As the world discusses solutions to combat climate change at COP28, it’s essential to redirect attention to a seemingly overlooked aspect amidst the focus on direct emissions and energy reduction. While these are crucial, they represent a minority of global carbon emissions.
Astonishingly, emissions from an organization’s supply chain surpass those from business operations by 11.4, contributing to 60% of global greenhouse gas emissions. Alarmingly, a whopping 90% of Chief Procurement Officers (CPOs) lack insight into the sustainability performance of these critical supply chains despite businesses allocating a significant portion – up to 70% – of their revenue to procurement, rarely attempting to adapt their processes to incoming sustainability requirements.
Global business leaders increasingly recognize the importance of Environmental, Social, and Governance (ESG) factors in investment decisions, with 71% acknowledging this paradigm shift. It is no longer a peripheral concern but a pressing reality demanding reevaluating our global systems.
Against this backdrop, the UAE pursues ambitious agendas shaping its growth, including “Make it in the Emirates,” Operation 300bn, UAE Centennial Plan 2071, Environmental Performance Enhancement Initiative, and UAE’s Green Agenda – 2030. These initiatives underline the nation’s commitment to a sustainable future.In pursuing these aspirations, a critical need arises for sustainable procurement policies, mechanisms, and strategies to support national endeavours. Sustainability is often mistaken for being synonymous with green or environmentally friendly.
Though this is an inalienable part of sustainability, it also covers a wide range of topics, including the welfare of workers, the local sourcing of goods and services, transparent governance, and innovation. All cases are critical to a proper procurement process. Sustainability is a wide-ranging topic that is more important than ever. It is doubly important to consider your impact on the environment and society through your supply chain.
In the face of this daunting revelation, one must ask: How do we navigate this labyrinth of emissions among a myriad of supply chain complexities and ensure that the UAE’s inspiring initiatives are reached? The answer is straightforward: Procuring our goods and services more sustainably. Though the answer may be simple, this means fundamentally redefining our approach to sourcing, purchasing, and managing goods and services. It also means scrutinizing every link across the supply chain, from production to delivery, with a firm focus on environmental and social impacts.
While some may view sustainable procurement as an additional cost, it is, in fact, an investment in a company’s future. Embracing sustainable procurement allows organizations to not only mitigate risks and actively contribute to a more resilient and sustainable future but also reduce procurement costs by up to 16% and increase profit margins by 10-20%. Companies can experience a 15-30% brand value increase by adopting sustainable practices. 59% of CPOs found that their sales revenue increased due to this enhanced reputation.
Sustainable procurement also provides an incredible opportunity to reduce your environmental impact. Studies show that sustainable procurement can help companies tackle over 80% of greenhouse gas emissions and 90% of overall environmental impact in the consumer sector. Sustainable procurement must be seen as a significant pillar around which the UAE’s green agendas and initiatives must be developed.
As we stand on the cusp of COP28, the path forward is clear: sustainable procurement is not just an option. It’s a requirement to ensure a more sustainable tomorrow.
It is also evident that we need local solutions to help us solve our local problems. We cannot rely on solutions developed abroad to understand the complexities and intricacies of our unique business culture. Hence, we developed Oscar, the MENA’s first automated sustainable procurement platform. Engineered to align seamlessly with national visions and net zero commitments, Oscar, a Mohammed Bin Rashid Innovation Fund’s Innovation Accelerator program member, addresses the core challenges businesses face in the region. As we delve into the crucial discussions of COP28, Oscar stands ready to illuminate the path toward sustainable procurement excellence.
Originally written by Abed Shawar, CEO of Oscar, a member of Mohammed Bin Rashid Innovation Fund’s Innovation Accelerator Program. Edited by Vibha Mehta.