Sustainability, sustainability, sustainability – these are the three biggest issues that procurement will face over the next ten to fifteen years. If we haven’t solved the problem by then, it will be too late. My sense is that all the other issues that procurement continues to face will lurk in the background vying for position, but sustainability will take centre stage in the immediate future.

Why am I so certain? Well, we have had the Stern report and we have also seen the Intergovernmental Panel on Climate Change report - both of which provide plenty of detail about what is going to happen to our planet and why. They have effectively drawn a line in the sand and laid down the gauntlet in terms of what we need to do. The media has picked up on this and we are now seeing a huge groundswell of interest. Not a day goes by without some aspect of sustainability appearing in the news. And if you read Stern, you will realise why – this is not the next big fad, it is about our future economic and social viability across the globe.

So what is sustainability all about? The simple answer is that by virtue of our day-to-day activities as humans, we are generating greenhouse gases that are causing the planet to get hotter – check out the following link at the New York Times for evidence of this:'The Warming of Greenland'. These gases are generated by the linear manufacturing and consumption lifecycles that we have adopted to drive our economies. These are supported by equally linear support and logistics networks. In these linear lifecycles, raw materials are the inputs, they undergo some kind of process to turn them into products and services, we then consume them and either bury the waste products or emit them into the atmosphere - it is the waste part of the equation that is causing the problem.

The goal is to become greenhouse gas neutral – i.e. the enterprise has no net impact on the environment in terms of the gases that it emits. There are basically three ways enterprises can achieve this – elimination, substitution, or carbon offsetting. First, the enterprise can eliminate its greenhouse gases by stopping their production; second, it can adopt processes and technologies that improve the types of gases it emits, shifting to a mix that is less harmful to the environment; third, it can continue to emit harmful greenhouse gases but offset them by investing in external projects that neutralise the effect of these gases. Offsetting has had some bad press recently as it can be argued that it is in effect a licence to emit; nonetheless, it is better than doing nothing. And, given that there are lots of very cheap options out there to offset your emissions, you can currently get a very big bang for your buck – see http://www.climatecare.org/ for further details.

To solve the problem long-term, however, we need to shift to closed-loop manufacturing and support lifecycles, which would increase the volume of waste products used as inputs into the manufacturing process, including the emitted greenhouse gases. To do this, enterprises will need to leverage all the internal expertise that they have at their disposal, which will inevitably include suppliers – hence procurement’s involvement. Moreover, the enterprise will need to police its own greenhouse gas footprint, driven in turn by its suppliers – I would argue that again, procurement is well-positioned to support this; the function should have the data, be able to manage relationships with the suppliers and have the analytical capability to root out any issues.

It should be self-evident that all of this will require a c-change in the way enterprises create value for society – new technologies will be needed and investment decisions will have to be based on greenhouse gas footprints as well as strict economic return. This problem extends all the way back into the supply chain – stopping only at the point when the raw materials are extracted out of the ground.

Consequently, the procurement function needs to reinvent itself - there will be far greater emphasis on collaboration and innovation with suppliers to develop solutions to the problems that organisations are beginning to face. This new challenge will rapidly consume scarce bandwidth within the procurement function, and, if it hasn’t already happened, procurement must adopt solutions that will increase efficiency and performance, such as outsourcing category management for non–strategic categories, or order processing.

This isn’t a competition so there is no prize. It’s a ‘must do’.

Kudos will go to those corporations and their procurement functions, which fix the greenhouse gas issue first. Investors will become increasingly discriminating in terms of the companies they invest in and inevitably, greenhouse gas emissions will be a differentiating factor. Maybe one day we will see the world’s first greenhouse gas neutral trading exchange, where all listed companies are greenhouse gas neutral.

So how important is this? It boils down to whether we want to address the issue or not. Even if the scientists are wrong, we can’t afford to ignore it. If you have time one Sunday evening, check out some of the 36 million hits that a search on Google generates for sustainability and decide for yourself.