Food Purchasing“Loans are linked to decarbonization performance,so theres procurement pressure coming from the financial department who says that interest rates will change o
67、therwise.”Marie Caroline Binot,Episaveurs Group Purchasing Manager for sweets and beverages“Risk is a daily occurrence for sensitive raw materials.For example,the El Nio phenomenon has a big impact on cocoa,coffee and especially orange juice with an increase of as much as 25%.We dont systematically
68、assess it right now but we are already experiencing it climate change effects.While we follow the trading trends,its mainly the suppliers who let us know.”216.Adapt a hybrid organization of the procurement departmentProcurement teams cannot embark on the process of sustainable procurement alone.A hy
69、brid organization would involve a collaborative structure where the procurement and CSR functions work closely together,integrating ESG monitoring into the procurement process.This requires a clear definition of roles and responsibilities for both teams.Sarah Kerlan,Pernod Ricard Chief Procurement O
70、fficer“Buyers will not be responsible for monitoring the action plans committed to by suppliers.This task will fall to the CSR representatives within procurement departments,similar to how suppliers are audited by the Quality department.”Designing the right collaboration between the Procurement and
71、CSR departments is key for the successful realization of sustainability targets especially if the two functions are organizationally separated.It is important that roles and responsibilities are clearly operationalized,based on use cases from daily business.HH Exemplary use cases for sustainability
72、in procurement Describe key tasks for each use caseDefine use case-specific roles and responsibilitiesIdentify pain pointsJointly solve pain points along each specific use caseSource:Roland BergerCompliancewith sustainability regulationSupplier forum for best practice ex-changeBuy carbon creditsCirc
73、ular economy initiativesSupplier specific LCA data.Further company specific use casesPre-screening of potential suppliers1234CSR and procurement22ConclusionBeing uniquely positioned to influence Scope 3,Procurement plays a pivotal role in driving a companys sustainability strategy.Managing relations
74、hips with suppliers gives Procurement visibility into the upstream supply chain where most of these emissions originate.To contribute to a companys sustainability goals,procurement teams must develop a good level of understanding of sustainability issues,actively engage with suppliers,and leverage t
75、ools that integrate environmental KPIs to monitor Scope 3 emissions reductions effectively.This shift from traditional procurement to sustainable procurement also requires more than just selecting the right suppliersit demands robust cross-functional collaboration,particularly between procurement an
76、d CSR teams.Achieving meaningful progress necessitates rethinking organizational structures to fully align procurement processes with sustainability objectives,ensuring transparency and accountability throughout the supply chain.23Contact detailsAlexander Belderok Senior Partner Global Head of Consu
77、mer Goods,Retail and Agrifood Sabrine Zerktouni Principal,Agriculture&Ingredients Patrick Asdaghi CEO&Co-founderpatrickcarbonmaps.ioElonore Lafonta Chief of Staff eleonorecarbonmaps.ioIna Durante Brand Content Manager ina.durantecarbonmaps.ioAcknowledgementsWe would like to sincerely thank all inter
78、viewees who contributed their time and insights to this study.Your input has been invaluable in shaping the results.We would also like to extend our appreciation to the Roland Berger Operations team for their valuable input.11/2024CSR and procurement24PublisherRoland Berger BVStrawinskylaan 5811077 XX AmsterdamThe N