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: Bayer is clearly a company that’s at the forefront of sustainability. Let’s explore this more from a tactical level. You are doing some baselining, what is it that you’re tracking? Also, how are you measuring it and setting the goals? And as the CPO, are you most responsible for sustainability?
Thomas Udesen: Yes, the CO2, the tech, is of course one dimension of sustainability. Our CEO is in fact our chief sustainability officer, so that makes it pretty easy because the tone from the top is crystal clear. And this is a priority project, meaning the resourcing is made available. I would recommend the same approach for other companies that are setting this up. We have a sustainability team and a procurement team that are collaborating very closely because the topics are not just CO2 related. CO2 is an important dimension, particularly when it comes to environmental climate change, but there are other aspects like biodiversity, and issues with palm oil and other ingredients that we’re buying, where collaboration is occurring as well.
A very large and growing topic, certainly in many parts of the world, including Germany, is human rights. Many governments are also realizing that the traction in the industry has been simply too slow. And it’s now moving into the legislative domain where a number of new laws are being introduced that are linked to human rights. What are the practices? How do you make sure you have oversight for tier one — that’s step one — but also going deeper into tiers two and three? And I think all the procurement people out there will know that’s an enormously complicated task that is ahead of us. And with that, of course, collaboration and technology will become really critical in making sure that you have oversight that makes you comfortable and provides transparency into your supply chain.
AB: You mentioned some metrics, and that your CEO is driving the initiative. It’s very visible and gaining buy-ins are easier in that situation. What are some of the metrics that you’re measuring, and how are you tracking those? And what are you relying on to show improvement in those areas?
TU: One of the ways that we are looking at progress across our supply chain is that, under the umbrella of sustainability, we are applying the EcoVadis Assessment. And those who are familiar with EcoVadis know that it’s one of the agencies that assess all the different dimensions across suppliers, operations, environmental, social management, ethics, and also sustainable procurement. And we can see to which extent we have progressed on that.
Our message to all our strategic suppliers is that you must be green, which means that you have to have a score of 45 or above. And with that, we also identify you as key in strategy — you’re traveling first-class, business class. We will give you access to preferential briefs, but we do expect that you have very solid practices aligned with what we believe is acceptable at Bayer. And if we have suppliers that are key in strategy but not meeting those expectations, they’ll be bumped down to economy class. It doesn’t mean we can’t do business with you, but your preferential access is gone until such a point that you have at least committed to progress and shown you can also deliver on it. So, our EcoVadis Rating as well as our average progress is one of the metrics we are keeping track of.
Then we are also looking, of course, at the absolute CO2 for our own operations. And one of the big influences we have is the conversion of energy from the fossil fuel base towards renewables. So, we keep track of how quickly we have been able to transform our global energy consumption from fossil-based to renewable. That’s an important metric we’re looking at.
But maybe more important is the CO2 we are buying from all the raw materials and services from our suppliers. It represents around 80% of Bayer’s overall CO2 footprint. So, of course, it’s by far the biggest portion. And with this, we’re tracking our yearly consumption. And making sure it has that reducing trajectory to ensure we meet those expectations and commitments that we’ve made externally as well.
MORE CPO TOPICS
Procurement Experts on CPO Rising — Creating a Foundational Contract Repository
Procurement Experts on CPO Rising — Assessing Your New Leadership Role
Procurement Experts on CPO Rising — Putting Your Skills to Work
Procurement Experts on CPO Rising — Planning for the Next Iteration of Source to Pay
