August 30, 2022 • 16 mins
Today's procurement decisions are going to make a difference tomorrow. Sustainability has become the central theme of the procurement decision-making game. In this episode of our PGC podcast, we are excited to have Thomas Udesen. The CPO at Pharma giant Bayer, and the co-founder of the Sustainable Procurement Pledge, a not-for-profit community.
Join the thought leader to know about what is happening in the sustainable procurement space.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:06):
Welcome to the procurement game changers,the podcast for procurement leaders that make
(00:35):
a difference today, we will be talking aboutsustainable procurement.
And for that topic, I have the great pleasureto receive Thomas Udesen, chief procurement
officer at Bayer, one of the largest lifescience companies in the world.
But Thomas is also the co-founder of the SustainableProcurement Pledge, a bottom-up nonprofit
organization for procurement professionals,academics, and practitioners, driving awareness
(00:58):
and knowledge on responsible sourcing practicesand empowering people in procurement for free.
Okay.
Welcome to the show, Thomas.
Thank you, Hélène.
Could you tell us what led you to procurement?
I think, as many other people who have joinedthis amazing function, it wasn’t a long-term
(01:18):
plan that enabled, that I landed up in procurement;some 20 odd years ago when I finished my MBA.
I happened to talk to the future CPO of Johnsonand Johnson as part of the interview panel
and, you know, the chemistry worked and whatthey were doing sounded amazingly interesting.
(01:41):
I joined the J&J procurement team in Switzerlandand have not left the function, as I'm so
convinced that there's much more we can do.
But even before that, if I can say, I havealways been in B2B and international trade
and had the benefit and pleasure of workingwith people from remote places.
(02:04):
This business to business setting has alwaysbeen part of who I am and what I'd like to
do.
Thank you.
So sustainability is becoming trendy, right?
There are many companies that are now investingin sustainability and social responsibility
initiatives, and of course, procurement isthe frontline on those topics.
(02:25):
So what is sustainable procurement?
What are the resources available for procurementprofessionals in this area?
That's what we're going to talk about today.
So let's start with a simple question likeThomas, what made you passionate about sustainable
procurement?
I'm passionate about the topic, because Iam deeply convinced that, in all organizations,
(02:48):
we are at the best position to drive thischange of how business is conducted and what
criteria are being used for decisions to bemade.
The world consists of sellers and buyers.
And in that forum, it's very hard to imaginethat the sellers will, in a way, be driving
(03:08):
change in their own portfolio, just out oftheir good intention.
It has to come from the network of procurementprofessionals that sit in all those value
chains; From the mines, from the farms, fromthe oceans to make sure that it reflects itself
into the iPhones and the Samsungs that weare all buying.
(03:29):
The only one function who objectively canmake that happen is procurement.
All right.
So how did you come up with the idea of co-foundingthe sustainable procurement pledge.
You mentioned that it's becoming trendy.
Yes and no.
It's true that we hear quite a lot about it.
But if you look at the data, it's still prettyscary what is going on.
(03:52):
We know that amongst the 15,000+ companieswho have signed the United Nations Global
Compact principles, many of them, if you talkto their procurement teams, actually are not
really applying those principles in theirday to day job.
If you look at the annual Ecovadis report,a rating agency that conducts around 65,000
(04:13):
assessments, you see that all other aspectsof sustainability: environmental, social,
and governance has increased over the lastcouple of years – and that's good news.
The bad news is that sustainable procurementhas consistently gone down over the last five
(04:34):
years, which means that the people who haveto make sure that the tier-2, tier-3 and tier-3
suppliers have mature practices have beenunderfunded and that's just not okay.
That's why we decided to launch the SustainableProcurement Pledge to find another way of
getting to these 1 million procurement peoplesitting out there who unfortunately doesn't
(04:55):
get sufficient help from the companies thatthey work for.
And we believe we can democratize the knowledge,make all the knowledge available for people
who need to make better decisions.
And that's what it is.
So how far have you guys come and what areyour future goals?
What we have seen, thankfully, is that sincewe launched just over two years ago, the world
(05:20):
has come together.
