Chapter 2:

Sustainability
Made Simple(r)
SAP Procurement Guidebook
Sustainability is Key in Navigating the New Normal

Learn how to incorporate it into your process effectively, build a resilient

supply chain, and rally your organization around your higher purpose.
SUSTAINABILITY MADE SIMPLE(R)
Building Sustainable
Procurement
When it comes to driving sustainability, accountability
lies with executive boards. Yet out of all corporate
functions, procurement is best suited to help the
board succeed in its efforts. After all, procurement’s
responsibilities touch nearly every aspect of the supply
chain, including:
• Sourcing suppliers and awarding contracts
• Driving compliance with procurement policies
and codes of conduct
• Managing supplier development and performance
• Identifying and managing risk across the supply chain
• Negotiating payment terms
• Promoting supplier diversity and supporting
local communities
• Fostering a culture of innovation through collaboration
with small, niche organizations
Procurement leaders, in short, decide who a company
buys from and how it does its buying. Should our supply
chain be diversified? How much of it should be local?
Are we working with innovative enterprises? To build a
durable, resilient supply chain, procurement must tackle
these sustainability-focused questions head-on.
Why Sustainability Wins
Before the current global health crisis, sustainability was
already a rising item on the agendas of many leading
organizations. Now the world must pay even greater
attention to sustainability and the impact it could have in
the long run.
Consider market demand. In recent years, customers
and investors have been rewarding businesses that
drive social, economic, and environmental outcomes.
According to one SAP Ariba study, 80% of consumers
in emerging markets will pay a premium for goods
from companies that actively work to reduce their
environmental footprint. Consumers and investors are
no longer satisfied by merely cosmetic approaches to
sustainability and are actively hostile to anything they
see as “greenwashing.”
But reputation is just the beginning. As gatekeepers
of the supply chain, procurement is playing an
increasingly pivotal role, not only in protecting the
brand from risky supplier behavior, but in identifying
delivery and performance disruptions that stem from
social, economic, and environmental factors. Now
more than ever, sustainability is critical to building a
durable, resilient supply chain.
In this chapter, we’ll walk through the key sustainability
challenges facing procurement teams today, as well as
how to overcome those challenges to drive resilience
within an organization.
Building Sustainable Procurement | 3
SUSTAINABILITY MADE SIMPLE(R)

Key Sustainability
Challenges
Despite its clear value to organizational health,
managing sustainability has traditionally been no easy
task. Historically, procurement teams have tended to
move slowly and reactively, relying on a host of legacy
processes that ultimately stand in the way. Common
examples include:

Manual Risk Scoring Supplier Data Scatter Procedural Complexity

It’s time-consuming, It’s hard to assess risk Sometimes, your

vulnerable to errors, and when your data is hidden in organization’s process hinders
maybe most importantly, it can spreadsheets and emails its progress. In a lot of cases,
miss key market signals. all over your computer – or it’s definitely slowing down
worse, all over the world. supplier qualification.

“Homegrown” Solutions High-Risk Suppliers Quantification

Ad hoc solutions and In a connected world, you’re We always talk about

workarounds may offer
some short-term solutions
to localized problems, but if
you’re bypassing established
processes and reducing
visibility, you’re incurring
real risk.
only as sustainable as your
suppliers. The wrong supplier
can contradict your best-
intentioned efforts and pose
a media threat.
“measuring what matters,”
but if you don’t have a
universal benchmark for
sustainability metrics, that
laudable goal may quickly
prove impossible.

Key Sustainability Challenges | 4

SUSTAINABILITY MADE SIMPLE(R)

Making the World a Better Place

The current global health crisis has highlighted just
how vulnerable supply chains can be – impacted by
physical, social, and economic health around the world.
In response to this crisis, procurement leaders have the
opportunity to build strong, sustainable supply chains –
ones that keep customers and employees satisfied and
help their organizations stay the course.
In order to make a difference, procurement corporate
social responsibility teams must work with their
employees on the following fronts:
1. Help create sustainable communities.
How to get there:
• Incorporate social requirements into sourcing
by implementing a supplier code of conduct,
setting expectations via RFx documents with
prospective suppliers
• Tap into a global community of approved suppliers,
identifying non-compliance with visibility and analysis
of third-party spend
• Enforce policy by making it easy for employees to buy
from ethical suppliers using integrated procure-to-
order tools and guided buying capabilities

Globally, 2.2 billion people currently live on less than

$2 per day – a figure that may grow worse as the current
crisis puts societies in even more vulnerable positions.
With SAP Ariba, you can help close this gap by working
with suppliers to lift communities out of poverty and
establish a fair, resilient supply chain.

