Sustainability is Driving Supply Management

by Nicolette Emmino

With environmental, social and governance (ESG) ratings a growing factor on Wall Street, sustainability has made significant inroads into corporate consciousness. That’s why the Institute for Supply Management® (ISM®) and Boise Paper conducted a survey over the summer to assess how sustainability is perceived and implemented by U.S.-based supply management professionals and their organizations in relation to three common pillars: social responsibility, environmental impact, and economic awareness.

The two created a white paper that explores the results through the lens of these three pillars, as well as the 11 attributes of the ISM Principles of Sustainability and Social Responsibility: anti-corruption, diversity and inclusiveness, environment, ethics and business conduct, financial integrity, global citizenship, health and safety, human rights, labor rights, supply chain sustainability, and transparency.

Of those surveyed, 74% have sustainability goals in place, with nearly half (48 percent) reporting that their companies’ sustainability goals are a part of daily operations. The following captures additional key findings that impact corporate decision-making and supply management initiatives.

  • Of the 11 sustainability attributes, ethics and conduct, followed by health and safety, are most important to supply management organizations and companies.
  • Between 48 and 67% of supply managers say they would pay more for the most common spend categories, including capital equipment, office supplies and manufacturing components if they were offered sustainably. What they are willing to pay more for can depend on the industry.
  • Non-manufacturing companies are less likely to prioritize working with U.S. suppliers than their manufacturing counterparts.
  • Generally, 46 to 63% of companies say they are willing to pay more for U.S.-made products like capital equipment and manufacturing components.
  • Companies with 10,000 or more employees are more likely to have goals in place and have them integrated into daily operations versus smaller companies.

“Sustainability only continues to grow in importance, for consumers, the companies that serve them and the supply management function that orchestrates the company’s sustainable policies, processes and performance,” said ISM Chief Executive Officer, Thomas W. Derry. “A great track record in sustainability is linked to higher revenues, profit and company valuations. It’s here to stay.”

The research revealed that focusing on the three pillars of sustainability while drawing from the 11 attributes of the ISM Principles of Sustainability and Social Responsibility — in particular, ethics and business conduct, health and safety, and environment, the sustainability attributes considered most important to supply management organizations — can help companies create value while impacting the environment, being responsive to customers, and improving communities.

The sustainability survey yielded 778 usable responses from supply management professionals from U.S.-based companies. ISM® asked survey respondents about their companies’ sustainability goals, how they evaluate environmental impact, why they work with U.S-based suppliers, health and safety in their supply chains, and other topics.

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