We are today 7,700 ambassadors from 142 countries.
So the desire to do something better and learnhow to do it better and meet peers who have
done it better is universal.
It's literally almost every country on theplanet.
(05:40):
So what we are now doing is to make sure wehave the institutional horsepower to also
meet the demand of this community.
And that is by registering a nonprofit andmaking sure we have access to some funding.
We are hiring the first executive director.
We will start making sure that there is aninfrastructure that makes all this knowledge
(06:05):
available to the practitioners for free sothat they can just make better decisions.
And at the end of the day, make sure thatthe planet that we live on is more fair, equitable,
and that we can also make sure future generationshave healthy air and food to eat.
What would be some practical examples on howyou personally implemented those sustainable
(06:30):
procurement practices in your job?
I happen to be lucky, I work for Bayer andwe were one of the first companies who signed
the UN Global Compact in year 2000.
And just by the nature of our industry beingvery process and energy intensive, a lot of
these topics around carbon and decarbonization,have always been part of the agenda here.
(06:53):
So it's not that I had to invent everythingas a lot of it really existed from the past.
What most people are asking for is how doyou then harmonize these principles, the UN
Global Compact Principles into your processes?
How do you make sure it's institutionalizedin your contracts, in your purchase orders,
(07:13):
that it's part of the decision criteria onceto award business, that it's part of your
category strategies, supplier management,how you segment, and well, that's what we
have done.
A lot of that leg work already happened.
But 10 years ago, in 2011, Bayer co-foundedtwo organizations, two industry collaborative
(07:34):
networks; Together for Sustainability, forchemicals and the Pharma Supply Chain Initiative
for pharmaceuticals.
Here the philosophy is that our supply chainsustainability practices are pre-competitive,
it's not something we need to compete on,and it's something we need to collaborate
on so that we have the biggest impact forall the efforts that we have.
(07:55):
We started those two industry initiativesas we are strong believers in doing a lot
of these things together and not doing themas standalone companies.
There’s an African proverb (08:05):
"If you want to move fast, you go alone.
If you want to move far, you go together".
This really institutionalize the fundamentalbelief on how do we address, big human challenges
like climate change and inequality.
I really like that point of saying, if yougo alone, you go fast.
(08:27):
If you go together, you go far.
It's a very good way to say that.
What's the major issue when you try to implementsustainable procurement practices.
What we hear from our Ambassadors, and thereis commonality across the world; there is
(08:48):
a real knowledge gap.
How do you make sure that you actually understandthose practical steps and in a way, take this
challenge and make it into more digestiblebites and help everybody on the path.
So, there's a knowledge gap and that's ofcourse what www.spp.earth and what we are
doing with the Sustainable Procurement Pledge.
We make all those tools available for people.
(09:08):
Then there is a leadership gap where we see,unfortunately in many organizations, that
the long-term topic of sustainability is onethat gets sort of forgotten in the heat of
the moment.
There are many organizations where, as yousay, it's a bit of a hype, it's very popular,
but when push comes to shove and decisionsneeds to be made, you would swing back to
(09:32):
a more short-term objective.
We hear that there is a vacuum in many organizationsaround leadership and making sure this is
strategic.
Then there's a bit of a courage.
There's a need for a support network.
People don't see many role models who havegone through it, who fell on their noses,
(09:53):
got themselves up and are now sharing theirlearnings at an eye to eye level.
That's what we are able to do (09:58):
reminding everybody that it's not going to be perfect, but you
have to start; take the first step and withthat, you will become better and better.
That's the third major dimension that peopletalk about.
So it's knowledge, it's leadership and it'scommunity.
That's what we are trying to institutionalizeand make available.
(10:21):
That’s very interesting.
We see how you can bring tools and supportto those professionals who want to implement
sustainable procurement practices.
But to what extent can we get our suppliersto adopt the same practices and how can we
influence their sustainability agenda?
Well, the good thing is, for SPP of course,that you are having access to the procurement
(10:44):
people of your suppliers.
