Procurement and supply chain professionals navigate a complex landscape where consumers increasingly prioritise environmentally conscious brands. At the same time, businesses face pressure to enhance supply chain resilience, cut costs and mitigate risks. As we know, sustainability is more than a moral choice, it’s a strategic necessity. Organisations that commit to green supply chains help protect and preserve the planet and give themselves the best chance at long-term success.
This article draws on recent research from the DACH region to explore the trends shaping green supply chains and their implications for the broader business world.
New sustainability reporting requirements
The Corporate Sustainability Reporting Directive (CSRD) took effect on January 5, 2023. It expands sustainability reporting requirements for large companies and listed SMEs, including some non-EU companies operating in the EU market. This ensures investors and stakeholders can assess and report on environmental and social impacts, which is critical for DACH businesses as they face increasing regulatory pressure to align with EU-wide sustainability standards. The first reports are due in 2025.
To thrive in this evolving regulatory landscape, DACH businesses must proactively adopt robust sustainability practices and reporting systems. This ensures compliance with the CSRD and enhances credibility and competitiveness in a market that increasingly values transparency and environmental responsibility.
Sustainability spending is on the rise
A 2023 study by Cognizant of 3,000 executives, including 204 from the DACH region, reveals sustainability spending is projected to increase by an annual average of nearly 11% between 2022 and 2025 and by almost 13% from 2025 to 2030. This rising investment reflects the growing sustainability priority for DACH businesses, particularly in manufacturing sectors, where the focus is shifting from voluntary, ‘basic’ efforts to more sophisticated, data-driven approaches.
For many businesses, the goal is to reduce Scope 3 emissions, which include all emissions across the supply chain, from raw material sourcing to product disposal. Ambitious targets, such as reducing supply chain emissions by 50% by 2030, require detailed, accurate data on every product, service and material used.
Achieving these targets will require substantial technology adoption. Tools like cloud computing, the Internet of Things (IoT) and AI-driven analytics will be essential for collecting and analysing the granular data needed to track environmental impacts. But there’s a challenge: the region faces a shortage of talent with the right digital skills. This is highly likely to hinder businesses’ ability to fully leverage these advanced technologies.
With these skills in high demand, it’s a challenge to source and retain the right procurement and supply chain professionals. That’s where the team at Bramwith can help. We are connected to some of the top procurement and supply chain candidates, across the UK and globally. People with experience in big data, AI, machine learning and a variety of digital skills. Get in touch today to find out how we can help your business.
Closing the gap in procurement digitalisation
The DACH SME Procurement Barometer 2024 from Onventis shows the importance of digitalisation in procurement and finance functions, particularly for mid-sized companies. Digital tools not only streamline procurement processes but also support sustainability initiatives by improving transparency throughout the supply chain.
51.6% of DACH SMEs are already taking steps toward sustainable procurement, reflecting the growing importance of Environmental, Social and Governance (ESG) goals in business strategies. Furthermore, 88.5% of respondents are open to implementing digital technologies, focussing on reducing costs and improving efficiency. Key digital transformation areas cited include supplier management, contract management and order fulfilment.
Yet, despite this openness, many companies still rely on tools like Excel for procurement tasks. These legacy systems may be sufficient for simple processes but fall short when managing the complexities of modern procurement, such as tracking sustainability metrics, monitoring supplier performance and ensuring regulatory compliance.
To fully realise the benefits of digitalisation, companies need to invest in specialised procurement systems that can handle large volumes of data and provide meaningful and actionable insights.
Practical guidance for DACH businesses
As DACH businesses navigate the transition to green supply chains and digitalised procurement, there are several steps to help optimise efforts.
- Invest in specialised digital tools such as cloud-based procurement platforms. This provides greater visibility, improves decision-making and improves tracking of sustainability metrics.
- Leverage data for sustainability. Sustainability is increasingly data-driven and reporting requirements are ever more stringent, especially when meeting Scope 3 emission targets. Companies must focus on gathering granular data across the supply chain, from sourcing raw materials to the environmental impact of their products. This data can then be used to identify inefficiencies, reduce emissions and ensure compliance with ESG goals.
Find out which KPIs to set for sustainability and how to put ESG goals on your business agenda.
- Prepare for E-Invoicing now. Paper invoices are being phased out in the DACH region from 2025. This will require businesses to digitise their invoicing processes. Getting ahead will ensure compliance, improve financial transparency and reduce unnecessary admin.
- Recruit the best procurement and supply chain talent. Technology adoption is only effective when the right talent is in place to implement, optimise and manage it. Businesses should prioritise attracting and retaining digital talent, and where possible, invest in training current employees to fill the skills gap. This is especially important for the successful adoption of advanced technologies like AI, ML, big data, IoT and intelligent automation.
- Expand the sustainability focus across the supply chain. Many DACH businesses are already taking steps toward integrating sustainability into their supply chains. However, to meet targets and remain competitive they need to extend these efforts beyond internal operations. Collaborating with suppliers and using digital tools to track and reduce emissions across the value chain is crucial for long-term sustainability.
Green supply chains as a competitive advantage
The rise of green supply chains offers some complex challenges, but also a wealth of exciting opportunities. As sustainability becomes a regulatory requirement and a market expectation, companies that embrace digitalisation and sustainability – and recruit the top digital talent – stand a far better chance at weathering economic storms and staying ahead of competitors.
If you want to find the best procurement and supply chain professionals for your business, get in touch with the team at Bramwith. We would love to help.
