How to embed sustainability in your Source to Pay process

In recent years, corporate social responsibility and sustainability have become more important within procurement departments. ESG criteria have increasingly become part of procurement policy and process design. “Today, though, that attention seems to be slipping into the background. Geopolitical tensions, trade uncertainty and conflicts are forcing buyers to focus mainly on security of supply and price stability. In that context, ESG is slipping down the priority list at many organisations,” says Menno, Director Technology at Spendlinq.

Even so, taking sustainability seriously remains essential. European laws and regulations require organisations to demonstrate how they deal with the environment, people and society, and how they put ESG criteria into practice. “You can’t separate sustainability from how you buy, who you work with and how you set up your processes”, says Menno. “By now it’s woven into every step of the chain.”

Within the Source to Pay domain, this means sustainability has to be more than an idealistic aspiration. It’s about concrete matters such as CO₂ reduction, circularity, reuse and energy consumption, but also about fair working conditions, diversity, chain transparency and risk management. The themes are numerous, and the only way to steer on them effectively is to embed sustainability structurally in the entire procurement and spend process.

Regulation is accelerating sustainable procurement

European laws and regulations set the standard here. The Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) force organisations to report and to demonstrably act sustainably. “It’s no longer optional. You have to be able to show what you’re doing and back it up with data and policy”, says Menno.

Growing awareness means sustainability is increasingly an explicit part of the procurement strategy. Organisations no longer assess suppliers solely on price and performance, but also on sustainability ambitions, quality labels and social impact. Even so, translating those ambitions into everyday practice in a concrete and systematic way remains a challenge.

Technology as an enabler

Technology can play a valuable role here. “We’re seeing more and more Source to Pay solutions offering functionality to better support sustainability”, says Menno. “Think of registering certifications, ESG risk analyses, or filters for sustainable products in ordering environments. Even so, the maturity level varies greatly per supplier. In many cases it stays limited to a label or a field, whereas sustainability needs to be built into the entire process. The challenge is to keep the whole chain in view, so not just your own supplier but also your supplier’s supplier(s).”

Sustainability in every phase of Source to Pay

In the sourcing phase, that means setting clear requirements and award criteria. Ask about carbon footprint, use of recycled materials, or policies on diversity and social responsibility in the chain. Where relevant, record this in a sustainability section of the annual report. Modern tendering systems make it possible to include these kinds of topics in scoring models or supplier assessments.

During contracting, it’s all about recording concrete agreements. Think of return flows, minimising packaging or applying longer-term sustainability targets. Contract modules can store terms and conditions and automatically set up alerts for things like an expiring certificate or missing sustainability information. In many cases, supplier management solutions can also help here with off-the-shelf integrations with organisations that can provide this information.

In the operational procurement phase, from ordering to paying, visibility is crucial. “Employees need to see at a glance which items or suppliers are sustainable”, Menno explains. “That can be done with colour coding, labels or preference settings in ordering environments. But it does require the source data to be in good order. To achieve this, organisations need to enrich catalogues and link supplier information to sustainability attributes. Spendlinq has the expertise in-house to help with this.”

There are also opportunities in invoice processing and goods receipt registration. For example, by capturing transport information or using invoice data to calculate CO₂ impact. But don’t forget that ‘simple’ electronic invoicing can already make a contribution. By combining internal data with external sources – such as environmental databases or sector benchmarks – you gain more and more insight into the real impact of what organisations spend.

Data Analytics plays a key role here. “We see ESG data being included in management reports more often, for example the percentage of sustainable spend, emissions per procurement category or the share of suppliers with social quality marks. New tools make it possible to monitor in real time and adjust automatically based on external developments or internal targets.”

From system configuration to cultural change

Still, Menno warns that technology alone isn’t enough. “You can get everything technically right, but if nobody uses it or there’s no ownership, little will change. That’s why Spendlinq advocates an integrated approach in which processes, people, systems and data are aligned in the right balance. It starts with insight: where are you now, what can you already measure, what do you need to measure and what’s missing? Then comes the set-up: how do you adapt your processes and tooling? And finally, embedding the approach: how do you make sure sustainability keeps showing up in practice in the choices the organisation makes?”

Start small, but do start

Menno advises organisations not to tackle everything at once. “Choose a procurement category, a supplier group or a process step where you can make an impact and build from there. The Source to Pay process offers plenty of entry points to make sustainability measurable, visible and workable.”

“Sustainable procurement isn’t a project you tick off”, he concludes. “It’s something you take into every step. If you set it up properly, it doesn’t just help you work more sustainably, it also helps you steer on it in a structural way.”