There are two ways of approaching that.
There's the top down, which I do as part ofmy day job where I'm part of Bayer.
We have very clear expectations to our suppliers.
We make sure that if you want to be key andstrategic, you have to have commitment and
a certain degree of practices.
And if you don't do that, we will probablyfind somebody else.
(11:05):
So that's the top down.
We do it in the industry as well; in Togetherfor Sustainability and the PSCI (Pharma Supply
Chain Initiative), where we also try to makeit easier and repeat the message, capacity
build and we train suppliers.
So that's all through the front door.
Now, SPP is all bottom up.
It's a grassroot approach and we want to makesure that it is the same knowledge we are
(11:27):
talking about.
We want to make sure that it's available forthe procurement teams at our suppliers and
at our suppliers' suppliers, so that theyunderstand, what it is that their colleagues
will be telling them once they hear the messagescoming through the front door.
That's why we really believe that you needto have both, you need to have the consistency
(11:48):
from the established commercial relationship,and you need to have the knowledge available
through the community of practitioners.
For the family, by the family.
So we talk a lot about sustainability in goodsand tangible goods actually.
But what about intangible?
(12:10):
What about, intellectual services like consulting,legal, marketing?
What about sustainability in those categories?
Well, I think first of all, of course, thatmany of them have great insights as far as
sustainability is concerned; Some are consultingon sustainability.
So, the group is super important - also interms of the mental capacity and the advocacy
(12:33):
for doing good.
And yes, it's true that traditionally, youwould think of carbon emissions and you will
think of materials and big factories and steelplants.
And of course that is true; the majority ofscope 3 emissions lies in the physical supply
(12:54):
chains.
But sustainability has three dimensions, right?
it's the Environmental E, the S for socialand G for Governmental.
Certainly when it comes to the indirect services,there is a big role to play when it comes
to the social, and to governance.
How do we make sure that the economic powerthat we hold is being used to minimize inequality,
(13:19):
that people have the right conditions, thatwe also make sure we have the right oversight
and we minimize corruption etc.
However, I also don't want to take this groupout of the environmental dimension, because
of all the data centers having huge needsof energy.
There is a big component linked with that,but most of the people, at least when I remember
(13:42):
I traveled on an airplane a few years back,they were also consultants.
There’s a huge dimension around travel,hotels, the impact we have on our fleets etc.
I do think there is a big role to play.
And with this, we are all in the same game.
(14:03):
The same applies for public procurement.
It's not just private procurement and indirect;It's also public procurement.
Your tax money is being procured for certainservices in the spirit of the interest of
the people.
And of course here there is also a lot thatcan and have to be known.
(14:23):
Absolutely.
So it's time to wrap up.
If you wanted our listeners to remember justone thing of our conversation, what would
that be?
Don't wait for perfection.
Don't let perfection get in the way of progress.
And don't try to do it on your own.
There are so many people who are happy tohelp.
The knowledge exists.
It's just a question of democratizing andreaching out if you need help.
(14:48):
I'm sure you will find a friend and SPP iscertainly one of those places where likeminded
people can share knowledge and get practicaltips on how do we do this together.
Because this is OUR challenge, right?
It's going to impact us and the next generations.
So how, how can they contract SPP?
(15:09):
Go and check out www.spp.earth and followus on LinkedIn www.linkedin.com/company/sustainable-procurement-pledge.
We also have our ambassador group on LinkedInwww.linkedin.com/groups/8845732/ and here
we are counting all the Ambassadors.
This is a very dynamic community with updatesand that's where you can also be.
We have also regular webinars happening atthe chapter level or at the global level.
(15:33):
We have the World Sustainable ProcurementDay that has been introduced every Equinox,
21st of March, between now and 2030.
So mark the date and join for all the funthat we are planning to have.
Thank you.
Wonderful.
Thank you, Thomas.
Thank you and see you later.
So now it's your turn to tell us about yourexperience and your challenges with sustainable
(15:55):
procurement in the common section.
Don't forget to subscribe if you want to benotified when new episode is out.
