Oliver Wyman: CPOs Drive Sustainability with Three Key Steps

More companies are embedding sustainability into procurement, with four in five translating ambitions into concrete objectives, according to Oliver Wyman’s Sustainable Procurement Survey.

While progress is visible, gaps remain. More than half of businesses have yet to define broader environmental targets for procurement beyond carbon emissions.

Chief Procurement Officers (CPOs), who manage sourcing and supplier relationships, play a crucial role in shifting supply chains towards sustainability. A company’s environmental and social impact isn’t just about its own practices—it extends to its suppliers.

A consumer goods company depends on packaging manufacturers, a food brand on agricultural practices and a railway operator on train manufacturers. Each supplier matters, making engagement a key piece of the sustainability puzzle.

To make procurement more sustainable, Oliver Wyman outlines three essential steps: assessing suppliers, engaging with them and providing support to enable change.

Assess: Setting clear expectations for suppliers

Large corporations often work with thousands of suppliers, making individual assessments impractical.

Instead, leading businesses take a “mass balance” approach—prioritising key suppliers while using standardised methods to evaluate the broader network. This ensures that suppliers meet ESG criteria without creating excessive workload for procurement teams.

Many companies start with a responsible sourcing policy that all suppliers must sign. Additional checks come through questionnaires or automated tools that analyse external databases like CDP’s ratings on carbon, water and forestry, or EcoVadis’ supply chain assessments.

Suppliers that fail to meet baseline benchmarks, such as Science Based Targets initiative goals or renewable energy usage thresholds, risk exclusion from supply chains. The approach allows companies to set clear expectations and establish a foundation for sustainable partnerships.

Engage: Balancing demands with incentives

Identifying key suppliers is just the first step—companies must also find a balance between enforcing ESG commitments and offering incentives. The most effective businesses go beyond compliance, creating reward systems that encourage sustainable progress.

One global sportswear brand, for example, ranks suppliers using a bronze, silver and gold system. Bronze and silver tiers ensure compliance, while gold status unlocks additional business opportunities and visibility.

Suppliers that reach this level demonstrate efforts in areas like employee benefits and responsible resource use.

This engagement strategy focuses on a smaller group, ranging from 50 to a few hundred suppliers, allowing companies to build long-term partnerships. Suppliers are more likely to invest in sustainability when they see direct business benefits.

Enable: Supporting suppliers for long-term change

Beyond monitoring and incentives, some businesses take an active role in helping suppliers make sustainability improvements. Financial support, shared expertise and collaborative initiatives all play a part in accelerating change.

• Access to finance: Some retailers and beverage companies collaborate with banks to offer supply chain finance programmes tied to sustainability criteria. Suppliers that meet ESG goals can benefit from improved cash flow, better loan terms or early payments.

• External funding support: Companies can also assist suppliers in securing public funding. Germany’s €4bn ($4.3bn) subsidy programme, which helps energy-intensive industries transition to greener practices, is an example of how external financing can support sustainability goals.

• Industry coalitions: Collaboration strengthens sustainability efforts. By joining coalitions that bring together businesses, NGOs and government bodies, suppliers gain access to shared expertise and resources.

• Knowledge-sharing initiatives: Many companies now provide training and workshops to help suppliers implement ESG principles. Some have dedicated supplier development teams that go beyond offering resources by providing hands-on guidance.

Sustainable procurement is not just about compliance—it’s about embedding sustainability across the supply chain.

Companies that successfully push their suppliers to make improvements do so with a mix of clear expectations, incentives and hands-on support.

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