Stepping up sustainability

SECTION TWO: THE FM SUPPLY CHAIN

A resilient supply chain is fundamental to a business’s long-term success. With the right supply partners, a business can not only ensure operational stability but also enhance its brand value by aligning with suppliers that share its values. Modern consumers are increasingly value-driven, favouring companies that demonstrate sustainability in both their internal practices and their external partnerships.

However, as our research shows, the FM sector has yet to fully integrate sustainability criteria into supplier selection, particularly around Scope 3 emissions. The data suggests that organisations are largely focused on their own direct environmental impact, with less attention given to the sustainability of their entire value chain. Several key factors contribute to this, as outlined in our research:

• Cost, Compliance, and Credibility: The most prevalent theme identified is the strong link between cost, compliance, and the reputation of suppliers. Unsurprisingly, cost remains the primary driver in supplier selection, as FMs continue to manage tight budgets. This cost-focus, while important, often overshadows the potential long-term benefits of sustainable supplier partnerships.
• Sustainability Standards with Suppliers: Although cost and legislation dominate decision-making, there is still an expectation for some level of sustainability from suppliers. The qualitative data reveals that while respondents acknowledge the importance of sustainability, it ranks low in priority, with only six per cent of participants citing it as a main priority in supplier selection.
• Supply Chain Complexities: Evaluating a supplier’s environmental credentials remains a challenge. Many rely on eco-certifications as a quick solution, but respondents expressed frustration at the complexity of gathering detailed sustainability information from suppliers.
• Lack of Communication with Suppliers: Effective communication is vital for fostering sustainability within the supply chain, yet only one per cent of respondents engage with their suppliers on this issue. This lack of dialogue represents a missed opportunity for businesses to build stronger relationships.

ECO-PREMIUMS

While inflation rates have stabilised, the FM sector still faces higher procurement costs, particularly for petrochemical products. The war in Ukraine has driven significant increases in production costs, affecting regional competitiveness and sourcing. Compounding these issues are supply chain disruptions, labour shortages, and rising wage costs.

Despite projected growth there are struggles with rising costs and competition, often trading off long-term sustainability goals for immediate financial concerns. Our survey found that 38 per cent of respondents cited cost as the primary barrier to sustainability—more than double the next biggest challenge, accurate tracking (15 per cent).

Manufacturers often attach “eco-premiums” to sustainable products, creating financial burdens, especially for Small and Medium Enterprises (SMEs). While some manufacturers are starting to offer more affordable options, sustainability is still associated with higher costs.

FMs are advised to adopt a broader perspective, recognising that sustainable products can yield long-term savings and efficiencies. They can still pursue sustainability within tight budgets by considering strategic approaches.

HOW TO NO LONGER TRADE OFF COST OVER SUSTAINABILITY?

• Think Long-Term: Sustainable technologies, like Biotechnology, may have higher upfront costs but often lead to significant long-term savings. Investing now can help avoid future regulatory costs and business disruptions.
• Wider Savings: Look beyond the initial price and consider operating, maintenance, and disposal costs. Sustainable options can offer better Return on Investment (ROI) and productivity gains when viewed holistically. For instance, eco-products that utilise residual cleaning can improve productivity, and less harsh chemicals can better protect assets.
• Local and Naturally Derived: FMs should prioritise products made from locally sourced and naturally derived feedstocks. This approach reduces dependency on global supply chains, mitigates disruptions, and supports sustainability efforts, all while enhancing procurement reliability and aligning with long-term sustainability goals.