In the early 2000s, the American gas company Enron inflated its profits and concealed its losses in order to increase its value on the stock market, precipitating its bankruptcy, leaving 20,000 employees out of work and destroying millions of dollars in pension funds. The authorities then decided to regulate the content of financial reports by imposing transparency.
On the same principle, in order to control greenwashing practices, a new European directive, the CSRD (Corporate Sustainability Reporting Directive) comes into force on January 1, 2024. The objective is to harmonize and improve the availability and quality of sustainability data from companies.
However, this reporting will not solve the inertia observed in the implementation of more virtuous value chains, as financial departments are not able to isolate the “environmental” effect of the actions envisaged. This situation is not sustainable, and procurement departments are at the forefront of the revolution to be led, since scope 3 (indirect emissions produced by the purchase of goods and services), one of the three levels of greenhouse gas emissions established by the Greenhouse Gas Protocol (GHG), is the one that represents the majority of gas emissions.
It is therefore up to the procurement functions to implement regenerative methods, from the Latin regeneratio, return to life. It is a “moral renewal, amendment of what was (…) altered” according to the Larousse dictionnary. Following the model of regenerative agriculture practices, a holistic approach will be required to restore the business environment. It will be important to create a broader ecosystem through committed and sincere partnership approaches with suppliers, and even go beyond that by fostering collaboration between competitors.
It is time to consider renewing procurement practices that have outlived their usefulness. However, the support of top management will remain decisive, which raises the question of the place of procurement in the executive committees. The function usually reports to the operation department or sometimes to the finance department, but only very rarely has a seat on the executive committee, reporting to the #CEO. As a result, the revolution to be carried out is encountering difficulties in obtaining the necessary support for its deployment.