5 May 2024
Author: Phui Kai Ling, Group Head of Procurement, DBS Bank
In today's rapidly evolving business landscape, sustainability has become a key differentiator for companies to achieve long-term value creation alongside organisational return on investment (ROI). The Singapore Budget 2024 highlighted the government’s focus on helping companies in their sustainability journey through a slew of initiatives. Central to this transformative shift is the concept of sustainable procurement, which goes beyond cost considerations to incorporate environmental, social, and governance (ESG) factors in purchasing decisions.
The traditional role of procurement has largely been focused on securing materials and services at competitive prices amidst supply chain resilience efforts. While these goals continue to be a top priority, the role of procurement has evolved towards a more holistic approach. By integrating sustainability into their procurement lifecycle, companies not only can enhance their reputation and stakeholder trust, but also unlock new opportunities for innovation, competitive advantage and profitability.
By embracing sustainable practices, companies can mitigate risks of supply chain disruptions caused by climate change, resource scarcity and social unrest. Such companies are also better positioned to adapt to regulatory changes, like government-mandated climate disclosures – which will be required of all Singapore-listed companies by the financial year of 2025.
Beyond developments in the regulatory space, several other factors are expected to nudge companies into making sustainability a key business priority. In a 2023 Singapore Business Federation survey, ESG expectations from employees and consumers emerged as one of the top factors projected to impact businesses. Meanwhile, 52 per cent of Singapore CEOs have reported embedding ESG into their business as a means of value creation. While compliance is the starting goal for many companies on their sustainability journey, there are numerous strategic opportunities along the way as well.
A compelling business case for sustainable procurement
Sustainable procurement can fuel innovation and business growth. By working closely with suppliers to develop sustainable products and services, companies can differentiate themselves in the market and tap into new revenue streams. Resource optimisation, waste reduction and energy savings can also drive cost efficiencies, with the cost savings then reinvested into innovation and growth initiatives, to further strengthen the company's competitive position.
Moreover, sustainable procurement can enhance a company's reputation and brand value. In today's socially conscious marketplace, consumers, investors and employees are increasingly demanding transparency and accountability from businesses. Deloitte’s 2023 Gen Z and Millennial survey found that 50 per cent of Gen Zs and 46 per cent of millennials are pressuring businesses to take action on climate change. 80 per cent of respondents also state that they want businesses to enable consumers to make sustainable purchasing decisions. Companies that demonstrate a commitment to sustainability through their procurement practices are more likely to attract and retain customers, investors and top talent.
Helping companies on their sustainability journey
At DBS, we see our suppliers as valued partners in creating a sustainable supply chain. Our Sustainable Sourcing Principles outline the expectations we have of suppliers in four key areas: human rights, health and safety, environmental sustainability, and business integrity and ethics.
As the world transitions to a greener future, knowledge and resources sharing will be crucial to empower all businesses to thrive in a rapidly changing environment. To support Singapore companies in their sustainable procurement journey, DBS co-founded the National Sustainable Procurement Roundtable (NSPR) in 2019. Today, the NSPR has more than 20 corporate members across a wide range of industries.
The NSPR’s latest publication is an e-book for suppliers that aims to provide practical insights and guidance on enhancing their sustainability practices. ‘A Supplier’s Guide to Sustainability’ provides guidance based on NSPR members’ first-hand experiences in implementing sustainable procurement practices, including industry benchmarks which they have adopted within their own companies.
By leveraging resources such as the e-book, companies can gain valuable insights into best practices and innovative approaches to sustainable procurement. This not only helps them meet regulatory requirements and stakeholder expectations but also positions them as leaders in driving positive change within their industries, ensuring that they stay competitive. The e-book can be downloaded for free at https://sustainableprocurement.sg/
Sustainable procurement is not just a moral imperative but a strategic business opportunity. By integrating sustainability into their procurement processes, companies can mitigate risks, enhance their reputation, drive innovation and achieve long-term success.
Asia’s Safest Bank, 2009 – 2024, Global Finance
Best Bank in the World 2022, Global Finance
World's Best Bank 2021, Euromoney
Best Bank in the World 2020, Global Finance
World's Best Bank 2019, Euromoney
Global Bank of the Year 2018, The Banker