Making the World a Better Place | 5

SUSTAINABILITY MADE SIMPLE(R)
2. Develop a diverse global supply chain.
Over 50% of US businesses are minority- and women-
owned, but account for only 6% of the total revenue
generated. With SAP Ariba, you can meet your diversity
goals by gaining instant access to a proven network of
minority, veteran, women-owned, and green-certified
suppliers. And as the current crisis disrupts global
supply chains, procurement leaders have an opportunity
to reimagine their operating models, bringing more
and more of their supply chain back into the country
of origin, making low-cost country source a thing of
the past and empowering local businesses and diverse
suppliers to flourish.
How to get there:
• Drive policy compliance through sourcing processes
designed to surface equitable and diverse suppliers
• Achieve full visibility through spend analyses that
provide comprehensive information on supplier
diversity metrics
Diversity you can see.
Across SAP Ariba’s enormous network, over 25%
are marked as diversity suppliers. Providing such
transparency allows our customers to spend more
purposefully while fostering growth for these diverse
suppliers. 
Customers like Johnson & Johnson, for example,
are members of the Billion Dollar Roundtable,
which promotes supplier diversity globally. Another
customer, IAG (Australia’s largest general insurer),
collaborated with SAP Ariba to create an internal
diversity marketplace of social enterprises and
indigenous- and women-owned businesses, enabling
its employees to channel their spend to have a
positive impact on local communities.
3. Reduce disruptions from
environmental change.
Lockdown measures taken by governments to counter
the current global health crisis are reported to have
reduced air pollution levels in major cities around the
world. This just goes to show how quickly action can
lead to environmental changes.
A report from the University of Maryland and software
firm Resilinc showed that global supply chain disruptions
caused by weather doubled in 2017 compared to the
previous year. Climate disasters that year also caused
businesses to lose US$350 billion, according to the
German reinsurer Munich RE. These numbers, as you
can imagine, are only expected to rise. 
With SAP Ariba, you can prevent supply chain
disruptions while meeting your corporate energy and
climate mandate by incorporating environmental
sustainability requirements directly into the sourcing
process.
How to get there:
• Reduce your carbon footprint by collaborating with
multiple tiers of direct spend trading partners on
demand signals and delivery requirements to trim
excess buffer stock and unneeded shipments
• Minimize business disruption through planned
inventory requirements with your suppliers,
along with timely, actionable supplier risk
insights and remediation
• Reduce process cycle time and replace paperwork
with automated workflows
Making the World a Better Place | 6
SUSTAINABILITY MADE SIMPLE(R)

4. Protect your brand while protecting

people around the world. Eradicating forced labor.

Although demand for food and medicines rose
significantly at the height of the current global health
crisis, economies are bracing themselves for a deep
recession as a result of the worldwide lockdowns. This,
in turn, may lead to a rise in the black market for labor.
Believe it or not, there were 48.5 million people already
living in slavery in 2018, many of them working in global
supply chains. SAP Ariba can help you maintain your
commitment to human and workplace rights.
To help procurement teams eliminate forced labor
from their supply chain, SAP Ariba created a forced
labor benchmark allowing customers to compare
themselves against their peers so that they can
apply the right programs to lower risk exposure and
leverage results. 
Our customer Nielsen, for example, added a
sustainability commitment to its website, using
technology to remove modern slavery from its
supply chain.

How to get there:

• Prequalify suppliers that uphold principles of Sustainability and supplier risk go hand in hand. With a
international human and workplace rights holistic supplier risk solution, you can assess, monitor,
• Minimize business disruption and brand damage and mitigate both environmental and forced labor risks
through engagement-based assessment, monitoring across your entire supply base. 
and mitigation of supplier risk
• Improve source-to-settle process efficiency with
sustainability and risk insights integrated into sourcing
and contract workflows
• Drive compliance with supplier risk coverage spanning
environmental and social, regulatory and legal, and
financial and operational factors
• Drive brand value through ethical sourcing, removing
forced labor from your supply chain

Making the World a Better Place | 7

SUSTAINABILITY MADE SIMPLE(R)

How SAP Ariba Can Help

As organizations figure out how to bounce back from the current global health crisis, digital technologies can help
them adjust to the “new normal.” By providing complete transparency, visibility and traceability, data and intelligence
tools can empower organizations to drive social and environmental impact – right when it’s needed the most.

SAP Ariba is at the forefront of promoting sustainability and governance worldwide. By leveraging our platform, our
customers are able to drive social and environmental policies while achieving improved business results.

With SAP Ariba, you can:

Leading with Purpose.