Thank you for listening.
Thank you again, Thomas, for your time andyour energy.
I hope you enjoyed this episode, and if that'sthe case, don't forget to give us a thumbs
up.
Happy sourcing to you all bye et au revoir.
Welcome to the procurement game changers,the podcast for procurement leaders that make
(00:35):
a difference today, we will be talking aboutsustainable procurement.
And for that topic, I have the great pleasureto receive Thomas Udesen, chief procurement
officer at Bayer, one of the largest lifescience companies in the world.
But Thomas is also the co-founder of the SustainableProcurement Pledge, a bottom-up nonprofit
organization for procurement professionals,academics, and practitioners, driving awareness
(00:58):
and knowledge on responsible sourcing practicesand empowering people in procurement for free.
Okay.
Welcome to the show, Thomas.
Thank you, Hélène.
Could you tell us what led you to procurement?
I think, as many other people who have joinedthis amazing function, it wasn’t a long-term
(01:18):
plan that enabled, that I landed up in procurement;some 20 odd years ago when I finished my MBA.
I happened to talk to the future CPO of Johnsonand Johnson as part of the interview panel
and, you know, the chemistry worked and whatthey were doing sounded amazingly interesting.
(01:41):
I joined the J&J procurement team in Switzerlandand have not left the function, as I'm so
convinced that there's much more we can do.
But even before that, if I can say, I havealways been in B2B and international trade
and had the benefit and pleasure of workingwith people from remote places.
(02:04):
This business to business setting has alwaysbeen part of who I am and what I'd like to
do.
Thank you.
So sustainability is becoming trendy, right?
There are many companies that are now investingin sustainability and social responsibility
initiatives, and of course, procurement isthe frontline on those topics.
(02:25):
So what is sustainable procurement?
What are the resources available for procurementprofessionals in this area?
That's what we're going to talk about today.
So let's start with a simple question likeThomas, what made you passionate about sustainable
procurement?
I'm passionate about the topic, because Iam deeply convinced that, in all organizations,
(02:48):
we are at the best position to drive thischange of how business is conducted and what
criteria are being used for decisions to bemade.
The world consists of sellers and buyers.
And in that forum, it's very hard to imaginethat the sellers will, in a way, be driving
(03:08):
change in their own portfolio, just out oftheir good intention.
It has to come from the network of procurementprofessionals that sit in all those value
chains; From the mines, from the farms, fromthe oceans to make sure that it reflects itself
into the iPhones and the Samsungs that weare all buying.
(03:29):
The only one function who objectively canmake that happen is procurement.
All right.
So how did you come up with the idea of co-foundingthe sustainable procurement pledge.
You mentioned that it's becoming trendy.
Yes and no.
It's true that we hear quite a lot about it.
But if you look at the data, it's still prettyscary what is going on.
(03:52):
We know that amongst the 15,000+ companieswho have signed the United Nations Global
Compact principles, many of them, if you talkto their procurement teams, actually are not
really applying those principles in theirday to day job.
If you look at the annual Ecovadis report,a rating agency that conducts around 65,000
(04:13):
assessments, you see that all other aspectsof sustainability: environmental, social,
and governance has increased over the lastcouple of years – and that's good news.
The bad news is that sustainable procurementhas consistently gone down over the last five
(04:34):
years, which means that the people who haveto make sure that the tier-2, tier-3 and tier-3
suppliers have mature practices have beenunderfunded and that's just not okay.
That's why we decided to launch the SustainableProcurement Pledge to find another way of
getting to these 1 million procurement peoplesitting out there who unfortunately doesn't
(04:55):
get sufficient help from the companies thatthey work for.
And we believe we can democratize the knowledge,make all the knowledge available for people
who need to make better decisions.
And that's what it is.
So how far have you guys come and what areyour future goals?
What we have seen, thankfully, is that sincewe launched just over two years ago, the world
(05:20):
has come together.
We are today 7,700 ambassadors from 142 countries.
So the desire to do something better and learnhow to do it better and meet peers who have
done it better is universal.
It's literally almost every country on theplanet.
