Almost all UK businesses say sustainability-led innovation has become a priority, but most lack plans to improve the sustainability of goods and services 

London, UK, 22 September, 2022.  Research from Ivalua, a leading global spend management cloud provider, has revealed that less than a quarter of UK businesses have comprehensive and fully implemented plans and KPIs for improving the sustainability of goods and services. Just 21 % have plans in place for reducing carbon emissions, while there was also a lack of plans for adopting circular economy principles (22 %), reducing e-Waste (20 %) and adopting renewable energy (18 %).

The Ivalua commissioned study, conducted by Coleman Parkes, found that 94 % of UK businesses claim that sustainability-led innovation - the act of developing more sustainable goods and services to reduce environmental impact - will be a priority in the next 12 months. Yet despite this, there are a lack of plans and KPIs in place for reducing chemical waste (23 %), reducing water pollution (38 %), reducing the usage of single use plastic (44 %) and reducing air pollution (51 %).

“Sustainability-led innovation can make organisations’ products and services greener, thereby offering an overall more attractive proposition for customers and end-users, as well as laying the foundations for a circular business model,” comments Alex Saric, smart procurement expert at Ivalua. “Yet comprehensive plans to make this a reality are currently lacking, especially in areas like reducing carbon emissions and adopting renewable energy. In light of rising gas and oil prices, there should be a renewed focus on sustainable innovation, and identifying how being greener could cut costs. But all too often, plans to improve sustainability fail to come to fruition because businesses can’t work effectively with suppliers, and lack visibility into green credentials beyond their own four walls.”

The majority (91 %) of UK businesses say sustainability-led innovation has become more important to customers in the last 12 months, while 90 % say that joint innovation and collaboration with suppliers are critical for achieving sustainability goals.

However, businesses face many challenges when working with suppliers to increase sustainability-led innovation, including; a lack of understanding around supplier innovation capabilities (58 %), a lack of visibility into tier 2 and 3 suppliers (51 %), poor data quality (50 %) and difficulty collaborating (37 %). Overcoming these barriers can have major benefits, with 97 % of UK businesses saying sustainability-led innovation will help to improve customer relationships, while 96 % say it will help to increase sales.

"Many corporate entities have commitments to deliver by the end of the decade on carbon neutrality. Conversely, in most cases, corporates lack meaningful data beyond tier 1 of their supply chains. In addition, due to the complexity of global supply chains, and the quantum of suppliers involved from tier 1 to 4 (and for many sectors regulatory compliance requirements), a plan for carbon reduction and/or removal cannot wait," explains David Loseby, Professor of Research Impact in Supply Chain Management at Leeds University Business School. "So, procurement must play a pivotal role in addressing visibility and transparency through supply chains in their entirety and act as a catalyst for effective and meaningful trust based collaboration." 

“To avoid greenwashing, organisations that are serious about turning sustainability words into action need to empower procurement, especially in light of the UK’s net zero 2050 pledge,” added Saric. “That requires agreeing KPIs that incentivise suppliers to improve sustainability. It means investing in the right technology that enables businesses to assess and engage suppliers, collaborate on sustainability targets and guide greener employee purchases. The data can also be used to enable better monitoring of progress, allowing organisations to course correct as required. Failure to do so could see businesses alienate customers, lose sales and become irrelevant in an eco-driven world.”

About the research

The study was conducted by Coleman Parkes in August 2022 on behalf of Ivalua. It is based on a survey of 303 UK procurement decision makers at companies with 1.000 or more employees and revenues greater than £50 million. 

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