• Build resilient supply chains in response to the current

global health crisis and future large-scale disruptions
• Leverage supplier “sustainability intelligence” across
forced labor, environmental, human rights, and ethical
sourcing indices
• Implement supplier risk assessment, monitoring, and
mitigation for each supplier engagement worldwide  “fostering diversity and inclusion,” “dealing fairly
• Access a rich ecosystem of supplier information
on our Ariba Network
• Set real-time risk alerts at each step of your
source-to-pay process
In today’s world, a company is expected to set a good
example for its employees, suppliers, customers,
and investors on how to make the world a better
place, and America’s CEOs are responding. SAP’s
CEO recently signed the Business Roundtable’s new
Statement on the Purpose of a Corporation, putting
and ethically with suppliers,” and “protecting the
environment” ahead of shareholder value. 
Partnering with multiple SAP divisions, SAP
Ariba enabled the transformation of “Buy Social,”
leveraging SAP’s purchasing power to benefit social
enterprises in the communities they operate in.
SAP Ariba has also signed up for the Global Impact
Sourcing Coalition and has been an active participant
of the “UN Global Compact – Decent Work in Global
Supply Chains” action initiative platform. 

Together, we can help organizations embrace

social enterprise and build a more equitable future
worldwide as part of the business model for the
“new normal.”

How SAP Ariba Can Help | 8

SUSTAINABILITY MADE SIMPLE(R)

Conclusion
Between consumer demand for ethically sourced
products, the mounting realities of climate change, and
of course, the current global health crisis, the need for
sustainable supply chains is only increasing. With SAP
Ariba, procurement teams can turn their organization’s
sustainability challenges into opportunities to foster
a durable supply chain that’s more future-proof, rally
employees around a core purpose, protect and build
their reputation as a company and brand, and satisfy
consumer and investor demands.

Conclusion | 9
SUSTAINABILITY MADE SIMPLE(R)
Outcomes of Sustainability:
Food for Thought
1. Durability
The concept of sustainability is closely related to
something else high on everyone’s agenda these days:
durability. In short, sustainable supply chains make for
durable supply chains.
Nowadays, supply chains tend to include multiple
partners, with services and sourcing managed across
many business units and around the world. This has
created cost efficiencies, but it has also reduced
transparency, increasing risk as a result.
Organizations, therefore, need to move away from the
more traditional business models, which operated
to the benefit of a small number of shareholders,
and embrace models that create long-term value for
all stakeholders, supply chains, communities, and
the planet. One way to do this is with the creation of
sustainable supply chains.
2. Customer Loyalty & Employee
Engagement
Sustainability not only improves business continuity
through avoidance of supply chain disruptions but
drives long-term growth in revenues through the
development of market-satisfying products.
Recent research suggests that there is now more
value placed on brand image and customer loyalty
than ever before. Consumers are more informed
about how products are made and whether the
processes involved include unethical practices
or result in negative impacts on the environment.
They are, therefore, choosing brands that promote
transparency in their supply chain, use sustainable
sources of raw materials, and employ fair human and
environmental practices.
And it’s not just consumers, either. A growing
number of millennials in the workforce believe
they have a responsibility to provide consumers
with products that are good for the environment
and society. This demographic is the future and
cannot be ignored if organizations wish to remain
relevant. There is an accelerating trend in legislation
covering modern slavery, and more environmentally
conscious consumers are demanding less waste
and more recycling. Keeping up is no longer enough.
Organizations must stay ahead of emerging risks
and legislation.
Outcomes of Sustainability: Food for Thought | 10
SUSTAINABILITY MADE SIMPLE(R)

3. Diversity, Localization, and Innovation

Diverse businesses are becoming an essential part

of the supplier network and play a crucial role in
contributing to more prosperous societies around the
world. These include minority enterprises defined by
gender, ethnicity, disability, and sexual orientation.

Simply put, diverse businesses bring significant added

value through their flexibility and high innovation
potential. Working with these suppliers allows
companies to use their everyday procurement spend
in a way that changes lives, whether that’s creating
jobs for vulnerable women, protecting our planet
through sustainable materials, or reinvesting profits
back into communities, e.g., social enterprises that
trade for a social purpose.

Working with local communities, moreover, is a proven,

innovative way for organizations to become less
dependent on globalization for products and services
and to reduce carbon footprint (or even become
carbon neutral) through optimized storage and
transportation.

Finally, including more diverse businesses into the

supplier base not only does good but can be part of
making a profit. SAP is the technology partner for
Social Enterprise UK (SEUK), which is the certifying
body for social enterprises in the UK and promotes the
social enterprise model. In addition, SAP sponsors the
SEWF (Social Enterprise World Forum) which supports
the creation of social enterprises worldwide.

Outcomes of Sustainability: Food for Thought | 11

It’s a brave new world for procurement. Let’s get you ready.
ariba.com/procurement-is-changing

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Sustainability eBook enUS 20/05

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