(05:40):
So what we are now doing is to make sure wehave the institutional horsepower to also
meet the demand of this community.
And that is by registering a nonprofit andmaking sure we have access to some funding.
We are hiring the first executive director.
We will start making sure that there is aninfrastructure that makes all this knowledge
(06:05):
available to the practitioners for free sothat they can just make better decisions.
And at the end of the day, make sure thatthe planet that we live on is more fair, equitable,
and that we can also make sure future generationshave healthy air and food to eat.
What would be some practical examples on howyou personally implemented those sustainable
(06:30):
procurement practices in your job?
I happen to be lucky, I work for Bayer andwe were one of the first companies who signed
the UN Global Compact in year 2000.
And just by the nature of our industry beingvery process and energy intensive, a lot of
these topics around carbon and decarbonization,have always been part of the agenda here.
(06:53):
So it's not that I had to invent everythingas a lot of it really existed from the past.
What most people are asking for is how doyou then harmonize these principles, the UN
Global Compact Principles into your processes?
How do you make sure it's institutionalizedin your contracts, in your purchase orders,
(07:13):
that it's part of the decision criteria onceto award business, that it's part of your
category strategies, supplier management,how you segment, and well, that's what we
have done.
A lot of that leg work already happened.
But 10 years ago, in 2011, Bayer co-foundedtwo organizations, two industry collaborative
(07:34):
networks; Together for Sustainability, forchemicals and the Pharma Supply Chain Initiative
for pharmaceuticals.
Here the philosophy is that our supply chainsustainability practices are pre-competitive,
it's not something we need to compete on,and it's something we need to collaborate
on so that we have the biggest impact forall the efforts that we have.
(07:55):
We started those two industry initiativesas we are strong believers in doing a lot
of these things together and not doing themas standalone companies.
There’s an African proverb (08:05):
"If you want to move fast, you go alone.
If you want to move far, you go together".
This really institutionalize the fundamentalbelief on how do we address, big human challenges
like climate change and inequality.
I really like that point of saying, if yougo alone, you go fast.
(08:27):
If you go together, you go far.
It's a very good way to say that.
What's the major issue when you try to implementsustainable procurement practices.
What we hear from our Ambassadors, and thereis commonality across the world; there is
(08:48):
a real knowledge gap.
How do you make sure that you actually understandthose practical steps and in a way, take this
challenge and make it into more digestiblebites and help everybody on the path.
So, there's a knowledge gap and that's ofcourse what www.spp.earth and what we are
doing with the Sustainable Procurement Pledge.
We make all those tools available for people.
(09:08):
Then there is a leadership gap where we see,unfortunately in many organizations, that
the long-term topic of sustainability is onethat gets sort of forgotten in the heat of
the moment.
There are many organizations where, as yousay, it's a bit of a hype, it's very popular,
but when push comes to shove and decisionsneeds to be made, you would swing back to
(09:32):
a more short-term objective.
We hear that there is a vacuum in many organizationsaround leadership and making sure this is
strategic.
Then there's a bit of a courage.
There's a need for a support network.
People don't see many role models who havegone through it, who fell on their noses,
(09:53):
got themselves up and are now sharing theirlearnings at an eye to eye level.
That's what we are able to do (09:58):
reminding everybody that it's not going to be perfect, but you
have to start; take the first step and withthat, you will become better and better.
That's the third major dimension that peopletalk about.
So it's knowledge, it's leadership and it'scommunity.
That's what we are trying to institutionalizeand make available.
(10:21):
That’s very interesting.
We see how you can bring tools and supportto those professionals who want to implement
sustainable procurement practices.
But to what extent can we get our suppliersto adopt the same practices and how can we
influence their sustainability agenda?
Well, the good thing is, for SPP of course,that you are having access to the procurement
(10:44):
people of your suppliers.
There are two ways of approaching that.
There's the top down, which I do as part ofmy day job where I'm part of Bayer.
We have very clear expectations to our suppliers.
We make sure that if you want to be key andstrategic, you have to have commitment and
a certain degree of practices.
