Sustainable Procurement: Still a Priority for European Firms

Six years ago, Sustainable Development was an emerging discipline. Today, it is a key concern for procurement executives at many of Europe’s leading and largest companies. According to the fourth-annual HEC Paris – EcoVadis - Sustainable Procurement Benchmark Report, Sustainable Procurement is a top priority of procurement directors across the Continent. And despite the global financial crisis, they continue to invest in the tools and processes to drive programs that fuel environmental innovation and compliance with Corporate Social Responsibility (CSR) initiatives.

"Sustainable procurement is an integral part of the new model that companies must adopt to survive and thrive in today’s global economy,” said Professor Olivier Bruel, Associate Professor, Coordinator of the Operations Management & Information Technology Department at HEC Paris, and principal author of the "Sustainable Procurement Benchmark Report”. "Our research clearly shows that the economic dimension of sustainability – total cost of ownership reduction as well as supporting suppliers in dire financial situations – is a critical focus for companies as they attempt to weather the financial storm while continuing to run their businesses in a socially and environmentally friendly manner.”

Conducted with support from Ariba, Inc., (Nasdaq: ARBA), the leading spend management solutions provider, and EcoVadis, a collaborative platform for assessing the environmental and social performance of suppliers on a global basis, the study surveyed procurement executives at 95 of Europe’s largest companies regarding their CSR and sustainability practices and found that:

• Sustainable Procurement is considered an "important” or "critical” objective by 90 percent of procurement directors at comparable levels to 2007.
• Brand protection and cost management are still the driving factors behind Sustainable Procurement initiatives, but compliance with environmental regulations has taken on increased importance.
• The vast majority of respondents have moved toward operational implementation of sustainability programs, with over 80 percent citing that they had initiated a program in 2008.
• 35 percent of companies surveyed intend to increase their investments in Sustainable Procurement despite budget cuts prompted by the recession.
• 37 percent of companies have put in place a Sustainable Procurement department and half have raised buyer awareness through training on Sustainable Procurement concerns and practices.
• Usage of tools specific to Sustainable Procurement has significantly evolved, with a special focus on solutions for supplier evaluation and risk analysis across procurement categories.
• 75 percent of companies interviewed are now integrating CSR into their sourcing process, with 30 percent allocating significant weight to these criteria in the grading and selection system.
• 75 percent of companies use Sustainable Procurement criteria to measure the performance of their suppliers on an ongoing basis.

"Environmental and social criteria have become key elements of the sourcing and procurement processes at leading organizations,” said Charles Royon, Vice President, Continental Europe, Ariba. "At Ariba, we are focused on providing companies with tools and best-practice processes they can leverage to integrate these criteria into their spend management programs and enhance and accelerate the results that their sustainability initiatives deliver.”

Ariba provides a comprehensive range of solutions that enable companies to effectively manage their spend from end-to-end including a proven assessment methodology to identify areas of opportunity in both cost control and sustainability. To learn more about the offering and the benefits it can deliver, visit http://www.ariba.com/services/expertise/.

"After four to five years of intense activity towards Sustainable Procurement, companies now have the tools and processes needed to actively contribute to CSR programs and deliver measurable results,” said Olivier Menuet, Sustainable Procurement Director, SNCF (French National Railways Company). "Now is the time to move forward and to start realizing the benefits that such solutions can provide.”

For insights into best practices and processes that can be implemented to advance Sustainable Procurement initiatives and accelerate the results that they deliver, visit http://www.ariba.com/services/expertise/ or www.ecovadis.com and download a full copy of the 2009 HEC Paris – EcoVadis - Sustainable Procurement Benchmark Report.

"Some are wondering whether sustainable procurement initiatives will be the victims of or a remedy to the current economic crisis,” said Pierre-Francois Thaler, Managing Director of EcoVadis. "Through interviews conducted with Chief Procurement Officers at Europe’s top companies, we have found an acceleration in the integration of sustainability criteria in operational procurement processes and believe that many organizations will leverage these criteria to enhance their performance during the down times and position themselves to better compete when things improve.”

About HEC Paris

Leading European business school according to the FT ranking, specialized in management teaching and research, HEC Paris offers a complete and unique range of academic programs for today’s and tomorrow's decision makers: HEC Ms in management, Specialized Master's Degrees, full-time and part-time MBAs, Executive MBAs, TRIUM Global Executive MBA, In-house and Open Executive programs and the Doctorate. Created in 1881, today HEC Paris has 105 tenured professors, 41 affiliate professors, 50 visiting professors, 3,000 students of whom 30% are foreigners, and more than 8,700 managers and executives in training worldwide every year.

About EcoVadis

EcoVadis operates the 1st collaborative platform, allowing companies to assess the environmental and social performance of their suppliers on a global basis. EcoVadis combines technology and Corporate Social Responsibility (CSR) expertise to deliver simple and reliable suppliers scorecards, covering 150 purchasing categories and 21 CSR criteria. EcoVadis supplier CSR ratings support businesses reduce risks, drive performance and uphold innovation in their supply chain. www.ecovadis.com

About Ariba, Inc.

Ariba, Inc. is the leading provider of on-demand spend management solutions. Our mission is to transform the way companies of all sizes, across all industries, and geographies operate by delivering technology, service, and network solutions that enable them to holistically source, contract, procure, pay, manage, and analyze their spend and supplier relationships. Delivered on demand, our enterprise-class offerings empower companies to achieve greater control of their spend and drive continuous improvements in financial and supply chain performance. More than 1,000 companies, including more than half of the companies on the Fortune 100, use Ariba solutions to manage their spend from sourcing and orders through invoicing and payment. For more information, visit www.ariba.com

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