The transformation of purchasing: From cost reducer to sustainability driver
Purchasing has developed into a key strategic function that contributes significantly to the sustainability and future viability of companies. This article highlights how purchasing focuses not only on reducing costs but also on creating long-term value, and shows the role it plays in promoting environmental and social standards.
Autor
Thomas Heine, Editor-in-chief of the magazine for sustainable purchasing
Purchasing has undergone profound changes in recent decades. Whereas it used to be viewed merely as a cost center, it is now a strategic function that is central to a company's objectives. This transformation is partly a response to external requirements such as sustainability regulations and rising expectations on the part of customers and investors. It is also a reflection of the growing recognition that purchasing plays a key role in ensuring a company's future viability.
From price focus to sustainable value creation
Traditionally, purchasing has been measured primarily by its ability to reduce costs and secure margins. Purchasing strategies were primarily focused on favorable prices and minimizing procurement expenses. However, this view falls short in today's business world.
Increasing sustainability requirements, global uncertainties, and pressure to be resilient have brought purchasing into the focus of strategic considerations. Decision-makers increasingly understand that cost reduction cannot be the sole objective—rather, it is about creating long-term value for the company and society.
In this context, purchasing is becoming a driver of environmental and social standards. By promoting sustainable supplier relationships and using environmentally friendly materials, it helps to reduce Scope 3 emissions and ensure compliance with human rights in the supply chain.
Integration into corporate strategy
Integrating purchasing into corporate strategy as a key challenge is like an orchestra in which each department plays its instrument. Purchasing must act as an interdisciplinary function that works closely with other departments. Take product development, for example: Since 2005, the EU Ecodesign Directive has set minimum environmental requirements for products on the European market, thereby saving a lot of energy. On July 18, 2024, it was replaced by the new EU Regulation on Ecodesign for Sustainable Products (ESPR). This extends the scope to new environmental aspects and almost all products, and will also lead to greater savings in raw materials in the future. Purchasing can have a decisive influence on which materials and technologies are used in new products. Early collaboration with product development enables more environmentally friendly and sustainable solutions to be implemented.
For example, with the finance department: The EU Taxonomy is a regulation defining sustainability. It is particularly important in the capital market, where it serves as a benchmark for companies and investors alike. It has a direct impact on banks' refinancing via green bonds and is therefore indirectly relevant for the underlying green loans. It will thus become a central element of control in banks in the future and will have a direct impact on future financing. Companies that comply with the taxonomy may be given preferential treatment, as they will have access to better financing conditions and market opportunities.
If a company wants to secure these financing advantages, close cooperation with the purchasing department is necessary, because purchasers must ensure that suppliers offer taxonomy-compliant products or services, as these are relevant for their own sustainability reporting. However, purchasing must also work closely with the finance department to ensure that sustainable procurement strategies are economically viable, as sustainability initiatives often have financial implications – whether through investments in technologies, the development of low-carbon products, or the implementation of certification standards.
Purchasing as a driver of innovation
Who else but purchasing could be the driver of innovation and sustainability throughout the entire value chain?
Companies that use purchasing strategically can develop sustainable business models that ensure long-term success because purchasing can support the introduction of circular economy approaches, for example, by procuring materials that are recyclable, reusable, or durable. Such approaches not only benefit the environment, but also reduce long-term costs.
Through close cooperation with innovative suppliers, purchasing can continue to promote sustainable technologies and products that create competitive advantages. Examples include low-carbon packaging and resource-efficient production processes.
The transformative power of purchasing in sustainable corporate management
As a new “sustainability driver,” purchasing not only promotes compliance with environmental and social standards, but also makes an essential contribution to securing the future viability of companies. By promoting sustainable supplier relationships, integrating them into corporate strategies, and supporting innovation, purchasing becomes a driver of long-term value creation. Changes in regulatory requirements, such as the EU Ecodesign Regulation and the EU Taxonomy, as well as rising stakeholder expectations, are taking the importance of this function to a new level. Close cooperation with departments such as product development and finance will be essential to integrate environmental and social goals economically and keep companies marketable.
In the future, purchasing will act even more as an innovation platform. With the support of approaches such as the circular economy and the promotion of sustainable technologies, it can not only create competitive advantages, but also play a central role in the transformation of business models. Companies that use purchasing strategically will be better positioned to meet the growing demands for sustainable value creation while securing financial benefits through regulatory compliance and innovative partnerships.