And if you don't do that, we will probablyfind somebody else.
(11:05):
So that's the top down.
We do it in the industry as well; in Togetherfor Sustainability and the PSCI (Pharma Supply
Chain Initiative), where we also try to makeit easier and repeat the message, capacity
build and we train suppliers.
So that's all through the front door.
Now, SPP is all bottom up.
It's a grassroot approach and we want to makesure that it is the same knowledge we are
(11:27):
talking about.
We want to make sure that it's available forthe procurement teams at our suppliers and
at our suppliers' suppliers, so that theyunderstand, what it is that their colleagues
will be telling them once they hear the messagescoming through the front door.
That's why we really believe that you needto have both, you need to have the consistency
(11:48):
from the established commercial relationship,and you need to have the knowledge available
through the community of practitioners.
For the family, by the family.
So we talk a lot about sustainability in goodsand tangible goods actually.
But what about intangible?
(12:10):
What about, intellectual services like consulting,legal, marketing?
What about sustainability in those categories?
Well, I think first of all, of course, thatmany of them have great insights as far as
sustainability is concerned; Some are consultingon sustainability.
So, the group is super important - also interms of the mental capacity and the advocacy
(12:33):
for doing good.
And yes, it's true that traditionally, youwould think of carbon emissions and you will
think of materials and big factories and steelplants.
And of course that is true; the majority ofscope 3 emissions lies in the physical supply
(12:54):
chains.
But sustainability has three dimensions, right?
it's the Environmental E, the S for socialand G for Governmental.
Certainly when it comes to the indirect services,there is a big role to play when it comes
to the social, and to governance.
How do we make sure that the economic powerthat we hold is being used to minimize inequality,
(13:19):
that people have the right conditions, thatwe also make sure we have the right oversight
and we minimize corruption etc.
However, I also don't want to take this groupout of the environmental dimension, because
of all the data centers having huge needsof energy.
There is a big component linked with that,but most of the people, at least when I remember
(13:42):
I traveled on an airplane a few years back,they were also consultants.
There’s a huge dimension around travel,hotels, the impact we have on our fleets etc.
I do think there is a big role to play.
And with this, we are all in the same game.
(14:03):
The same applies for public procurement.
It's not just private procurement and indirect;It's also public procurement.
Your tax money is being procured for certainservices in the spirit of the interest of
the people.
And of course here there is also a lot thatcan and have to be known.
(14:23):
Absolutely.
So it's time to wrap up.
If you wanted our listeners to remember justone thing of our conversation, what would
that be?
Don't wait for perfection.
Don't let perfection get in the way of progress.
And don't try to do it on your own.
There are so many people who are happy tohelp.
The knowledge exists.
It's just a question of democratizing andreaching out if you need help.
(14:48):
I'm sure you will find a friend and SPP iscertainly one of those places where likeminded
people can share knowledge and get practicaltips on how do we do this together.
Because this is OUR challenge, right?
It's going to impact us and the next generations.
So how, how can they contract SPP?
(15:09):
Go and check out www.spp.earth and followus on LinkedIn www.linkedin.com/company/sustainable-procurement-pledge.
We also have our ambassador group on LinkedInwww.linkedin.com/groups/8845732/ and here
we are counting all the Ambassadors.
This is a very dynamic community with updatesand that's where you can also be.
We have also regular webinars happening atthe chapter level or at the global level.
(15:33):
We have the World Sustainable ProcurementDay that has been introduced every Equinox,
21st of March, between now and 2030.
So mark the date and join for all the funthat we are planning to have.
Thank you.
Wonderful.
Thank you, Thomas.
Thank you and see you later.
So now it's your turn to tell us about yourexperience and your challenges with sustainable
(15:55):
procurement in the common section.
Don't forget to subscribe if you want to benotified when new episode is out.
Thank you for listening.
Thank you again, Thomas, for your time andyour energy.
I hope you enjoyed this episode, and if that'sthe case, don't forget to give us a thumbs
up.
Happy sourcing to you all bye et au revoir.
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