Sustainability Practices in Outsourcing

Implementing a #CarbonPricing #Framework in #Supplier Decision-Making Incorporating carbon pricing into supplier #evaluation is essential for achieving sustainability #targets and managing c#osts. Here’s a streamlined approach: 1. Establish #Baseline and Objectives: Define goals: #cost management, #regulatory compliance, #sustainability. #Measure current #carbonfootprint and #request #baseline data from suppliers. 2. Develop #CarbonPricing #Strategy: Choose a carbon pricing model (e.g., #carbontax, #internalpricing). #Set a carbon price #pertonofCO2e based on #market or #regulatory standards. 3. #Integrate Carbon Pricing into Supplier Evaluation: Assess supplier emissions (#Scope123). #Calculate carbon costs: Total Carbon Cost=Total Emissions×Carbon Price #Conduct Total Cost of Ownership (#TCO)analysis: TCO=Direct Costs+Carbon Costs+Other Indirect Costs 4. Develop a Supplier #Scorecard: Criteria: #Emission levels, #carbon pricing strategies, efforts to #reduce #emissions, compliance, overall TCO. #Assign #weights based on #importance. 5. Supplier Selection and Contracting: #Evaluate and #rank suppliers using the #scorecard. #Negotiate contracts with emission reduction targets and #compliance clauses. Provide #incentives for carbon footprint #reduction. Collaboration and Support: #Share best #practices and provide #technical assistance. Invest in joint #sustainability projects. 6. Monitoring and Reporting: Continuously #monitor emissions and #costs. Require regular reporting and #adjust #decisions based on performance. 7. #Review and #Refine Strategy: Regularly review the carbon pricing #strategy. Update based on new #regulations, market conditions, and #goals. Engage with suppliers for continuous improvement. Example in Practice: Objective: #30% reduction in #supply chain emissions by 2030. Model: Internal carbon price set at #$50 #pertonofCO2e. Evaluation: Supplier #A emits #1000 tons CO2e ($50,000 cost), Supplier #B emits #1500 tons CO2e ($75,000 cost). Scorecard Weights: #Emission Levels (40%), Carbon #Strategies (30%), #TCO (30%). #Preferred Supplier: #SupplierA, with lower emissions and effective strategies. Support: Sharing energy efficiency #best practices, #coinvesting in renewable energy. Regular #monitoring, performance #reviews, and #annual strategy updates ensure continuous improvement and #alignment with sustainability goals.

More than half of Salesforce’s most strategic suppliers — based on the amount the $38 billion software company spends on their goods and services — have agreed to cut their greenhouse gas emissions as part of binding provisions in their contracts. Those clauses are part of the Salesforce Sustainability Exhibit, introduced four years ago in May 2021 as an amendment to the company’s standard contact. Many large companies actively encourage suppliers to reduce emissions through science-based targets, and some offer educational resources and technical assistance to help. Salesforce remains unique in codifying those commitments as part of its procurement process, although customer service software company Zendesk — a Salesforce supplier — was inspired enough by the approach to introduce a similar set of contract clauses in November 2024. Best practices for companies interested in shaping similar programs: ➡️ Get procurement teams involved. They can help prioritize engagement and signal which suppliers might find new requirements difficult to meet. ➡️ Provide technical support. Many companies, especially smaller ones, will need an education on the concept of net zero. ➡️ Offer options. Allow suppliers to choose the emissions reduction path that makes the most sense for their business rather than dictating a one-size-fits all approach.  ➡️ Look for ways to support supplier investments. For example, a corporation could motivate supplier investments in renewable energy or lower-emissions materials through better procurement terms. Lessons from Salesforce’s unique contracting process: https://lnkd.in/eHZ7qGvm Cooper Wechkin Louisa McGuirk Serena Ingre Emily Damon Amy Garber

Integrating sustainability into every step of procurement Procurement is becoming a strategic function shaping corporate impact and long-term resilience. Integrating sustainability from the earliest planning stages allows companies to identify high-impact categories and link sourcing decisions to emissions, governance, and performance targets. Supplier selection is evolving. Beyond price and efficiency, organizations assess supplier maturity, transparency, and progress in sustainability performance to ensure accountability and shared value creation. Procurement design is changing. Requests for quotations include sustainability weighting and product carbon footprint disclosure to ensure consistent evaluation and comparability across suppliers. Data integrity is becoming a competitive advantage. Companies adjust pricing models to reflect carbon intensity and apply clear criteria when emissions data is incomplete or missing. Contracts are turning into instruments of accountability. They include measurable sustainability targets, reporting obligations, and adherence to supplier codes of conduct that strengthen governance and oversight. Ongoing supplier engagement is the new standard. Continuous monitoring, audits, and capacity-building initiatives help drive measurable progress across entire value chains. Green procurement represents a structural transformation that connects strategy, governance, and performance to business resilience. How prepared are procurement teams to deliver measurable impact through sustainability? What mechanisms are helping organizations ensure supplier accountability? Source: Kearney (2025), WEF Green Procurement Playbook #sustainability #esg