Our “Procurement Experts on CPO Rising” series continues today with an excerpt from my 2022 episode of the Procurement Rising Podcast – Thomas Udesen, Chief Procurement Officer at Bayer and co-founder of the Sustainable Procurement Pledge (click to listen to the full interview). Note that this excerpt has been edited for readability.
Andrew Bartolini: Let’s talk about sustainability. What attracted you to this issue? You mentioned wanting to join J&J way back because of its commitment to doing well, doing good in the community. But let’s start with sustainability and how you think about it, how you define it, and what that means to CPOs.
Thomas Udesen: I’ve worked in Ghana and Indonesia in the timber trading business, which also included tropical timber. So, I’ve spent many years in the rainforest and have also seen what positive impact business can have on local communities. But of course, when you’re there in the front, you also see where it doesn’t work, and I’ve been exposed to many of those. Seeing how inequality is affecting the potential for a lot of people out there, if you do things in a more inclusive, responsible way, you can actually get this fine balance of economic prosperity combined with environmental protection. And that’s what sustainability is for me, making sure that the business we conduct has an economic driver. It is necessary to fuel innovation and ensure our investments are ready for the future. However, you must also consider all the environmental aspects as well as the social aspects that are associated with the way that we are conducting business. A lot of people are talking about people and planet profit, and that’s really what it means for me as well.
AB: Let’s put that into the procurement context. At Bayer, as the chief procurement officer, how do you introduce these policies or this approach? Or maybe it’s something that’s more accepted at the executive level? But talk about the impact in supplier relationship management and insourcing, for example.
TU: It’s important to recognize that I didn’t invent this in Bayer. In fact, it’s been a journey that this company has been on since 2000 when it was one of the first secretaries to the United Nations Global Compact. Since then, we have spent a lot of time with industry collaboration, as well as founding two large organizations. Right now, one is associated with sustainability, which is the chemical industry initiative.
AB: With sustainability defined, let’s talk about it in the context of procurement and the role of the CPO at Bayer, connecting the dots between your interests in sustainability and the broad exposure of working in foreign countries and seeing the impact of policy.
TU: The topic has been really on the agenda at Bayer for decades. And we were one of the first companies that signed the United Nations Global Compact Principles in 2000. Since then, we’ve also been one of the companies that has been collaborating with a number of industry associations and initiatives around the topic — for example, the Pharmaceutical Supply Chain Initiative and Together for Sustainability since 2011. So, the topic has really been on the radar for quite a while.
What does that mean for us in procurement? It means of course, that we are hardwiring all these principles, which are defined by the United Nations Global Compact Principles. It’s about ensuring environmental principles are designed into your processes and social aspects, whether it’s diversity or inclusion, while also making sure human rights are being considered in your engagement with suppliers.
We’ve spent a lot of years trying to make sure that this is hardwired. And we also followed the more typical approach of starting with a baseline assessment audit to determine the level of certain behaviors in your supply chain. And it’s not about measuring, but rather having a positive impact. That’s where a lot of the detailed engagement with suppliers happens. We see there are certain gaps and we jointly agree on corrective actions. If we don’t see those actions taking place, we will have conversations. Is there a lack of commitment? Do we really have a bigger issue? Do we need to start talking about disengagement, etc.? This is how we have been operating a lot under the umbrella together for sustainability the last decade.
Starting more recently, we have signed up for the Science Based Target initiative. And we’ve been making sure that our CO2 emissions are compliant with the 1.5 percent temperature increase as according to the Paris Climate Agreement. And that, of course, had implications on Bayer’s operation, but very much so on the procurement team. We are now behind very tangible reductions on scope one, two, as well as scope three. And that’s where I think a lot of the activities in the coming years will be keeping us busy — scope one and two with all our internal footprints both directly and indirectly. Right now, we are transforming all our energy consumption to renewables, and looking at things like fleet and how can we convert our fleets towards electric or hybrid. How can we curtail travel? How can we invest in technologies that reduce the CO2 footprint, and will that go towards this net-zero carbon ambition that we have also articulated for 2030?
MORE CPO TOPICS
Procurement Experts on CPO Rising – Furthering the Mission in Higher Education
Procurement Experts on CPO Rising – Transitioning Into a New CPO Role
Procurement Experts on CPO Rising (Mergers, Acquisitions AND CPOs)
Procurement Experts on CPO Rising (Deploying Technology During a Pandemic)
